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“Another kick in the teeth”: a top economist on how trade with China helped elect Trump

David Autor’s groundbreaking work on the neglected costs of trade is revealing.

Updated by Zeeshan [e-mail]@vox.com Mar 29, 2017, 8:50am EDT


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David Autor believes both these things to be true: one, that Donald Trump’s diagnosis of trade with China as the source of woe for countless American workers was both accurate and a crucial part of his appeal on his march to the White House. And two, that Trump’s plan to help those workers by cracking down on trade is likely to backfire.

Autor, a leading empirical economist at MIT, has made something of a habit of looking at big sets of data and drawing conclusions that defy the commonly held wisdom of mainstream economic theory. His work is one of the best guides to the economic forces Trump tapped to win the election last year.

Along with economists David Dorn and Gordon Hanson, Autor has published some groundbreaking work over the past few years on how China’s evolution into a manufacturing colossus has created seismic shocks in towns scattered across the American heartland. What they’ve learned is that competition from China, which accelerated dramatically after it plugged into the global economy by joining the World Trade Organization in 2001, has had unexpectedly long-lasting effects on US labor markets.

At least a million people have not only lost their jobs but have struggled a great deal to find new ones to replace them. That period of limbo has in turn radicalized communities politically, caused a plunge in the marriage rate, and increased the share of children born into poverty. Autor suspects that the long-neglected effects of China’s rise on American workers likely helped tip the election to Trump.

Autor and his collaborators’ works have been hailed as some of the most important work .. http://marginalrevolution.com/marginalrevolution/2016/01/autor-dorn-and-hanson-on-what-we-know-about-china.html .. on trade in decades. In modern economics, open trade has generally been regarded as a win-win for the countries involved, and the costs in terms of job displacements have been assumed to be modest and short-lived. Autor’s findings, which surprised even him, have shown that’s not always the case.

I spoke with Autor over the phone about his work on “the China shock” and what Trump gets right and wrong about trade. This transcript has been edited for length and clarity.

[...]

Zeeshan Aleem

What do you think about Trump’s trade vision, which blends closing ourselves off from the world to some degree with scaling down trade commitments?

David Autor

It's extremely naive and uninformed. I don't think it has any basis in economic reasoning about the costs and benefits of trade. I think he is a pure mercantilist — he simply thinks exports are good, imports are bad.

I think the idea of slapping large tariffs, or border taxes, on imports is a very destructive idea on all kinds of fronts. I think tearing up the Trans-Pacific Partnership was an incredibly shortsighted decision; the country that most benefited from us tearing up the TPP was China. They were not a signatory of the TPP, and they didn’t want it enacted because it was meant to basically prevent them from setting the rules of the game in Asia. Now that's exactly what they will do.

http://www.vox.com/new-money/2017/3/29/15035498/autor-trump-china-trade-election

Trump was on to something about the effect of trade with China which helped get him elected, but...