June 05, 2017
Dean Baker
Truthout, June 5, 2017
There has been a strange debate among many liberals and progressives since the election as to whether they should have empathy for the people who voted for Donald Trump. After all, Trump is a pretty reprehensible character who has pledged to do some pretty awful things in the White House. Is there a reason that people should have empathy for the voters who put him there?
Whatever answer you pick to that question, there is another set of questions that should be simpler for progressives to answer. What are the right economic policies to be pursuing for the working class? This is a question of designing policies that may help people who voted for Trump, but will also help tens of millions of people, largely people of color, who did not vote for Trump. Progressive economic policy has to place the interests of ordinary workers, and those unable to work, at the top of the agenda.
One item that should be laid out at the beginning of this discussion is that government policy, and specifically its trade policy, did in fact screw millions of workers and their families in the last decade. It is very fashionable to pretend the massive loss in manufacturing jobs was due to automation — the natural march of technology, not trade. That is a lie.
From December 1970 to December of 2000, manufacturing employment was virtually unchanged, apart from cyclical ups and downs. In the next seven years, from December of 2000 to December of 2007, manufacturing employment fell by more than 3.4 million, a drop of almost 20 percent. This plunge in employment was due to the explosion of the trade deficit over this period, not automation.
There was plenty of automation (a.k.a. productivity growth) in the three decades from 1970 to 2000, but higher productivity was offset by an increase in demand, leaving total employment little changed. This was no longer true when the trade deficit exploded to almost 6 percent of GDP in 2005 and 2006 (more than $1.1 trillion in today’s economy).
There really is not much ambiguity about this story. Does anyone believe that if we had balanced trade, and produced another $1.1 trillion or so worth of manufactured goods, that we would not be employing more manufacturing workers? It is incredible that many policy types try to deny the obvious impact of the trade deficit on manufacturing employment.
Furthermore, both parties have their fingerprints all over this one. In addition to the bipartisan support for trade measures like the North American Free Trade Agreement and China’s admission to the World Trade Organization, we also have the high dollar policy begun under Robert Rubin and Bill Clinton and continued under George W. Bush. This was the proximate cause of the soaring trade deficit and this was deliberate policy.
As Eswar Prasad, the International Monetary Fund’s chief China officer in the last decade recently said in reference to China’s policy of deliberately propping up the value of the dollar:
“There were other dimensions of China’s economic policies that were seen as more important to US economic and business interests ….. [such as] greater market access, better intellectual property rights protection, easier access to investment opportunities, etc.”
In other words, the US government was perfectly happy allowing China to pursue a currency policy that cost millions of US manufacturing jobs, as long as it got concessions on copyrights for Microsoft, drug patents for Pfizer and increased access to Chinese financial markets for Goldman Sachs. So yes, it was trade and trade policy that ruined the lives of millions of working class people (of all races) in the Midwest and destroyed their communities. If anyone is interested in talking seriously to Trump voters, it might be a good place to start by acknowledging that fact and that the leadership in the Democratic Party was complicit in these policies.
While we can’t run history backwards (the lost jobs are not coming back) there are obviously things that can and should be done to benefit working people. The top of the list is to prevent the Trump budget cuts, including the gutting of Medicaid and the repeal of the Affordable Care Act. These cuts will leave large numbers of working class voters uninsured.
We can also reverse the trade policy of the last decade, putting a priority on a reducing the value of the dollar to make our goods and services more competitive internationally, even if it means Bill Gates will collect somewhat less money for his copyright on Windows. We may not be able to restore the jobs lost in Ohio and Michigan, but another 1-2 million manufacturing jobs would be a big boost to the two thirds of the labor force that lacks a college degree.
And, we could run full employment policies. Among other things, this means stopping the Federal Reserve Board from raising interest rates and slowing the rate of job creation even when there is no evidence of rising inflation. The inflation rate has consistently been below the Fed’s 2 percent target ever since the recession, and in recent months it actually has been falling. Allowing more job growth not only gives more people jobs, but it will give tens of millions of workers the bargaining power they need to see wage gains.
This would be a great agenda to help tens of millions of working class people, including many of the white ones who voted for Trump. Folks can keep arguing about whether the Trump voters in this group deserve our empathy, but these are clear pro-worker policies that progressives should be pushing, even if we may not like some of the people who would benefit.
