Technology & Trade

Trade: The Scapegoat for America’s Social Problems?

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There was an odd flap a couple weeks ago after the leak of slides from Peter Navarro arguing that a “weakened manufacturing base,” presumably caused by trade, has caused a wide variety of social problems including not only the expected factory closings and job losses but also increased drug use, declining marriage rates, increases spousal abuse, and a higher abortion rate.

Laughter from the swamp, buoyed by the slides’ failure to provide any data to support the various contentions, pretty much eliminated any possibility of a serious discussion of Navarro’s claims. It turns out, however, that not everybody was laughing, and the issue is, as usual, more complicated than it seems at first chuckle.

Clearly, failure to provide backup data weakens his arguments, and some of the more far-fetched ones are not supported by data readily available to the public. (Although it is a fair point to argue that if one does not look at the whole country but instead drills down to specific impacted communities, results might differ. Of course that is true about most assertions — if you pick your sample carefully enough you can prove most anything).

At the same time, nobody should be surprised by the basic contention that economic decline and job loss have societal consequences. You can see that pretty quickly by overlaying a map of the parts of the country that have suffered the greatest manufacturing employment declines with one that shows the greatest prevalence of opioid use. Job loss and the accompanying loss of self-worth and growing desperation go hand in hand with a variety of self-destructive behaviors. People may not like to work, or they may not like the particular work they do, but working nonetheless provides an important sense of self-worth that helps keep our society on an even keel.

The more important criticism of Navarro is his failure to demonstrate that trade is the cause of this sad sequence of events. Others have done that in part. The now-famous Autor, Dorn, and Hanson study showed a link between Chinese imports and U.S. job losses, although Autor has rejected both Navarro’s more far-fetched assertions and his trade policy prescriptions as not supported by his study. But even accepting a link does not establish trade as the sole or even main cause of the pain and misery parts of our population are suffering. Most economists would say that productivity improvements, driven by technological advances, have had a far larger impact on jobs than trade. In some cases, coal being a good example, it is hard to argue that imports had any significant direct impact; yet coal communities in West Virginia stand out as examples of many of the problems Navarro is talking about. There are simply other factors at play that are more important.

Understanding that the problem is more than trade, in turn, pushes the debate in the direction of other solutions besides restricting imports, and here is where Navarro is guilty as well. He does not provide viable solutions to the problems he identifies. This is another example of the fable that I wrote last week that exposes the gap between policy making and reality.

It also reminds me of Michael Douglas’ final speech in “The American President,” when he says his opponent is only interested in two things: “making you afraid of it and telling you who to blame for it.” We are being told to be afraid of trade and that the foreigners are to blame for it and for our social problems. I think Americans are too smart to buy that, but to make an effective contrary case you need good alternatives. You can’t fight something with nothing. I’ve discussed alternatives in the past and will do so again, but for today let’s just leave it at Americans are smart enough to cut through all the noise and figure out where Navarro is right and where he is wrong, and in the future we will look at more poll data that demonstrates that.

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