Workers at a shoe factory in Zhejiang Province, China. A new study finds that benefits from trade to the American economy may not always justify its costs in lost jobs. Credit Lang Lang/Reuters
Were the experts wrong about the benefits of trade for the American economy?
The nation’s working class will have another opportunity to demonstrate its political clout Tuesday night, as primary voters go to the polls in Illinois and Ohio, Rust Belt states that have suffered intensely from the loss of good manufacturing jobs. Last week, the insurrection handed Michigan’s Democratic primary to Bernie Sanders while continuing to buoy the insurgent Republican candidacy of Donald Trump.
Voters’ anger and frustration, driven in part by relentless globalization and technological change, may not propel either candidate to the presidency. But it is already having a big impact on America’s future, shaking a once-solid consensus that freer trade is, necessarily, a good thing.
“The economic populism of the presidential campaign has forced the recognition that expanded trade is a double-edged sword,” wrote Jared Bernstein, former economic adviser to Vice President Joseph R. Biden Jr.
What seems most striking is that the angry working class — dismissed so often as myopic, unable to understand the economic trade-offs presented by trade — appears to have understood what the experts are only belatedly finding to be true: The benefits from trade to the American economy may not always justify its costs.
In a recent study, three economists — David Autor at the Massachusetts Institute of Technology, David Dorn at the University of Zurich and Gordon Hanson at the University of California, San Diego — raised a profound challenge to all of us brought up to believe that economies quickly recover from trade shocks. In theory, a developed industrial country like the United States adjusts to import competition by moving workers into more advanced industries that can successfully compete in global markets.