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Home Publications Blogs Beat the Press Why Do the Media Give So Much More Attention to Jobs We Lose Due to Environmental Restrictions Than Jobs We Lose Because of the Trade Deficit?

Why Do the Media Give So Much More Attention to Jobs We Lose Due to Environmental Restrictions Than Jobs We Lose Because of the Trade Deficit?

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Wednesday, 04 June 2014 08:48

It was hard to miss all the news stories the last few days about the jobs that will likely be lost in coal mining areas due to efforts to curtail carbon emissions. And these are stories that should be pursued. Most coal miners will never have another job that pays anywhere near as well if they lose their job in the industry.

Nonetheless a sense of scale would be appropriate. There are a bit less than 80,000 coal mining jobs in the whole country. They will not all go away and the regulations proposed by the Obama administration are being phased in over 16 years. By comparison, we lost roughly 80,000 jobs in coal mining in the eight years from 1985 to 1993, when the labor force was less than three quarters its current size. I don't recall anywhere near the same focus on this far more serious hit to coal country.

By comparison, we just has trade data released this morning showing that the deficit had jumped by $3 billion in April. The trade deficit has been running at a $535 billion annual rate over the last three months. This compares to a $450 billion annual rate over the prior three months. The difference, if sustained, implies a direct loss of roughly 700,000 jobs since GDP would be 0.5 percentage points lower with this larger trade deficit. (This doesn't count the multiplier effect, which would increase the impact by roughly 50 percent.)

It is striking that a rise in the trade deficit that could cost the country 700,000 jobs this year is likely to get so much less attention from the media than the Obama administrations' proposal to reduce carbon emissions, which will cost less than 80,000 jobs over the next 16 years. If the concern is simply jobs, it is a bit hard to explain the fact that job loss due to environmental restrictions is given so much more attention than the job loss due to trade, which is more than an order of magnitude greater and happening immediately.

Perhaps the explanation has something to do with the gainers from the trade deficit. The recipe for reducing the trade deficit is lowering the value of the dollar against foreign currencies. (This is pretty basic, a lower valued dollar makes our exports cheaper to foreigners. Therefore they buy more of our exports. It also makes imports more expensive. This causes us to buy domestically produced goods rather than imports.)

While it is not hard to see a path to a lower valued dollar and a smaller trade deficit not everyone benefits in this story. Walmart has spent decades building up low-cost supply chains throughout the world. It is not anxious to see the price of the goods it is importing increase by 15 to 20 percent due to a lower valued dollar. Similarly General Electric and other major manufacturers have set up operations in Mexico, China, and other low-wage countries. They don't want to lose the advantage they get from cheap labor by seeing the dollar fall in value relative to the currencies of these countries.

Add in the fact that the financial sector also likes a high dollar since it means their money goes farther overseas and you can see why it is hard to put together a political coalition pushing for a lower valued dollar. But honest reporters would focus on what matters for jobs and the economy. 

 

 

 

 

 

Comments (9)Add Comment
..., Low-rated comment [Show]
What Dean didn't mention banana guard was that
written by MIchiganmitch, June 04, 2014 2:36
Green jobs created in the solar and wind industries that replacing carbon jobs with renewable energy jobs will likely far exceed lost coal mining jobs making his point even further. With only 13,000 coal mining jobs left in Kentucky, instead of insisting on what amounts to retaining buggy whip jobs at the turn of the 20th century, perhaps some federal subsidies could be employed to make Kentucky a solar or wind power state if only 13K jobs is the qualifier.
Bananaguard thinks context is meaningless.
written by Squeezed Turnip, June 04, 2014 3:07
Gosh, bananaguard, even my child (28) can figure out that if reporters/repeaters are focusing on job impacts, they would at least mention the 10 times weightier elephant in the room. If you'd rather have the propaganda accepted uncritically and keep your head where the sun don't shine, well, enjoy the aroma. Some people don't get the point of irony even when they recognize it: maybe you have Asperger's Syndrome and your perception actually has nothing to do with Dr. Baker? In other words, it's you, not him.
...
written by urban legend, June 04, 2014 4:43
If today's GDP is $17 trillion, doesn't a $535 billion trade deficit amount to about three per cent of GDP? And wouldn't the theoretical job shortfall represented by that gap amount (before multiplier) be about 4.5 million -- and close to 7 million with multiplier?

Maybe then we could start talking about the possibility of having reached the "natural rate of unemployment"?
Why Do the Media Give So Much More Attention...
written by Sandwichman, June 04, 2014 8:15
Because it's not their job to inform people. It's their job to make money by selling advertising to big corporations.

Next question...
Baker was understating the case. Foreign mercantilism is the curse that won't stop...
written by Indiana Patriot, June 04, 2014 9:07
Dean is absolutely right. If anything he is understating the importance of the trade deficit. The trade deficit (and the promise of foreign mercantilist intervention) also reduces the US economy's long term dynamic potential by depressing investment in manufacturing. If the US hadn't opened itself up to European and Asian mercantilism beginning in the 1970's we would not have had first the growth slowdown and then the shift into absolute economic decline. The $17 trillion potential of 2014 GDP in the current world is vastly smaller than what could have been achieved if the growth rates of 1945 to 1970 had been sustained.

No Tokyo round, meaning no GATT/WTO, no American economic decline.

In the ideal scenario, if arch-protectionist Teddy Roosevelt had risen from the grave and crushed Ford/Carter in 1976 Presidential election then it really would have been "Morning in America" in the 1980's. Instead of incipient decline leading to the absolute catastrophe of the last twenty years.
Add to profit, monopoly, access, long term profit locking and more.
written by jaaaaayceeeee, June 04, 2014 9:29

Longer term media profits depend upon more than advertisers (try making a news website profitable with advertising).

Add keeping powerful sources and advertisers happy, butt-covering timing, blocking proposals that will save working taxpayers money, and false equivalence for future campaign dollars to your lists of news media influences, that trickle down to the TV news from which 90% of voters get their information.

And this crude list is useless, compared to good economics policy reporting, which is evidence based - though responsible economics reporting can be as marginalized as Elizabeth Warren working in a group of Rubinite financial advisors.
Environmental regulation does create employment in my case
written by John Wright, June 05, 2014 9:05
A few years ago my job involved satisfying European environmental requirements related to RoHS (removal of hazardous substances) from printed circuit assemblies.

In my case, this meant the substitution of SN-PB (tin-lead) based solder components and the solder paste used to attach components to boards. Moving to Pb free solder (tin-silver-copper), with its approx 40degree C higher melting point certainly produced employment for many such as chemists who developed higher temperature PCB material, solder manufacturers, process engineers and even me.

I suggested to co-workers that we were examples that "government creates jobs", in this case the European governmental RoHS environmental regulations that US manufacturers needed to follow to be able to ship to Europe and much of the world.
...
written by Nard Dawg, June 05, 2014 9:21
Former Arkansas governor Bill Clinton sure did do Arkansas-based Walmart a favor. Goldman Sachs exec turned Treasury secretary Rubins sure did Goldman Sachs a favor. I guess Summers got his bread buttered by someone too?

Herbert Hoover was more progressive than these neoliberal and neoconservative hacks.

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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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