China Killed 1 Million U.S. Jobs, But Don't Blame Trade Deals Candidates on the campaign trail have blasted NAFTA and the TPP. But the rhetoric has been wrong, says an MIT economist, noting it's trade with China that's done a number on U.S. manufacturing jobs.
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China Killed 1 Million U.S. Jobs, But Don't Blame Trade Deals

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China Killed 1 Million U.S. Jobs, But Don't Blame Trade Deals

China Killed 1 Million U.S. Jobs, But Don't Blame Trade Deals

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KELLY MCEVERS, HOST:

For decades, economists pushed for more open international trade. They say it's good for the U.S. economy. But recent research shows when it comes to China, trade has hurt American workers more than the experts predicted. This week, NPR and some member stations are reporting on trade for our project A Nation Engaged. Now NPR's Chris Arnold looks at why the issue resonates with voters this election season.

CHRIS ARNOLD, BYLINE: If you're Bernie Sanders and you want to get your supporters fired up at a rally, bashing trade deals like NAFTA and the TPP is a good way to go.

(SOUNDBITE OF ARCHIVED RECORDING)

BERNIE SANDERS: Every disastrous trade agreement which has cost us millions of decent-paying jobs...

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DONALD TRUMP: The TPP is a horrible deal.

ARNOLD: Here's Donald Trump in a primary debate on Fox.

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TRUMP: It's a deal that was designed for China to come in, as they always do, through the back door and totally take advantage of everyone. And we don't have smart people making the deal.

(APPLAUSE)

ARNOLD: Actually, China isn't even a part of the TPP trade deal, so as far as Trump's comments there...

DAVID AUTOR: That's off-the-scales wrong.

ARNOLD: David Autor is a labor economist at MIT. He says the political rhetoric is often a confused mess, but he says it's tapping into something that's very real.

AUTOR: I think what politicians are correctly responding to is the reality that the last 35 years have been bad ones for blue-collar Americans.

ARNOLD: Wages have been stagnant, and millions of manufacturing jobs have disappeared. Now, you can't just blame trade, though. Technology plays a very big role here. With computers and automation, factories in all kinds of other workplaces need fewer people, and that kills a lot of jobs. Autor says by comparison, if you look at NAFTA and trade with Mexico, that really has not been very harmful for U.S. workers, but China - his research shows that's a different story.

AUTOR: China's rise is really kind of a world historical event. This is the largest country in the world. It has caused a wholesale substantial contraction of U.S. manufacturing employment.

ARNOLD: Autor says in less than a decade, starting in the year 2000, trade with China destroyed about 1 million U.S. manufacturing jobs. Now, trade theory doesn't say that all workers will be protected. It says that trade will make both countries better off. But what happened here?

OK, let's forget about China for a moment and consider U.S. trade with another country - France. The U.S. makes good airplanes and cars, of course, and the French - well, the French make good cheese.

ARNOLD: Have a little bag of...

AUTOR: Oh, my God.

ARNOLD: ...My goodies.

AUTOR: OK.

ARNOLD: So here I have some French cheeses.

AUTOR: OK, there we go.

ARNOLD: I'm sitting with David Autor in his office at MIT, and in the middle of our interview, I pull out some useful items to help him explain how trade is supposed to work.

ARNOLD: For you, David, I brought some...

AUTOR: OK.

ARNOLD: ...Little cars.

AUTOR: Matchboxes.

ARNOLD: Yeah.

AUTOR: Matchbox cars.

ARNOLD: So I'll be France, and you're America with the cars. So how does this work where we both win?

AUTOR: I say, you know, you make some really good gourmet food there, Chris, and we'd sure like to eat it. I guess I could take some of my Chevy workers, and I could say, you know, go spend two days a week making cheese, and you know, stop putting on hubcaps. But they probably wouldn't be very good at it, and the end result would be...

ARNOLD: Bad cheese.

AUTOR: ...Bad cheese, fewer cars.

ARNOLD: So instead of that...

AUTOR: Why don't we just trade? And I'll give you some trucks, and you give me some gourmet food, and we'll both be doing the think that we're good at. We'll be focusing on our area of compared advantage.

ARNOLD: And this is the magic of trade. With two countries doing what they're best at with the same number of workers and the same amount of money invested together, they can create more higher-quality stuff than either of them could separately. In a sense, it creates wealth for both countries.

China was a bit different, though, because for one thing, it was a huge, and it began exporting all kinds of things that U.S. manufacturers were already making, just doing it cheaper. And much more quickly than economists predicted, China was able to transform its rural society with about a billion low-wage workers into a cheap-labor manufacturing superpower.

AUTOR: It was the proverbial boulder, you know, sitting at the top of a mountain for a hundred years. And one day, it just started to roll down, and you know, it is rather disruptive to those in the valley below.

ARNOLD: That would be the American manufacturing workers getting squashed by the Chinese boulder.

AUTOR: I mean, I don't want to go to far with that analogy because we still win from trade with China.

ARNOLD: Everything from the shoes that you're wearing, your watch, kitchen appliances, your phone - so many things in our lives are cheaper because of international trade that overall, despite the loss of jobs, Autor says that the U.S. and China still both come out ahead. The problem, though, is that these benefits are diffuse, but the harm, the pain - that's concentrated.

AUTOR: If I lose my job at a furniture factory where I've worked for decades, no amount of sort of, you know, cheaper toys and raincoats at Walmart is going to make me whole again.

ARNOLD: So Autor wishes that this is what the national conversation could be about. Instead of bashing trade deals, he'd like to see a lot more focus on what we could do to help workers who've been displaced by trade. He says other developed countries do a much better job of this, and the U.S. is pretty lousy at it. Chris Arnold, NPR News, Boston.

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