by Spencer P Morrison, NEE
Most Americans Support Trade Theoretically, but Don’t See Practical Benefits
New public opinion data from Pew Research finds that while Americans support global trade in principle, many are skeptical of its practical benefits—particularly regarding job creation and wage improvements.
Pew’s report is based on surveys conducted among 30,133 respondents in 27 countries between May 14 and August 12, 2018.
From the report:
Americans and publics in advanced economies are especially skeptical of trade’s role in boosting wages – only about three-in-ten in the United States and across the other advanced economies surveyed subscribe to this view. Slightly more Americans think trade lowers prices and generates new jobs (37% and 36%, respectively). Among the other advanced economies polled, a median of 47% link trade to job creation, while 28% say prices decrease thanks to trade.
People in emerging markets are even more dubious of trade’s impact on prices – a median of just 18% in these countries say it drives prices lower. But publics across the nine emerging markets surveyed are enthusiastic about trade’s other economic benefits: A median of 56% think trade leads to more jobs and 47% say it improves wages.
Of course, the American’s observation that trade doesn’t seem to create jobs or raise wages is correct. Consider that since 2001, when China joined the World Trade Organization, America lost 5 million manufacturing jobs and a further 7 million predicate jobs (ancillary employment that depended upon factories as economic anchors).
Likewise, the NAFTA-induced Mexican trade deficit currently displaces a net 1.7 million jobs (both anchors and predicates). This is in spite of the fact that President Bill Clinton promised the American public that NAFTA would create millions of new jobs, while at the same time protecting American workers from cheap Mexican competition. This was a lie.
There is also a substantial body of evidence showing that American wages are negatively distorted by foreign competition. For example, the Economic Policy Institute found that even purported “free trade” deals have, on balance, harmed American workers.
This makes sense when you think-through the logic: global free trade subjects Americans to wage-competition with people in developing nations. These people often earn just a fraction of what Americans make due to market asymmetries. Some asymmetries could potentially be mitigated by negotiating better deals—imposing tougher environmental laws on China would raise their business costs, for example. However, most are baked-into their respective economy: undeveloped markets are cheaper because they’re undeveloped, and no amount of legal harmonization will change this fact.
Regardless, competition reduces prices (in this case, the value of labor), which harms American workers.
This is a problem because most Americans work for a living. Thus, the majority of Americans are actually harmed by international free trade policies, while the capital-owning minority, and those whose jobs aren’t (immediately) threatened by offshoring benefit enormously.
Free trade doesn’t just generate wealth, it also redistributes it, which can lead to big social problems down the road.
Regardless, the data suggests that many Americans are receptive to the principles underlying President Trump’s trade agenda. This is good news.