« Goldstone Commission Members Affirm Study FindingsEgypt's Islamists: The Big Bad Wolf »

Economists Shocked, Shocked: We Really Are Losing Jobs to China!

April 14th, 2011

Ian Fletcher

There’s a nice new academic paper just out by an MIT economist and his friends that gives some hard data to back up everyone’s suspicion that the U.S. is losing jobs to China. It’s entitled “The China Syndrome: Local Labor Market Effects of Import Competition in the United States,” by David Autor, and you can download it here if you’re curious.

The bottom line here probably won’t be all that surprising to most ordinary Americans, though it will annoy the living daylights out of most academic economists and our political establishment. In the authors’ own words,

Our study suggests that the rapid increase in U.S. imports of Chinese goods during the past two decades has had a substantial impact on employment and household incomes, benefits program enrollments, and transfer payments in local labor markets exposed to increased import competition. These effects extend far outside the manufacturing sector, and they imply substantial changes in worker and household welfare.

In ordinary language, we’re getting scr*wed, folks. “Welfare,” in this context, doesn’t mean welfare checks; it is the economists’ term for, roughly, “economic well-being.” And the “substantial changes” mentioned are not for the better.

One key discovery of this study is hard data to back up the idea, which I have personally argued for years, that free trade is not a small-government policy. In reality, free trade tends to expand government, by increasing the demand for social services and transfer payments (unemployment, welfare etc.) needed to mitigate its social costs. As the authors put it:

Growing import exposure spurs a substantial increase in transfer payments to individuals and households in the form of unemployment insurance benefits, disability benefits, income support payments, and in-kind medical benefits.

Quite. But don’t think the butcher’s bill is paid for by all this welfare-state generosity. The authors conclude that all this government assistance doesn’t cover the harm done by free trade:

Nevertheless, transfers fall far short of offsetting the large decline in average household incomes found in local labor markets that are most heavily exposed to China trade.

Now here’s the real kicker: the authors calculate that the economic efficiency lost due to increased transfer payments is quite likely big enough to cancel out all the supposed gains in economic efficiency due to trade with China!

Our estimates imply that the losses in economic efficiency from trade-induced increases in the usage of public benefits are, in the medium run, of the same order of magnitude as U.S. consumer gains from trade with China.

In other words, the blithe assumption of conventional economics that “Sure, free trade has its costs, but the benefits are infinitely larger” doesn’t hold up. We’re either not winning out, or winning only peanuts.

Finally, for any readers who have been smugly assuming that because they don’t personally work in manufacturing, none of this affects them, bad news. The authors report that,

Our analysis finds that exposure to Chinese import competition affects local labor markets along numerous margins beyond its impact on manufacturing employment. In particular, while growing exposure to Chinese imports reduces manufacturing employment in a local labor market, it also triggers a decline in wages that is primarily observed outside of the manufacturing sector. Reductions in both employment and wage levels lead to a steep drop in the average earnings of households. (Emphasis added.)

So don’t think there’s anywhere to hide from the China threat.

Make no mistake, people: the case for free trade is inexorably crumbling.

-###-

Ian Fletcher is Senior Economist of the Coalition for a Prosperous America, a nationwide grass-roots organization dedicated to fixing America’s trade policies and comprising representatives from business, agriculture, and labor. He was previously Research Fellow at the U.S. Business and Industry Council, a Washington think tank founded in 1933 and before that, an economist in private practice serving mainly hedge funds and private equity firms. Educated at Columbia University and the University of Chicago, he lives in San Francisco. He is the author of Free Trade Doesn't Work, 2011 Edition: What Should Replace It and Why. | www.freetradedoesntwork.com

No feedback yet

Voices

Voices

  • Dr. Vladislav B. Sotirovic The 2018 Skripal Attack Case The current orchestrated Western policy of total Russophobia, directed by Collective West, can be recorded to start by the British Cabinet of Theresa May – the focal servant-dog to US global…
  • By Sally Dugman This proactive Palestinian Pulverizers of humans, D. Trump who is indirectly responsible for the deaths of many thousands of Palestinian people of all ages, has no standing to say something like this utterly stupid statement about Putin:…
  • Tracy Turner When the Republic Betrays, the Body Must Answer Protest is not a right—it is a judgment passed upon power. A corrupt state standing above law and beyond justice forfeits its legitimacy, and we, the people, are compelled to answer—not with…
  • Tracy Turner The Reclamation of the Republic When, in the Course of human events, it shall become absolutely necessary for the People to dissolve the political ties which have united them to a government that has betrayed its trust to obtain their…
  • Tracy Turner SMELE's (Slow-Motion-Extinction-Level-Events). Not yet common in academia, but it should be. I. Introduction: The Timebombs We Ignore "Not with a bang but a bureaucratic shrug, the world ends." - Revisionist reading of Eliot by the…
  • By David Swanson I wish U.S. academics would spend less time fantasizing choices between various murders with trollies, or playing games with theories about how greedy robots might do diplomacy, and more time on the impeachment problem. The United…
  • Cathy Smith Hidden Bombshells in Trump’s “Big Bodacious Pill” “The most dangerous place to be is between power and its reckoning.” —Rewritten maxim of Beltway survival In the dark guts of Trump’s 2025 legislative monolith—cheekily christened the Big…
  • Robert David A global exposé of how corporations distort science, erase truth, and turn human death into quarterly growth. I. Introduction: When Truth Becomes a Liability In an age when algorithms dictate belief and lobbyists author legislation, truth…
  • Robert David Polluters don’t just dump toxins. They dump stories—engineered by billion-dollar PR firms. They Poisoned the Planet—Then Hired Spin Doctors to Make You Forget When a chemical spill poisons a town, when a pipeline ruptures in a fireball,…
  • By David Swanson, World BEYOND War Switzerland got that way through NEUTRALITY Remarks at Neutrality Colloquium: A Call to Action for Active Neutrality & World Peace, June 26-27, 2025 in Geneva, Switzerland. I grew up in a town in the United States that…
July 2025
Sun Mon Tue Wed Thu Fri Sat
 << <   > >>
    1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30 31    

  XML Feeds

Social CMS
FAIR USE NOTICE: This site contains copyrighted articles and information about environmental, political, human rights, economic, democratic, scientific, and social justice issues, etc. This news and information is displayed without profit for educational purposes, in accordance with, Title 17 U.S.C. Section 107 of the US Copyright Law. Thepeoplesvoice.org is a non-advocacy internet web site, edited by non-affiliated U.S. citizens. editor
ozlu Sozler GereksizGercek Hava Durumu Firma Rehberi Hava Durumu Firma Rehberi E-okul Veli Firma Rehberi