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Home Publications Blogs Beat the Press Washington Post Continues Myth that Trade Has Not Hurt Manufacturing Workers

Washington Post Continues Myth that Trade Has Not Hurt Manufacturing Workers

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Wednesday, 01 May 2013 07:22

The Washington Post is one of the most ardent supporters of the policy of selective protectionism. This policy is designed to redistribute income upward by deliberately putting less educated workers in direct competition with low-paid workers in the developing world, while maintaining or increasing protectionist barriers that prevent highly educated professionals like doctors and lawyers from facing the same sort of competition. The predicted and actual result of this policy has been to redistribute income upward to the protected class.

In order to advance this agenda the Post routinely publishes pieces that attempt to conceal the extent to which the current pattern of trade has hurt manufacturing workers and the whole segment of the labor force that might compete with these workers for jobs. Today it gives readers a segment "dispelling myths about manufacturing." Myth # 2 is:

"Trade and offshoring drove the decline in manufacturing in the U.S."

The piece then tells us the real culprit is productivity growth, not trade. It blames the rapid productivity growth of the years 2000-2010 for the loss of more than 5.5 million manufacturing jobs over the period.

The data suggest a different story. Productivity growth in manufacturing is not new. The 3.3 percent annual rate of growth over this period was impressive, but it's not hugely different from the 2.7 percent rate the country experienced from 1950 to 1979. In that period manufacturing employment increased by 30.6 percent, from 14.8 million to 19.3 million.

The modest difference in productivity growth in these two periods explains only a tiny portion of the difference in employment outcomes. The fact that the United States had a surplus in trade in manufacturing items throughout the first period, while it saw huge growth in its trade deficit in the second period, explains far more of the difference in outcomes.

 

Comments (4)Add Comment
Productivity growth
written by Squeezed turnip, May 01, 2013 9:44
A summary statement from the Census Bureau:
The Nation's international trade balance in goods and services improved to -$43.0 billion in February from -$44.5 billion in January (revised), as exports increased more than imports.

At this rate of improvement, we'll hit the break even point in only 4 years or so!

As far as what hurt manufacturing, it wasn't trade policy (according to the WP) but it wasn't productivity (as proved by Dean), no, what it must be is the increase in upper management salaries, the concentration of wealth into an upper crust, the ballooning of corporate bribes profits, and the collapse of corporate innovation as a result.
shifting locations...
written by pete, May 01, 2013 10:33
Part of the issue is shifting locations. Manufacturing has traveled south toward freer labor markets. This takes time, i.e., there is short term displacement. The funny thing is Texas has horrible welfare support, meager public shools, and low wages, but is drawing in workers. Go figure.
...
written by Ellis, May 01, 2013 10:35
Is industrial production growing or shrinking? Isn't it two-thirds higher than it was 20 years ago? Despite the trade deficit, industrial production does grow.
The biggest problem for industrial workers is not trade, but that they do not at all benefit from the enormous productivity increases that they are responsible for. On the contrary, productivity is used by business owners as a weapon against them.
By liberal economists like Baker concentrating on trade, they divert the discussion from the real issues, thus aiding the business owners.
...
written by dilbert dogbert, May 01, 2013 10:29
Not only Joe6Pack was subjected to competition. His employer was also. The result was manufacturers racing to add capital to the process and reduce the need for Joe6Pack. Same thing happened when Canadian soft wood products were targeted by the US. The Canadians just upgraded their mills and still could under price US mills.

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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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