On Tue, 23 Mar 2004, Nathan Newman wrote:
> A blog post I did, but I'm curious how Doug (and others) who doubt the
> importance of trade as a source of lost jobs would respond?-- NN
Just a few comments. One, these back of the envelope calculations can't be right. To start with, according to one of your favorite sources, Business Week, the total number of manufacturing workers in China is about 100 million, of which only 35% are involved in export. (http://www.businessweek.com/bwdaily/dnflash/oct2003/nf2003106_8722_db010.htm) And since those 35 million aren't simply exporting to the US, but to the whole world, the ones in direct competition with US workers in your model would be a fraction of 35 million.
On the other side of the equation, the Americans they would be competing with to supply goods to the American people are not the entire American workforce, but the fraction of the 14.5 million employed in manufacturing who supply the US domestic market. The 108 million in services are not in competition.
Furthermore, since it is perfectly possible to lose jobs in manufacturing and gain them in services (it's been going on in the US for half a century), it is perfectly possible at least theoretically that this can also happen internationally. It is not given that there has to be net loss. It is something that would have to be determined by closer analysis.
Lastly, while I agree that Chinese wages are kept down by repression, that was true before too. If we compare before and after the great manufacturing boom, things have gotten better for Chinese workers. It hasn't removed repression. But it has substantially improved their standard of living. If you want to make a bi-national balance sheet like this and keep it honest, you have to find a way to weigh our loss in standard of living (if net loss there is, considering all workers) against their gain.
I'm not trying to dismiss the argument that jobs are being displaced. I think it's an argument that deserves serious consideration. I don't entirely rule out that we might be looking at something unprecedented. But once you start looking at it seriously, the econometrics are complex.
Michael