Trade Myths and Manufacturing

By August 27, 2007Trade

U.S. trade deficits have hit the manufacturing economy hard, as our nation exports its good jobs abroad. Right? That, at least, is the line of argument that anti-trade interests frequently push.

Then what explains the similar decline in manufacturing jobs in Japan and Germany, both with histories of trade surpluses? (Recent story on Japan and a piece from December on Germany.)

William F. Buckley writes about the trade issue and manufacturing in his latest column, in which he sings the praises of Alan Reynolds’ recent book on economics, “Income and Wealth.” Buckley:

How to cope with all the thunder about U.S. trade policies? Since Japan and Germany have run chronic trade surpluses for many years, Reynolds notes, statistics showing greater loss of manufacturing jobs in those countries than in the U.S. “contradict all trade-related explanations for the (unproven) belief the United States has long been suffering wage stagnation or increasing wage inequality.”

And on the U.S. wealth spectrum?

On page 203, for example, Reynolds lists the most popular superstitions of the derogating class, including the assertions that 80 percent to 90 percent of U.S. households have experienced no increase in real income for 25 years, and that only the top 1 percent to 10 percent have received any significant benefits from the growth of productivity.

“Not one of those statements is even remotely close to being true,” Reynolds writes. “It is difficult to imagine how so many of the nation’s leading economic journalists and economists claim to believe not just one or two of these incredible ideas, but the entire package.”

A timely column, as Congress returns from the August recess with trade agreements with Peru, Panama, Colombia and South Korea on the agenda (we hope).

Join the discussion One Comment

  • Demi says:

    Reducing the trade deficit requires increasing exports and decreasing imports. That requires inducing foreigners to buy more U.S. made goods, and inducing Americans to “switch” their spending from imports to domestic made goods. Market economies accomplish this through changed relative prices. That calls for exchange rate adjustment that makes foreign goods more expensive for US consumers, and US goods cheaper for foreign consumers. The U.S. deficit with China reflects that US need export more to China.
    Demand for many US products in China are very strong,but there are few, if any, effective methods for US SMF’s to access Chinese buyers and meet the demand. AC-Ali enables US businesses to list their company and product descriptions in English. AmeriChinaB2B will translate these descriptions in Chinese and put them on its China Business platform http://www.acb2b.cn. which attracts a large number of Chinese importers and distributors looking for American products to import to China.
    Welcome to AmeriChinaB2B( http://www.acb2b.com/ ) to begin your business trip of China.

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