Ive arrived. The strange thing is that this article lacks an agency to explain why the US manufacturing industry has become so hollow after China’s accession to the WTO. Although China does not meet WTO standards, the United States has promoted this move. First, the United States accepted the North American Free Trade Agreement. When the Samuelson-Stalper theorem clearly stated that it would not create jobs, the Clinton administration falsely claimed that it would create jobs. When China considers joining the WTO, the impact on manufacturing employment will be undisputed.
Secondly, the author curiously puts China’s competitive advantage only in labor costs, ignoring environmental arbitrage, because the lower costs of Chinese manufacturers are also because they do not have to comply with Western pollution control standards.
Having said that, this article effectively refutes the “let them eat training” method to deal with workers whose job types have been withdrawn from their hands.
Author: Amitrajeet A. Batabyal, Arthur J. Gosnell Professor of Economics, Rochester Institute of Technology.Originally published on dialogue
In December 1978, the Chinese leader Deng Xiaoping By strengthening trade and cultural ties with the West, economic reforms were introduced, which greatly changed China’s economy.
Since the beginning of the 1990s, these reforms have brought China into what it is today: one who owns Dynamic And an economy that is essentially market-driven, which is also the world’s Second largest.
Since then, American residents have enjoyed low-priced goods exported from China, but many communities that produce goods that compete with Chinese manufacturing exports have suffered losses Unemployment and recession.
This negative impact of Chinese exports on U.S. manufacturing employment is often referred to as the “China shock.” A recent study Studies have found that although this shock stabilizes around 2010, its harmful sequelae will continue for many years, especially in certain industries, such as Furniture, games and toys, as well as children’s toy bicycles or cars.
I am a Professor of Economics Who has research Regarding China, knowing when these trade impacts will end has allowed me and other researchers to study what long-term demographic aftershocks are occurring in American communities and how to best respond to these aftershocks. These policy prescriptions can be applied to other industries that are experiencing rapid employment changes due to macroeconomic trends.
How did China get so many benefits so quickly
As part of the increasing openness to the world, China has joined WTO – International agency that sets global trade rules – 2001.Believe that increasing economic liberalization will lead to Political liberalization In China, the United States began to conduct strong trade with the country.
International Trade Theory Teaching free trade between countries makes them better than not doing trade at all.and Recent studies Emphasizes that the economic gains the U.S. gains from overall trade are positive but small, and added 2% to 8% of GDP.
The source of this shock is China Comparative Advantage Manufacturing, especially labor-intensive commodities. Comparative Advantage Is the ability of a country to produce goods or services at a lower price cost Than its trading partners.China has one adequate supply The relationship between labor and capital and natural resources.
As China began to liberalize foreign trade and manufacturing exports increased sharply, the U.S. economy was hit by economic shocks. That’s because the goods produced in the United States cannot compete with the cheap Chinese goods that flood the market.
This The U.S. economy lost 1.5 million manufacturing jobs Between 1980 and 2000, and More than 5 million Between 2000 and 2017.
The decline in manufacturing employment is Unaccompanied This is the same amount as the employment growth in other sectors of the U.S. economy.
Today, even if the surge in China’s manufacturing industry ends, its impact on the United States still exists.
Ten years after the end of China’s trade shock in 2010, the United States still has a large number of local economies. Studies have shown that the social structure, including the marriage system, is wearing down because Workers lost their jobs And there is no They can live on a stable wage.
The lack of wages subsequently led to a decline in demand for local goods and services, Home value and property tax income. Also have Increase The number of people receiving government assistance (such as medical assistance).
How to help communities that are still suffering
Economists generally support “People-oriented” rather than “place-oriented” policies. People-oriented policy Focusing on the trapped population and often focusing on retraining, while local-based policies focus on investing in the communities where workers live, such as revitalizing the city center.Investment in communities hit hard by Chinese imports often focuses on people-centered policies because economists It is generally believed that investing in workers can help them leave poverty-stricken areas with few employment opportunities Go to new places with better job markets, schools and other amenities.
The most famous human-centered U.S. government program to help workers displaced by trade competition is Workers’ Trade Adjustment Assistance. It helps workers obtain job training, relocation assistance, medical insurance subsidies and unemployment benefits.
However, relative to the scale of unemployment, Program is small, Providing too little relief to most workers who were unemployed due to import competition in the 1990s and 2000s.
Nobel Prize winner Abhijit Banerjee and Esther Duflo point out The TAA program needs to be significantly expanded.Although the House of Representatives is Take measures To reauthorize and expand the TAA program, it is too early to determine what the final legislative council will look like.
Revisiting location-based policies
Although economists are in favor of a people-oriented policy, there is evidence that people laid off due to import competition from China often Do not move Due to unaffordable housing, childcare costs, and the uncertainty associated with finding a new job.
The places left behind will never completely die out.On the contrary, in Such a place There are fewer and fewer people getting married and having children. More children are living in poverty, the number of alcohol and drug abusers increases, and the likelihood of young people graduating from college decreases.
Therefore, the United States may now need to rethink economic policy to focus on two key points: the need to provide adequate assistance to workers in large-scale layoffs, and recognize that such assistance usually needs to be localized.
Two lessons for the future
Although the local economy suffers Great Depression Recovery The employment rate before the recession was very fast, and the decline in coal and China’s trade shocks were both caused Long-term unemployment, reduced income and slow population decline.
Policymakers can apply the lessons learned from this trade shock to effectively respond to the next possible large-scale layoffs.
As the economy transitions from fossil fuels, we will continue to see unemployment In coal mining and oil industry.
Although the use of renewable energy may increase Create new jobs, There is no guarantee that they will be anywhere near where local unemployment occurred. Therefore, the prospect of large-scale, partial unemployment still exists. New policies are needed to promote employment growth in areas damaged by long-term unemployment.
Evidence in U.S. and Europe It shows that political support for populist nationalists tends to be greater in regions suffering from massive unemployment dominated by trade.
If policies to promote employment growth in impoverished areas are not implemented, we may see more populist nationalists in power in the United States