"China trade costs US 1.5 million jobs"

[TexasLawyer]

From Asia Times

http://www.atimes.com/atimes/China/GB09Ad05.html

Asia Times is publishing on its site a comprehensive and lengthy economic study performed by Dr. Robert E Scott, who is the director of international programs at the Economic Policy Institute (link to Institute is available at the end of AT article). Really interesting article.

Feb 9, 2005
China trade costs US 1.5 million jobs
By Robert E Scott

The rise in the United States' trade deficit with China between 1989 and 2003 caused the displacement of production that supported 1.5 million US jobs. Some of those jobs were related to production or services that ceased or moved elsewhere; others were jobs in supplying industries. These jobs reflect the effect on labor demand - in lost job opportunities - in an economy with a worsening balance between exports and imports. Most of those lost opportunities were in the high-wage and job-hemorrhaging manufacturing sector. The number of job opportunities lost each year grew rapidly during the 1990s and accelerated after China entered the World Trade Organization (WTO) in 2001. The loss of these potential jobs is just the most visible tip of China's impact on the US economy.

During the 14-year period covered by this study, there has been a significant shift in the kinds of industries suffering job displacement, a shift that runs counter to initial expectations. Where the largest impact was once felt in labor-intensive, lower-tech manufacturing industries such as apparel and shoes, the fastest growth in job displacement is now occurring in highly skilled and advanced technology areas once considered relatively immune, such as electronics, computers, and communications equipment.

Major findings of this study

The loss of job-supporting production in the United States due to growing trade deficits with China has more than doubled since it entered the WTO in 2001. The 1.5 million job opportunities lost nationwide are distributed among all 50 states and the District of Columbia, with the biggest losers in numeric terms being California (199,922), Texas (99,420), New York (81,721), Pennsylvania (69,822), Illinois (69,668), North Carolina (62,698), Florida (60,026), Ohio (58,094), Michigan (50,991) and Georgia (46,848).
The 10 hardest-hit states, as a share of total state employment, are Maine (14,951, or 2.47%), Arkansas (19,123, 1.67%), North Carolina (62,698, 1.65%), Rhode Island (7,548, 1.56%), New Hampshire (9,443, 1.53%), Indiana (43,533, 1.50%), Massachusetts (46,463, 1.46%), Wisconsin (39,668, 1.43%), Vermont (4,211, 1.41%) and California (199,922, 1.39%).

China's exports to the US of electronics, computers and communications equipment, along with other products that use more highly skilled labor and advanced technologies, are growing much faster than its exports of low-value, labor-intensive items such as apparel, shoes and plastic products. Consequently, China now accounts for the entire US$32 billion US trade deficit in advanced-technology products (ATP). China is also rapidly gaining advantage in more advanced industries such as autos and aerospace products.

China's entry into the WTO was supposed to provide openings for a sufficiently rapid growth in US exports to reduce the trade deficit with China. While the export growth rate has increased since 2001 (from a very small base), the value of those exports has been swamped by a rapidly rising tide of imports. The WTO is a free-trade and investment agreement that has provided investors with a unique set of guarantees designed to stimulate foreign direct investment and the movement of factories around the world, especially from the US to low-wage locations such as China and Mexico.

<much more>

[aquart]

1. Gosh, weren't we smart.

[madrchsod]

2. my brothers and sisters

in the steelworking industries watched our jobs leave america starting in the mid to late 70`s.
we have nothing to export to china so that idea of exporting our goods was false and they knew that at the time. the clinton and bush whitehouse pushed the treaty for the investors of cheap labor capital

[htuttle]

3. I knew a guy who carried a picture of factory assembly machine around

Back in about 1989 or so.

He had the snapshot in his wallet. It was apparently a picture of the machine he used to work on sitting in a factory in China. They actually moved the machine from Milwaukee to China.

I have no idea how he got the picture, but he used to show it and say, "Look, here's a picture of my job....it's now in China."

I met him while driving a taxi -- he was driving one too.

Remember when graduating from High School, and getting a job at "The Mill" used to mean you were set to buy a house and raise a family, ie., the 'Middle Class American Dream'?

You can barely get an efficiency apartment on a High School Diploma nowdays. In fact, you'd probably have to share to split the rent.

[Igel]

15. I watched the Bethlehem Steel Sparrows Point

plant go from 35k employees when I was in elementary school to having about 3000 (many of them were security guards) when I was in college.

Specialty steels, stricter controls, economy of scale ... the "L" blast furnace was their last ditch effort. Too little, too late.

[wildmanj]

4. jobs

people don't always get what they want but they almost always get what they deserve-----the politicians stole our country one job at the time and we stood aside and did nothing

[gizmo1979]

7. And we're still sitting around doing nothing!

They aren't done.That 1.5 million is not stagnant jobs are lost everyday.But not to worry Bush has all those good paying jobs lined up for us at wal-mart.

[BigBearJohn]

5. This really deflates me. I feel like cattle being led to the slaughter

[NYC]

16. We are.

Even the cattle who know they are being led to slaughter can't stop it.

[DemoTex]

6. Yet SC textile workers love Bu$h and DeMint.

Go figure.

[TexasLawyer]

9. It's because Bush and DeMint will keep them safe from...

married gay couples.

[Anakin Skywalker]

12. They Love him for his "morals".

:puke: blech!

[this_side_up]

8. Free Trade is quite a deal

...

Wages were good, ranging between $12 and $22 an hour. The plant refined 1 million tons of sugar beets into 3 million 100-pound sacks of sugar during an average campaign season.

Ralph Burton, president and CEO of Amalgamated, blamed the layoffs on free trade agreements and U.S. marketing policies that permit large sugar imports from overseas. The mounting economic pressure from cheap imports resulted in a cutback in this season's processing output to about 800,000 tons, he said.

In addition, Amalgamated's contract growers in Oregon and Idaho reduced sugar beet acreage by 16 percent in the last year at the company's request, Burton said.

"Our country right now seems to be obsessed with transferring agriculture jobs to other countries," he said. "We have yet to recognize that being able to supply our food is a national security item."

http://www.oregonlive.com/search/index.ssf?/base/news/1107608217300720.xml?oregonian?nwg

[NYC]

17. More than half the food in the U.S. is imported.

Burton is correct. It is a national security issue.

It is an issue that we now depend on foreign countries for food, everyday products, and even military & defense things.

Maersk (a Danish company) shipped some of our stuff overseas. A Chinese company made the inferior cots (some of which collapsed) that our soldiers were sleeping on in Kuwait.

Some people profited from this. The country as a whole suffers from it.

[ctaylor]

10. Sounds like someone hasn't read their Adam Smith

This sounds like simple Mercantilism analysis to me. Wasn't that disproven like 200 years ago? Jobs are not a zero sum game.

I agree that we need to worry about what type of jobs will be available for entry level and low skill workers of the future. Freaking out over long-disproven economic models isn't going to help, though.

I do agree that Chinese mfg. is a problem. I just don't think that this article hits on the right reason. The problem I see is that the PRC is essentially running a 'company town'. The thungs in charge artificially keep their people's wages below their free-market value by a combination of corruption, prohibiting labor from organizing and excersizing its right to bargin for higher salaries/better conditions, and currency value manipulation. I think they are doing this for two reasons. One is to simply allow the political-class to skim more off the top. I suspect the other is to make China's mfg. costs appear artificially low so that they can get outside investment for rapidly building up their industrial base. Hmm.... A real fascist state trying to rapidly build its mfg. base and coveting land they don't currently have under their jackboot. I wonder if we should worry* about that?

But it doesn't help us analyze the problem by artifically portraying the division of labor that allowed us to climb out of the stone-age as suddenly being a terrible thing. Of course people are going to focus on their core-competencies and trade for other items. Obviously that is going to have geographic trends. Even if we try to stop outsourcing with trade tarrifs, the general trend of evolution in American jobs will continue through things like immigrant labor and automation. I think the political questions we need to be asking are:

1) What are entry level workers going to do in America in the future, and are there any changes in the tax and regulatory environment that we need to make to make it easier for those workers to get those jobs and then move up to higher paying ones?

2) Are there jobs that are so important to nat'l security that we need to keep those skill-sets in the country (or at least in a reliable allied nation like Canada) even if that means doing so at a higher cost? Higher cost, btw, means slower economic growth and therefore eventually a lower overall standard of living and/or higher unemployment, so we have to be very sure its worth it every time we say "yes" to protectionism. Keeping domestic-content laws on strategic products from being watered down (and perhaps adding "reliable ally source" alternatives) is probably the best way to to that IMHO.

Either that or we should just all become Amish. That should "freeze" our labor market so that no one ever has to worry about having to learn a new career. At least until some other nation that didn't cripple their economy comes and takes us over.


*This might be a good opportunity for some young Democrats to get a welld deserved reputation for being strong on national defense, btw.

[ctaylor]

13. oops

Obviously that should be "thugs", not "thungs".

[htuttle]

18. The cow has left the barn at this point

I don't know if or when NAFTA and GATT are up for renewal -- they may be permanent. But if I were to get a chance to renegotiate them, or redo the treaty back then, I'd add two clauses:

1) Minimum environmental and human rights requirements (such as no child or slave labor, etc...), else be subject to punitive tariffs.

2) Require that workers be allowed the right to collective bargaining, ie., unionization.

Point one would mean that countries that have sensible and humane environmental and human rights protections aren't continually undercut by those countries that don't have them (such as China).

Point two would open the door for more rapid global wage equalization. In China (and Burma and others), unauthorized (ie., non-state) labor unions are considered criminal. There's no way for the workers there to even attempt to raise their wages.

Any future trade agreements should include at least these two requirements as a starting point.

[ctaylor]

19. I second that.

:)

[VirginiaDem]

20. I'm basically with you...

I would add that we have to be ready and able to retrain workers so they can get into other areas. What Ricardo/Stolper-Samuelson "prove" is that a nation benefits overall from trade but that those benefits are distributed unevenly. We're land and capital abundant and labour scarce, so those in capital and land benefit while labour is hurt by trade expansion (minus the benefits of cheaper consumer goods). This means we should be taking all or a significant part of those theoretical savings and plunking them into safety net/retraining programs, which we are obviously not doing.

[kodi]

11. So long as bankers make their money no one cares about workers

The globalists who ballyhoo this as further integration of the world economy seem not to understand one fundamental item, i.e., ultimately, the US is the world's enforcer of laws and trade agreements and weakening it's economy will only make it harder for the US to be the world's policeman in these areas.

One reason the Japanese and Chinese buy US treasury bonds is that they know they need to US to use its military might to back up international agreements that benefit them and this enforcement can only be done by a solvent US government. In other words, they are buying American protection, and at a cost lower than if they had to invest in their own armed forces to gain the same international stability.

[ctaylor]

14. Maybe the Japanese...

... but I have a hard time believing that the Chicoms would deliberately try to bolster the U.S. military.

[kodi]

21. no "arms race" allows the Chinese to concentrate on internal economics.

They are letting the US bear the cost of policing the world as they build their economy into superpower status.

Right now the Chinese need stable foreign markets for their goods. If they had to ensure the stability of the global system of trade on their own, they could not do it without vast increases in military spending; spending sufficient to wreck their economy.

If they tried right now, they would go the way of the Soviet Union.

The Chinese (and the rest of the world) are outsourcing to the US the military task of global enforcer of trade, land, and legal issues.

The US spends more on military than the rest of the world combined. It is what the US brings to the table in international situations. We're the guys with the guns.

Right now, what we are getting back is a global transfusion of money to support us in this "mission."

[barb162]

22. yes, we give away our jobs, our industry, our technology, our science

and a few other things and prety soon we will have nothing left here. Why can't our government seem to understand we need FAIR trade instead of this rapacious free trade. We need to get jobs back here even if the cost to the US is higher because in the end it will be lower cost, less welfare, more tax payers, less personal bankruptcies, etc. Ou r country cannot survive if we send all of our tech and jobs overseas