How economists calculate manufacturing output

May 7, 2018 12:58 AM

So when Trump won the presidential election, the true-blue data believers dismissed his victory as the triumph of rhetoric over fact. His supporters had succumbed to a nativist tale with cartoon villains like “cheating China” and a shadowy cabal of Rust Belt-razing “globalists.”

But it turns out that Trump’s story of US manufacturing decline was much closer to being right than the story of technological progress being spun in Washington, New York, and Cambridge.

Thanks to a painstaking analysis by a handful of economists, it’s become clear that the data that underpin the dominant narrative—or more precisely, the way most economists interpreted the data—were way off-base. Foreign competition, not automation, was behind the stunning loss in factory jobs. And that means America’s manufacturing sector is in far worse shape than the media, politicians, and even most academics realize.
[...]

How, then, do you reconcile the epic employment slump of the 2000s with the steady rise in output? The obvious conclusion is that factories needed fewer people than they did in the past because robots are now doing more and more of the producing. That’s tough for factory workers, but US manufacturing is doing fine.

That rests on the basic assumption that the manufacturing output data reflect the actual volume of stuff produced by US factories. It’s a reasonable assumption to make. Unfortunately, it’s not an accurate one.

Link to the damn paper:

Susan Houseman et al.: Offshoring Bias in U.S. Manufacturing Journal of Economic Perspectives Vol. 25 No. 2 Spring 2011

Susan Houseman: Understanding the Decline of U.S. Manufacturing Employment, preprint, 2018

and many many more links to economic analyses in the article itself.

posted by kmt (40 comments total)

Productivity improvement is not just or even mainly about automation. And why would it be a problem if manufacturing employment declined for one reason and not for another? Either the workers where there are no longer jobs matter or they don't.
posted by hawthorne at 2:15 AM on May 7, 2018 [4 favorites]

Consider the shuttering of some 78,000 manufacturing plants between 2000 and 2014, a 22% drop.

Reading between the lines of the Qz article in the OP, it feels as though somewhere between 2000 and 2005, the data started getting massaged to promote the very framing that this FPP is now demolishing.

I remember in 2004, in Chicago, working in the industrial design field, discussing the challenges to local industry due to the flight of manufacturing to China, and thus much of the value add work related to product development.
posted by infini at 3:02 AM on May 7, 2018 [3 favorites]

Further, we've had discussions on the blue before on the decline of US manufacturing. Little in this OP should be a surprise, unless you count the lack of context and history that tends to accompany most US analysis and opinions in the media.
posted by infini at 3:05 AM on May 7, 2018 [7 favorites]

Hm, I don't think this is just re-treading the obvious. Yes, manufacturing employment in the US has gone down since 2000, and some folks say this is because of trade. But it's also been down in certain regions since the 60s, down as a shard of overall employment since the 40s, and between 2000-2005, only down in the US (not other developed economies)—all these don't sound at all like trade is the explanation. A focus on measurement, as in Houseman et al, could help us understand why different indicators seem to point in different directions.

A few pull-quotes from a 2016 Washington Post interview with Houseman:

On the US vs other developed economies:

U.S. job losses are not unique. Other advanced countries have been exposed to the same forces of globalization. Many have experienced substantial job losses in their manufacturing sectors in recent years and in Britain, they have been on par with losses in the United States.

On how one should react to these findings:

Trump’s blunt policy proposals — like tearing up our past trade deals and slapping higher tariffs on imported goods — are bad ideas... [T]rade broadly benefits many Americans... [O]ur negotiators need to better take into account workers’ interests and avoid terms that will lead to large-scale layoffs. That, essentially, reflects Hillary Clinton’s position on trade deals.

On policy solutions:

We need to make sure that our trading partners do not keep their currencies artificially low.... Government subsidies for research and development...will also improve the competitiveness of domestic manufacturers.... [I]ncome and retraining assistance for dislocated workers and economic development assistance for their communities should be an integral part of the policy mix.

I was under the impression that the Renmibi has appreciated greatly in the past several years, I'd love to hear why Houseman still thinks it's greatly undervalued.

Also, is it just me, or does Houseman imply that we need to drastically adjust our measurements of US real GDP? If we're systematically overestimating the contribution of computer manufacturing to the point that it dwarfs all other manufacturing, that should mean our measurements are ~10% too high, right?
posted by vasi at 4:41 AM on May 7, 2018 [4 favorites]

There's other policies involved, how can I go onto ebay for a small part or cheapo electronic device and get it in a few days with free shipping from China? What I wonder is who (US Senate or Congress family member nudge nudge wink wink) is getting insanely wealthy on that small shipping subsidy?

Trump is wrong is so many ways but expressing that something is deeply askew is a truth that rings clearly to many.
posted by sammyo at 5:02 AM on May 7, 2018 [1 favorite]

Trade is a symbolic issue for many Americans. The notion of a "trade deficit" rings true and carries much symbolism among a lot of of Trump's supporters (and sadly among many on the left), despite it being a pretty mistaken concept. It's sort of like saying I have a trade deficit with my local Kroger: I give them all this money, and all I get in return are these stupid groceries. The trade deficit argument fetishizes manufacturing over trade, regardless how inefficient manufacturing may be. The extent that China subsidizes manufacturing, either directly or indirectly via things like postage breaks and currency manipulation is a subsidy of American consumers and their ability to buy. In aggregate, is anyone is losing, it's not Americans.

I know plenty of folks in Rust Belt states are desperate for the anti foreign manufacturing message, but the writing has been on the wall for decades. The decline of labor intensive manufacturing in the US has been observable longer than I've been alive.

Strangely enough (or maybe not so much), Trump carried sectors such as farming, an industry highly dependent on trade, and his support followed cultural lines more than not, so I posit that actual trade was not really at the heart of Trump's trade message, but rather the symbolism of "Made in America" bullshit. Shocking, I know.
posted by 2N2222 at 5:27 AM on May 7, 2018 [11 favorites]

that something is deeply askew is a truth that rings clearly to many.

That only remains true as long as you don't fill in 'something' with anything specific.
posted by PMdixon at 5:28 AM on May 7, 2018 [7 favorites]

There's other policies involved, how can I go onto ebay for a small part or cheapo electronic device and get it in a few days with free shipping from China? What I wonder is who (US Senate or Congress family member nudge nudge wink wink) is getting insanely wealthy on that small shipping subsidy?
As I understand it, this has more to do with international postal treaties than anything else.
posted by hawthorne at 5:56 AM on May 7, 2018 [2 favorites]

Only a fraction of manufacturing, but does cars becoming more durable play into this?
posted by Nancy Lebovitz at 6:22 AM on May 7, 2018 [1 favorite]

does cars becoming more durable play into this?

Cars being made with less steel might hurt the steel industry, but how would cars being designed in a more complicated way with crumple zones reduce opportunities for manufacturers to make money?
posted by justsomebodythatyouusedtoknow at 6:55 AM on May 7, 2018

Every year you don't buy a car because your old one is still fine is money you spend on not-cars instead of cars.
posted by GCU Sweet and Full of Grace at 7:15 AM on May 7, 2018 [4 favorites]

A factor I don't see mentioned is that there has been a shift in the separate contributions of design and manufacturing. For example, much of the cost of a iPhone is due to the contribution of all those programmers at Apple. That's design. The actual cost of manufacture is difficult to determine from published reports but it's generally considered to be pretty small (though more than what FoxConn was getting for assembling parts manufactured elsewhere).

I think there is also an economic factor in how much manufactured items leverage additional employment. Farm equipment would be an example of low leverage: 1 man per $1 million machine. Cell phones have high leverage: what is the total employment in all those cell phone stores? Of course, the cell phone employment is going to ebb away just as computer store employment has.
posted by SemiSalt at 7:50 AM on May 7, 2018 [1 favorite]

why would it be a problem if manufacturing employment declined for one reason and not for another?

Wars, leaders, nations all ebb and flow on these kinds of impressions and how closely they follow reality.

I mention not just the actual reason, but the impression and the space in between, because people in Greece (and other targets of austerity) suffered mightily on the idea of what caused a certain kind of economy.

Thanks for the post.
posted by Reasonably Everything Happens at 8:24 AM on May 7, 2018 [3 favorites]

Foreign competition, not automation, was behind the stunning loss in factory jobs.

I thought this was the conventional explanation? The conventional response (and the part which may be an oversimplification) being that the benefits of cheap imports outweigh the costs of lost manufacturing employment.
posted by atoxyl at 8:38 AM on May 7, 2018 [1 favorite]

When the robots seriously become "competent" factory workers they will be available internationally, it will not be bringing manufacturing "back home". It's already starting at Apple plants in China and Asia.

Not just labor but at least in the case of solar panels, it's also lower environmental standards. For every great deal on a solar roof, you're helping to ruin a river in China. Solar's been in the news but all of China's manufacturing "benefits" from lower standards all around. Stay alert in factories there, loosing a finger might mean you loose a day's pay if you bleed too much.

So yes, if we can gut EPA, OSHA, fair wages, we can bring back a lot of manufacturing.
posted by sammyo at 8:56 AM on May 7, 2018 [2 favorites]

I thought this was the conventional explanation? The conventional response (and the part which may be an oversimplification) being that the benefits of cheap imports outweigh the costs of lost manufacturing employment.

I mean the argument is that the good factory jobs went away due to foreign competition, but there's no way to bring them back as good jobs, because while automation may not be cheaper than a factory with low pay, low environmental standards, and low labor standards overseas, the math is a lot different once you actually want to make a factory that pays a living wage in America.

An American factory with American wages and standard is just going to have fewer workers for the same production. Manufacturing, even with the greatest policies, is not going to be enough to employ all the underemployed people in this country.

And I think that's the real argument: mucking about with manufacturing policy is just a sideshow that won't do anywhere near enough to help the real "real" America.

And that, to the best of my knowledge, is mostly people struggling to get by on shitty retail jobs that might be 30 hours a week if their bosses don't cut their hours or screw with their schedules. Sure, I can't imagine I've got the full picture here, but any nostalgia I have for working in a factory has nothing to do with the pride of putting things in boxes for America it's because it had a regular schedule and paid enough to live on. That's what people need. Well and having 3 day weekends because I worked four 10's.

Heck, if you could promise everyone a decent paying job with 3 day weekends, I'd have to imagine you'd be incredibly popular. The question is, what's stopping someone from being able to do that?
posted by Zalzidrax at 10:17 AM on May 7, 2018 [3 favorites]

why would it be a problem if manufacturing employment declined for one reason and not for another?

It matters because the causes matter. The neo-liberal position has been that the decline in manufacturing jobs is inevitable -- that it is a natural consequence of technology and automation. Therefore there is nothing to do about it and we just have to accept it.

But the truth is that the loss of manufacturing jobs was a result of deliberate economic policies by U.S leaders. It was not a natural phenomenon at all.

First, neo-libs confuse the issue by looking at manufacturing jobs as a percentage of all jobs. That shows a steady decline over decades. But this is simply an indication that the service sector has been growing steadily. If you want to have a clearer picture of the plight of manufacturing workers it makes more sense to look at absolute numbers. The number of manufacturing jobs has held steady for decades at around 17 million -- until the late 1990s and early 2000s. Between 1997 and 2007 the number of manufacturing jobs that had held steady for decades suddenly fell off a cliff, declining by 20%, a loss of nearly 3.5 million high paying manufacturing jobs.

The cause wasn't automation because if it was automation, you would have seen a dramatic increase in productivity numbers. But productivity growth during that period was actually pretty anemic compared to previous decades.

The biggest factor was the explosion of the trade deficit in the early 2000s. By definition if you have large trade deficits it means you are trading jobs in the U.S. for jobs overseas. Instead of manufacturing goods in the U.S. you are manufacturing them overseas and importing them.

The ballooning trade deficits weren't inevitable. They were the result of deliberate trade policies established by neo-liberals. They allowed China to manipulate its currency to lower the cost of foreign manufacturing to put U.S. workers out of work. Instead of negotiating trade agreements that were fairer to U.S. manufacturing workers, they instead negotiated agreements to make it easier for multi-national corporations to move manufacturing overseas. They deliberately negotiated to improve protections for white collar workers like bankers, software developers, entertainment companies and pharmaceutical companies at the expense of manufacturing workers. This is a big factor in increasing economic inequality. The neo-libs were allowed to pick the winners, white collar workers, and the losers, blue collar workers.

Trump wasn't wrong about trade policies hurting manufacturing workers. They definitely did. However, tariffs aren't the answer. The horse is already out of the barn. Millions of people have lost their good manufacturing jobs and they are never coming back. Tariffs at this late date will just make things worse, causing more job losses.

So understanding why manufacturing jobs declined so precipitously is vitally important. To accept the neo-liberal argument that those losses were inevitable rather than deliberate prevents developing better economic policies that don't favor the already advantaged.
posted by JackFlash at 11:52 AM on May 7, 2018 [9 favorites]

They allowed China to manipulate its currency to lower the cost of foreign manufacturing to put U.S. workers out of work.

Which terms of which agreements did that?

There's enough real problems around frictionless movement of capital across borders that labor can't cross without buying into incoherent xenophobic conspiracy theories about currency manipulation.

(No one can explain the difference between engaging in currency manipulation and monetary policy - because there isn't one. Every country with its own currency manipulates it every time they print a new bill.)
posted by PMdixon at 1:38 PM on May 7, 2018 [5 favorites]

Seriously? You cannot be denying that China actively manipulated the value of its currency by buying up trillions in U.S. dollars? This lowered the value of the renminbi making Chinese manufactured goods cheaper than U.S. manufactured goods. Lowering the renminbi by 10% is exactly equivalent to putting a 10% tariff on U.S. exports and reducing the cost of Chinese imports by 10%. This subsidy created jobs for the Chinese flocking to the cities and put U.S. workers out of a job.

Yes, China has relaxed its manipulation in the last couple of years and allowed the renminbi to appreciate. That is because the mission has been accomplished. Manufacturing jobs have been moved overseas and they aren't coming back now. Instead of suppressing domestic consumption by Chinese citizens, they have moved to a new phase of encouraging domestic consumption to fuel the manufacturing jobs moved from the U.S. to China.
posted by JackFlash at 2:13 PM on May 7, 2018 [2 favorites]

Then the US actively manipulated its currency by engaging in QE-infinity, and the EU is busy manipulating its currency right now, and let's not even talk about the BoJ.

Also this:

Lowering the renminbi by 10% is exactly equivalent to putting a 10% tariff on U.S. exports and reducing the cost of Chinese imports by 10%.

is true in a world where the only 2 currencies are the dollar and the renminbi. We don't live in that world.
posted by PMdixon at 2:48 PM on May 7, 2018

is true in a world where the only 2 currencies are the dollar and the renminbi. We don't live in that world.

Nonsense. It doesn't matter how many currencies there are. What matters is the relative value of the two currencies of interest in the trade deficit. If China depresses its currency by 10%, it lowers the cost of Chinese goods and raises the cost of U.S. goods by 10%. That is simple accounting. It has a similar effect on the trade balance as a tariff.

Then the US actively manipulated its currency by engaging in QE-infinity

More nonsense. You are making the absurd argument that all actions of central banks are equivalent -- and the even more absurd argument that quantitative easing is an extreme (infinity, ha) form of currency manipulation just because it involves big numbers.

QE was engaged not for currency manipulation but to lower domestic short term interest rates by purchasing domestic assets. It can have a very small secondary effect on exchange rates but not if all central banks are depressing domestic interest rates at the same time. They more or less cancel each other out, which is exactly what happened during the financial crisis when most every country was lowering interest rates.

On the other hand, during the 2000s, China was not buying domestic assets but foreign assets with the deliberate first order purpose of depressing its currency relative to the U.S. You are making the false argument that "everybody does it" so nothing should be done about it. Nothing could be farther from the truth.

China's currency manipulation was responsible for millions of workers losing their good paying manufacturing jobs. U.S. trade negotiators looked the other way because it wasn't their ox being gored, it was just a couple million blue collar workers. They were more interested in making the world safe for multi-national corporations and protecting white collar workers. There are winners and losers in any trade deal and the U.S. was picking the side of the wealthy.
posted by JackFlash at 4:49 PM on May 7, 2018 [4 favorites]

China's currency manipulation was responsible for millions of workers losing their good paying manufacturing jobs.

China's not the first or only one that has pursued export-led growth in order to grow it's economy. China's East and Southeast Asian neighbors have pursued similar strategies at different times starting around the 60s to rapidly industrialize and increase their standard of living. And some of these economies have also been accused of undervaluing their currencies too. In the 80s Trump was bashing Japan, saying the same things he's saying about China now (who during the 80s was just starting to open up).

If what the article says is true, then I'm curious why manufacturing jobs remain steady when Japan, South Korea, Taiwan, Hong Kong, and Singapore followed the same path, but collapsed when China tried it. Yes, China is totally bigger population-wise than all of them combined, but I'm surprised that when those countries (and others, like the Tiger cubs) started coming online, that they didn't even graze US manufacturing jobs.
posted by FJT at 8:53 PM on May 7, 2018 [1 favorite]

iirc, headlines from the early 2000s promoted China mightily - both as a huge consumer market opportunity as well as a location to move manufacturing as it was cheaper and more profitable. In all of these discussions, the role played by management consultancies is often overlooked.
posted by infini at 12:05 AM on May 8, 2018 [1 favorite]

If China depresses its currency by 10%, it lowers the cost of Chinese goods and raises the cost of U.S. goods by 10%. That is simple accounting. It has a similar effect on the trade balance as a tariff.
My starting position is that changes to nominal exchange rates have no lasting effects at all - only real exchange rates matter.
posted by hawthorne at 6:43 AM on May 8, 2018 [1 favorite]

I don't understand the argument that manufacturing jobs should be measured in absolute numbers rather than proportions. Why wouldn't you expect that larger populations would consume more manufactured goods?
posted by en forme de poire at 11:30 AM on May 8, 2018 [1 favorite]

I think it's because proportions obscures the fact that service jobs were growing at the time. So showing the share of manufacturing jobs declining starting from the 1960s to 2000s hides the fact that absolute number of manufacturing jobs actually started to drop in the 2000s.
posted by FJT at 1:24 PM on May 8, 2018

So showing the share of manufacturing jobs declining starting from the 1960s to 2000s hides the fact that absolute number of manufacturing jobs actually started to drop in the 2000s

Again: why is the drop in absolute terms a problem but not that in proportional terms?

If one believes that the key input into $PickBadOutcome is manufacturing employment, why would it be OK for the proportion of jobs in manufacturing to go down so long as the absolute number doesn't drop?

This is not to say a bunch of things didn't happen in the '90s and '00s that one could point to as drivers of increasing income inequality and wage stagnation, but singling out manufacturing employment in absolute terms as a key metric just seems weird to me - especially treating it as some kind of exogenous input rather than an endogenous outcome of the politico-economic context.
posted by PMdixon at 1:32 PM on May 8, 2018 [1 favorite]

Again: why is the drop in absolute terms a problem but not that in proportional terms?

Causes are important, as FJT indicated. The proportional decline has been a decades long trend as the absolute number of manufacturing jobs remained constant but the economy was busy creating lots of new service jobs. For decades, no manufacturing jobs were destroyed. The number was relatively constant.

But in the 2000s as the trade deficit ballooned because of China's currency manipulation, the absolute number of manufacturing jobs plummeted for the first time. That is why the absolute number is significant.

The proportional decline was caused by the creation of new service jobs. The absolute decline was caused by currency manipulation. (Not entirely but to a significant extent. There were other causes like unfavorable trade agreements, "financial innovation", etc.)

Causes matter.
posted by JackFlash at 5:17 PM on May 8, 2018

Then talk about the causes, and tell me how to distinguish between legitimate monetary policy and illegitimate currency manipulation.¹ Don't pick a symbolic effect that won't be reversed and fetishize it.

(QE-infinity is a widely used nickname for QE-3 since it was open-ended, unlike QE1&2, but I apologize for using jargon.)

¹And your domestic/foreign asset distinction won't cut it given that every central bank holds reserves of foreign currencies - hard to get more foreign than that. Was the SNB engaging in currency manipulation when it went on a buying spree for euros to keep its exchange rate floor/peg in place? What about when they dropped it?
posted by PMdixon at 5:41 PM on May 8, 2018

Hard to tell if you are arguing in bad faith or simply being obtuse.

You repeatedly try to conflate every action of a central bank as being exactly the same.

For example, when you say that every country holds foreign reserves you are ignoring the fact that China's foreign reserves are more than 100 times the size of, say, Germany or France. That isn't an insignificant difference.

It should be unnecessary since it is obvious to everyone except you, but you can use the U.S. Treasury's formal definition of currency manipulation if you like. It has three criteria. First is a significant trade surplus with the U.S. of at least $20 billion (China's has been as much as $375 billion). Second is a current account balance of at least 3% of GDP (China's was almost 10% at its peak). Third is persistent one-sided intervention in purchases of foreign currency (China acquired 3 trillion of U.S. dollars alone in less than a decade, triple the reserves of any other country in the world). Contrary to your belief that everybody is just alike, quantities matter.

Deny it if you like, but China has had a deliberate policy of fueling its expansion by depressing its currency in order to stimulate exports. It has relaxed that now somewhat as it has shifted to a new phase of stimulating domestic consumption but that is small comfort to the millions of U.S. blue collar workers who permanently lost their good paying jobs during the 2000s.
posted by JackFlash at 7:45 PM on May 8, 2018

I appreciate the accusation of bad faith.

You repeatedly try to conflate every action of a central bank as being exactly the same.

No. I'm saying that they have exactly the same legitimacy. All monetary policy is currency manipulation. How else would you engage in monetary policy other than by manipulating the value of money? Why are some manipulations licit and others not? And does any currency peg constitute manipulation, because they tend to require large purchases (or sales) of foreign reserves to maintain?

It should be unnecessary since it is obvious to everyone except you, but you can use the U.S. Treasury's formal definition of currency manipulation if you like. It has three criteria. First is a significant trade surplus with the U.S. of at least $20 billion (China's has been as much as $375 billion). Second is a current account balance of at least 3% of GDP (China's was almost 10% at its peak). Third is persistent one-sided intervention in purchases of foreign currency (China acquired 3 trillion of U.S. dollars alone in less than a decade, triple the reserves of any other country in the world). Contrary to your belief that everybody is just alike, quantities matter.

I don't like, because it's a dumb definition made for domestic pandering. It basically amounts to "an export oriented economy probably without North Atlantic consumption levels that does a decent amount of trade with the US." Vietnam meets these standards. And as I keep hammering on, if Switzerland wasn't in Europe so would they - they're $15B short on their trade balance with the US specifically. At the point we're including China, Vietnam, and Switzerland in the same category, it is not a useful category.

(China acquired 3 trillion of U.S. dollars alone in less than a decade, triple the reserves of any other country in the world). Contrary to your belief that everybody is just alike, quantities matter.

They're the largest economy in the world! They have a fifth of the world's population! Of course they're going to need higher levels of reserves than anyone else. That fact alone does not signify anything in particular - because quantities matter, and the quantity of currency in circulation determines how much you need in reserves to meet policy targets.
posted by PMdixon at 6:49 AM on May 9, 2018

So it is your position that China did not have a policy of depressing the value of its currency in order to boost its export economy? It is your position that China's currency policy had no effect on the trade balance between the U.S. and China? And it is your position that the trade imbalance had no effect on the stunning loss of manufacturing jobs in the early 2000s? Well, at least that makes your positions clear. No more needs be said.
posted by JackFlash at 8:48 AM on May 9, 2018

Am I the only one who remembers reading about the way computers were distorting manufacturing figures in about 2000? (I'm pretty sure it was the run-up to the 2000 Presidential election). 16 years later and they never thought to fix it? Despite Moore's Law?
posted by Francis at 8:48 AM on May 9, 2018

So it is your position that China did not have a policy of depressing the value of its currency in order to boost its export economy? It is your position that China's currency policy had no effect on the trade balance between the U.S. and China? And it is your position that the trade imbalance had no effect on the stunning loss of manufacturing jobs in the early 2000s?

I said none of those things. I said that to the extent China is guilty of currency manipulation so is everyone else. Managing exchange rates based on domestic needs and government policy is what central banks do and it's really goofy to single that out as nefarious. And I don't see why export-led development is an illegitimate policy goal for the Chinese government.

I do think that 'balance of trade' is not a useful aggregate number so I guess I will take the position that the net trade balance has minimal effect on any particular outcome. Let's say the US had accrued a trade surplus in that time period because China, say, decided to crack down on movie piracy and money started flowing into Hollywood: why would that change anything about manufacturing jobs?
posted by PMdixon at 10:36 AM on May 9, 2018

I did not say that China was nefarious. I said they were manipulating currency to unprecedented degree. Of course China would establish economic policies to their own benefit, but that is why countries have trade negotiations, in order to balance competing interests.

In the case of China, U.S. trade representatives decided to negotiate for the benefit of white collar workers to the detriment of blue collar workers.

Let's say the US had accrued a trade surplus in that time period because China, say, decided to crack down on movie piracy and money started flowing into Hollywood: why would that change anything about manufacturing jobs?

That is pretty much exactly what happened. The U.S. in their negotiations said they were willing to overlook currency manipulation which damaged blue collar workers in exchange for tighter IP controls which benefited white collar workers. They could have negotiated just the opposite, but instead decided that white collar workers would be the winners and blue collar workers would be the losers.

At least you have conceded that China was engaging in currency manipulation but you still seem to be denying its unprecedented extent and that it had any affect on manufacturing jobs. The entire purpose of their currency manipulation was to boost their manufacturing exports. And the soaring trade deficit in the 2000s, especially in manufactured goods, indicated that it worked. A billion dollars of goods purchased from China is a billion dollars of goods not manufactured in the U.S.

Now you might argue, as many neo-liberals did, that the U.S. got a better deal by favoring white collar workers over blue collar workers, but that is no comfort to the millions who lost their jobs. They certainly have a right to complain.
posted by JackFlash at 11:11 AM on May 9, 2018

The US government engaged in policies that had a predictable effect of increasing income inequality and causing wage stagnation. The US government has a duty of care to US citizens. The Chinese government does not. Given this I find the focus on China's efforts to boost exports as opposed to the US's response to those efforts odd.

Of course patterns of global trade are going to heavily impact employment in tradeable sectors - I'm asking for a reason that this change in the patterns of global trade is special compared to others. If it isn't special, then China is a non sequitur.

"unprecedented extent" is so broad as to be meaningless. What extent would be precedented? What precedent was there for the various negative policy rates implemented in the wake of 2008? You keep saying things like that as if they are self evidently true and make your point for you.

Either China did something special that needed/s to be responded to in a China-specific fashion, or else some generic process - eg the end of the Cold War, lowering of trade barriers, and the spread of containerization generally lowered the friction of moving capital across borders - led to negative impacts on domestic income and wealth distribution. In the latter case China is a red herring. I'm still waiting for you to make an argument for the former.
posted by PMdixon at 1:17 PM on May 9, 2018

You are making the standard neo-liberal argument that rising inequality was an inevitable result of globalization, containerization, etc. Nothing to be done about it.

I'm making the argument that rising inequality was the result of deliberate policies of U.S. government entities. You can't fix those policies if you are unwilling to recognize their effects.

The Chinese government's responsibility is to advocate for Chinese citizens and the U.S. government's is to advocate for U.S. citizens in trade agreements. That is how trade negotiations work. But U.S. policymakers approached that negotiation in a manner that favored the wealthy against the middle class in the U.S.

China's policies were detrimental to a segment of the U.S. population, so I don't see how you can call that a non-sequitur. I'm not saying that the China was wrong to advocate for their citizens. I'm saying the U.S. was wrong to acquiesce in a manner that favored the wealthy against middle class and increased inequality.

U.S. policy towards China was not the only cause of inequality, but it was a significant one, resulting in the loss of millions of good paying manufacturing jobs. To say China is a red herring is the typical "free-trader" neo-liberal response.
posted by JackFlash at 1:57 PM on May 9, 2018

You have no idea what my preferred policies are or would have been. (Hint: nationalize most of the things) I can disagree with you on the causation without disagreeing in the assessment of the outcome. You really need to actually read what people are saying instead of just forcing them to fit into the script you're used to.
posted by PMdixon at 2:13 PM on May 9, 2018 [1 favorite]

I don't know your preferred policies. I am merely pointing out that you are espousing neo-liberal arguments.

I guess we will just have to disagree.
posted by JackFlash at 2:48 PM on May 9, 2018

Neoliberalism is a set of policies. I can only be making neoliberal arguments if I'm arguing for neoliberal policies. I wasn't arguing for any policy, in fact: I was taking the position that your analysis of the root causes is mistaken, with the implicit corollary that this will lead to inefficacy in addressing the effects.
posted by PMdixon at 3:43 PM on May 9, 2018 [1 favorite]