Economy & Business

Trump’s Trade Wars Would Avenge Only Mythical Job Casualties

Shipping containers at the Port Newark Container Terminal in Newark, N.J., in 2009 (Mike Segar/Reuters)
NAFTA and Chinese imports eliminate far fewer jobs than the U.S. economy’s creative destruction.

America’s government declares “war” promiscuously — on poverty, on drugs, on cancer, etc. — except when actually going to war, which the nation has done often since it last declared war (on June 5, 1942, on Romania, Bulgaria, and Hungary). But the incipient war du jour is being postponed. Treasury Secretary Steven Mnuchin says the Trump administration is “putting the trade war on hold.” The one with China, that is. Others can continue.

The armistice-before-the-war is good news for farmers, who could use some. USA Today reports that the net income of U.S. farmers has fallen by more than half since 2013, to its lowest point since 2006, the steepest decline since the Depression. For this, blame productive farming around the world (supply outpacing demand), rotten weather in America, and perverse government in Washington. China and Mexico, responding to uncertainties caused by U.S. indignation (about China selling too much to consenting American adults, and about NAFTA enabling mighty Mexico to exploit America), are finding alternative sources of soybeans, pork, and beef.

There is nothing like a calamity for taking one’s mind off one’s troubles, and anti-immigration Republicans have another affliction for American farmers. The Wall Street Journal reports that about half of agriculture workers are undocumented immigrants. Because more Mexicans have left than entered the United States between 2009 and 2014, the immigrant agriculture labor force is aging — and moving to higher-paying construction jobs. The Journal:

As farmers struggle to find workers, more production has moved abroad. Avocado imports have doubled over the last eight years while U.S. production (measured by acreage) has declined by about a quarter. Since 1999, domestic production has fallen for oranges (by 36 percent), grapefruits (61 percent) and asparagus (69 percent). Imports of fresh fruits and vegetables have swelled. . . . This hurts workers in related industries like transportation and food processing.

This is the Republicans’ approach to succoring “victims of globalization.”

Mortgage rates have risen to the highest level since 2011, they are far from done rising, and a National Association of Realtors economist says that every percentage-point increase can reduce home sales 7 to 8 percent. Simultaneously, the administration’s protectionism is further increasing the cost of homeownership with tariffs on imported Canadian lumber (framing lumber is about 18 percent of the average new home’s selling price). Bloomberg Businessweek says this adds an average of $1,360 to the cost of building a single-family home, the price of which has risen $6,388 since January 2017. Steel can sometimes be used as a substitute for lumber, except . . .

In the 1830s, in Grand Detour, Ill., a young blacksmith designed a self-scouring steel plow that could turn the Midwest’s heavy black topsoil. John Deere then started a company and now his name is on big green machines everywhere. Today, however, the administration’s steel tariffs are causing Deere & Co. to raise prices, which will injure its competitiveness, unless the demand for American machinery is price-inelastic. Perhaps the Trump administration’s protectionists, who know so much (how much Americans should consume of this and that import, and at what prices), know this about the machinery market.

The last know-it-all administration so aggressive about controlling wages and prices was also Republican (Richard Nixon’s).

Not content with bossing around Americans, even unto telling them which washing machines to buy, the administration’s protectionists have demanded that Mexico, as part of a renegotiated NAFTA, institute a $16 minimum wage for Mexican factory workers. So, a Republican administration purports to know more than Mexico’s labor market knows about the proper price of Mexican labor. But, then, the last know-it-all administration so aggressive about controlling wages and prices was Republican (Richard Nixon’s).

All this dictating and renegotiating is supposed to protect American jobs from the menace of NAFTA, which according to one of its ardent critics destroyed 1 million U.S. jobs in its first 20 years (1994–2014). An academic study argues that trade with China destroyed 2.4 million jobs between 1999 and 2011. But Don Boudreaux of George Mason University’s Mercatus Center says this means it took NAFTA two decades to destroy as many jobs as are erased by the normal churning of the American job market on average every 18 days. And the so-called “China shock” eliminated in 13 years as many jobs as are eliminated by the U.S. economy’s process of creative destruction, on average, every 41 days. So, if there are to be trade “wars” with China and Mexico, they will be launched to avenge job “casualties” that are far fewer than those routinely inflicted by the domestic processes that produce American prosperity.

© 2018, Washington Post Writers Group

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