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Home Publications Blogs Beat the Press NPR Failed to Correct President Obama's Error: Net Exports Have Not Been a Boost to the Economy in 2013

NPR Failed to Correct President Obama's Error: Net Exports Have Not Been a Boost to the Economy in 2013

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Friday, 27 December 2013 08:17

Morning Edition had a segment on the Trans-Pacific Partnership and EU-U.S. trade agreement today. The piece began with a speech by President Obama in which he asserted that exports have been one of the fastest growing sectors of the economy. This is not true in any meaningful sense.

What matters for the economy is net exports, not exports alone. If GM shuts down an auto assembly plant in Ohio and replaces it with one in Mexico, which then ships the cars back to the United States, this would show up as an increase in exports. However, it would be associated with a loss of jobs and output in the United States since it means that imports will have grown by even more.

Much of our trade has this character. If we look at net exports, trade has actually been a drag on growth in 2013. Presumably President Obama understands this fact and was simply trying to deceive his audience to promote his trade agenda. NPR should have exposed this deception rather than assisting President Obama in accomplishing this goal.

The piece also repeatedly refers to these deals as "free trade" agreements. This is inaccurate. Many of the provisions in the proposed agreements have little to do with trade, as was explained in the segment, and some will actually increase barriers, as is the case with rules that will lead to strengthened copyright and patent protection.

 

Comments (5)Add Comment
...
written by Last Mover, December 27, 2013 8:39

Exactly. What Obama actually said was if you like the job you have now from exports, you can keep it, just in case you don't like the jobs from net exports not created by TPP.
...
written by sherparick, December 27, 2013 9:12
Actually, I don't know if President Obama, or for that matter most of America's political and media elite understand this concept. I think that they accept a meme that has been propagated for almost 30 years of "trade is good." All the important CEOs and investors they meet and fundraise from tell them this and that the "U.S." (confusing their interests as members of the corporate elite with the interest of the commonwealth), needs more "trade agreements." The evidence of a flat median wage going back 40 years and that now 67% of the working population makes less than the average wage is evidence that such trade agreements do not create a broadly shared prosperity.
so let me get this straight
written by djb, December 27, 2013 10:11

So

we export parts and supplies to mexico, so that american cars can be built there for lower wages

and these cars are then imported back to the us

but the parts and supplies we send down there that are for building the cars that are intended to be sold in america

are considered as "exports"

nice

viewer II
written by viewer, December 27, 2013 2:26
djb, actually the parts were mostly made in china then imported here for export to mexico for assembly.
There Are Barriers To Trade
written by John, December 27, 2013 8:02
American economists see trade through the prism of America. What many of these professionals fail to see is how trade is practiced from the "other side." Most other countries have industrial policies that support local industry where the US does not. Trade treaties address these practices.

Take the EU as an example. The EU imposes high tariffs on all imported goods from the US. Yes, that is correct high tariffs. They do so because their is no reciprocal trade agreement. But when you import products from Hong Kong to the EU, there is no such import duties. That is because the EU and Hong Kong have a trade agreement.

Eliminating import tariff helps improve efficiency. Rather than have products held at customs awaiting payment, zero tariff allows door - to - door shipment. It saves a load of time.

High import tariffs are still around and are enforced in many countries.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.

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