Today's economy  /  Trade

cartoon of Uncle Sam directing shipping traffic from china to U.S.Nations that avail themselves of the international marketplace outperform those who confine themselves to national boundaries1.  Open markets, free to perform, are the cornerstone of our economic beliefs as Republicans.  Mess with the free market then you don’t have true competition, and who suffers?  The consumer.

 

A major contribution of free trade is a reduction in the cost of living for consumers by making goods and services available at a lower cost.  Unfortunately, there is a downside.  International trade both creates and destroys jobs.  Economies that enjoy international competitiveness will thrive, creating job opportunities, but those that are unable to compete abroad will contract and cut back on employment2.

 

Many people conclude by trading with China, we have surrendered our economic strength and that protectionism will bring manual jobs back.  However, technological change is the predominate cause for the loss of manufacturing employment (4.815 million) not international trade3 (985,000 jobs).  Taking a protectionist turn regarding free trade will not bring jobs back.  But what it will do is kill both today’s and tomorrow’s jobs—4.8 million jobs in 2019 in a full trade war scenario4.

 

The challenge for laid-off workers in finding new employment at a comparable wage is steep, and it may compromise their lifelong earnings potential.  A skill mismatch may also prevent these workers from transitioning to new economic sectors with growth potential.

 

We need:

 

  • Dedicated community college funding to allow individuals to gain or reboot their current skills to become more employable;
  • An increase in the number of apprenticeships
  • Job opportunities in rebuilding our deteriorating infrastructure, for workers unlikely to shift occupations through new skills.

 

A prosperous middle class and investments in human capital are essential to the renewal of US internationalism and our leadership in trade.  Succumbing to protectionism will leave workers’ needs unattended and make us all worse off5.

 

 

 

 

1 Brookings Institute, Big Ideas for America, cited as World Economic Forum, “The Case for Trade and Competitiveness,” September 2015, http://www3.weforum.rog/docs/WEF_GAC_Competitiveness_2015.pdf

2 Brookings Institute, “Big Ideas for America,” by Michael E. O’Hanlon (Editor), location 2936 of 8649.

3 Douglas A. Irwin, “The Truth about Trade: What Critics get Wrong about the Global Economy,” Foreign Affairs 95, no. 4 (2016) 84-95

Brookings Institute, Noland and others, “Assessing Trade Agendas in the US Presidential Campaign"

5 Brookings Institute, “Big Ideas for America,” by Michael E. O’Hanlon (Editor), location 2807 of 8649.

 

 

 

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