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No, the USA don’t lose in any trade deal

The United States does not have a trade agreement with China, Not yet.

April 8, 2016 

Expanded trade with China over the past 15 years has cost the United States at least 2 million jobs.

Cracking down on trade with China, by taxing the cheap consumer goods shipped to our store shelves, could cost millions of additional jobs. That both of these things can be true is the conundrum of trade, the breakout issue of the 2016 presidential election.

Democrats have long debated globalization and its consequences in their primary campaigns, particularly in the Rust Belt, a tradition Bernie Sanders and Hillary Clinton are continuing.

But Republicans, led by Donald Trump, are suddenly bashing trade, too.

On both sides, the issue has become a leading scapegoat for lost jobs and stagnating working-class wages, and rejiggering “bad” deals has become a common promise to restore middle-class prosperity. Many of the campaign promises, though, rest on myths. Here are the most egregious of them.

1. America is “losing” in bad trade deals, particularly with China.

“When was the last time anybody saw us beating, let’s say, China in a trade deal?” Trump asked in his campaign launch last summer, using a line he repeats in some form in nearly every public appearance. “They kill us.”

Conservative commentator Pat Buchanan wrote this year that “to understand why Detroit [looks] as it does, while the desolate Shanghai Richard Nixon visited in ’72 is the great and gleaming metropolis of 2016, look to our trade deficits.”

The United States has increased trade with China over the past two decades, and that increase has cost more than 2 million U.S. jobs, according to calculations by a team of economists led by MIT’s David Autor.

There is a lot of evidence that the Chinese have manipulated their currency over much of that period, effectively making it easier for Americans to buy their products and harder for Chinese consumers to buy American products, thus artificially inflating the U.S. trade deficit.

(It’s worth noting that in the past year, China has allowed its currency to rise in value against the dollar.)

Still: The United States does not have a trade agreement with China, neither a bilateral or a multilateral deal — much less a good one or a bad one.

The two countries trade on baseline terms set by the World Trade Organization;

Trump has long criticized America’s decision under President Bill Clinton to agree to China’s entry to the WTO. If the next president wants to change those terms, he or she would need to enact change at the WTO (nearly impossible, in the short term), negotiate an agreement directly with the Chinese (not remotely on the table) or pressure China through other means, such as officially declaring it a currency manipulator (theoretically possible and relatively simple procedurally).

But when Trump says he would “immediately start renegotiating” America’s trade deal with China, he’s talking about something that doesn’t exist.

2. America is “losing” in auto trade with Japan.

In a Michael Crichton-esque throwback to the 1980s, Trump loves to toss Japan into his triad of great trade villains, along with China and Mexico — especially in terms of automobiles. “You look at Japan,” Trump told The Washington Post. “They send their cars in here by the hundreds of thousands. You go to Los Angeles, you look at those docks, and these cars get driven off those boats at 40 miles an hour. You’ve never seen anything like it. They just come pouring into our country.”

That’s a widely held view in former auto-manufacturing strongholds such as Michigan, where Japanese cars are still hard to find.

Such places have suffered “from car buyers’ turn away from patriotic consumerism,” author Edward McClelland argued in The Post last year.

But while it’s true that Japan exports cars to the United States, it doesn’t do that nearly as much as it used to, even though Toyotas, Hondas and Nissans dot the list of best-selling automobiles.

Today, many Japanese brands build vehicles in the United Statesmore than twice as many autos as those shipped from Japan into U.S. ports.

In the mid-’80s, America imported 3.5 million cars from Japanese factories every year. By 2013, those imports were down by 50 percent.

3. Getting tougher on trade would supercharge the U.S. economy.

Trump’s economic plan boils down to cutting taxes and renegotiating trade deals, including the nonexistent China agreement.

He told The Post he could generate revenue to pay off $19 trillion in federal debt within eight years without raising taxes.

“The power is trade,” Trump said. “Our deals are so bad.” Sanders suggests the same thing in calling for his own protectionist policies: “We should have a trade policy which represents the working families of this country, that rebuilds our manufacturing base.”

As leverage to cut better deals, Trump has threatened tariffs on China and Mexico. Sanders has also raised the threat of tariffs.

Economic models don’t generally predict that such ideas would rev up the U.S. economy, though — quite the opposite.

A model by Moody’s Analytics, prepared at the request of The Post, predicts that Trump-style tariffs would push our economy into recession and throw millions of Americans out of work. A more optimistic model, from economist J.W. Mason of the Roosevelt Institute, estimates that tariffs would probably reduce America’s gross domestic product by about 1 percent — not a huge effect but also not the growth boom that opponents of free trade predict.

4. Better deals would bring back lost factory jobs.

This is an explicit Trump promise that blue-collar workers would love to come true.

He’s not the only candidate who believes this: “I’m going to stand up for fair trade,” Sen. Ted Cruz said in an ad he aired before the Wisconsin primary this past week, “and bring our jobs back from China.”

But that argument rests on two dicey assumptions:

1. that companies would move production back to the United States in the event of a trade war and

2. that the “re-shored” production would create as many new jobs as were lost to begin with.

Many economists doubt that companies would move much factory work back from China. They wouldn’t be certain how long tariffs might last, for example, and wouldn’t want to be stuck with higher U.S. production costs if trade flows picked up again under a future president. They’re more likely, Moody’s economist Mark Zandi says, to move factories to Vietnam, Cambodia or other developing nations, unless America is set to restrict trade with all those countries, too.

And in any country, the trend in manufacturing is toward automation of production: Factory output has risen much faster in this recovery than employment has.

5. There’s no way this debate ends well for the American worker.

That’s the conclusion you might draw as economists and business leaders continue to insist that some lost jobs are an acceptable price to pay for the faster economic growth and cheaper consumer goods that trade brings to the country. “If we are not engaged in the global economy, we will lose more jobs,” Julie Granger, the senior vice president of the Metropolitan Milwaukee Association of Commerce, told McClatchy.“There’s no going back.”

But that’s myopic, too. An emerging consensus among trade-focused economists is that the United States needs to do a lot more to compensate the workers displaced by increased trade, through much more aggressive retraining or direct government subsidies to affected workers.

What those workers really need are new, good-paying jobs. Oddly enough, expanded trade of a different sort could help foster the creation of those jobs.

As the liberal economist Dean Baker frequently argues, large swaths of U.S. workers remain mostly shielded from foreign competition, thanks to various licensing requirements to work in their fields here. Those include many high-paid professionals, such as doctors and pharmaceutical executives.

Allowing more foreign-born professionals to compete with native-born Americans in those fields, Baker contends, would push salaries down for some of our highest-paid workers, and prices would fall for consumers.

Income inequality would shrink, the average worker would have more money to spend and the economy might run more efficiently. And perhaps more middle-class jobs really would rush into the economy — at Trump’s 40 miles per hour or otherwise.

Jim Tankersley covers economic policy for The Post. He’s from Oregon, and he misses it.

Theory for what’s behind the rise of ISIS

A year after his 700-page opus “Capital in the Twenty-First Century” stormed to the top of America’s best-seller lists, Thomas Piketty is out with a new argument about income inequality.

It may prove more controversial than his book, which continues to generate debate in political and economic circles.

The new argument, which Piketty spelled out recently in the French newspaper Le Monde, is this: Inequality is a major driver of Middle Eastern terrorism, including the Islamic State attacks on Paris earlier this month — and Western nations have themselves largely to blame for that inequality.

Jim Tankersley covers economic policy for The Post. He’s from Oregon.

Piketty writes that the Middle East’s political and social system has been made fragile by the high concentration of oil wealth into a few countries with relatively little population.

If you look at the region between Egypt and Iran — which includes Syria — you find several oil monarchies controlling between 60 and 70 percent of wealth, while housing just a bit more than 10 percent of the 300 million people living in that area.

(Piketty does not specify which countries he’s talking about, but judging from a study he co-authored last year on Middle East inequality, it appears he means Qatar, the United Arab Emirates, Kuwait, Saudia Arabia, Bahrain and Oman. By his numbers, they accounted for 16 percent of the region’s population in 2012 and almost 60 percent of its gross domestic product.)

This concentration of so much wealth in countries with so small a share of the population, he says, makes the region “the most unequal on the planet.”

Within those monarchies, he continues, a small slice of people controls most of the wealth, while a large — including women and refugees — are kept in a state of “semi-slavery.”

Those economic conditions, he says, have become justifications for jihadists, along with the casualties of a series of wars in the region perpetuated by Western powers.

(Why terror Not performed in these oil rich countries? The theory is flawed if Not including the US policies in the equation)

His list starts with the first Gulf War, which he says resulted in allied forces returning oil “to the emirs.” Though he does not spend much space connecting those ideas, the clear implication is that economic deprivation and the horrors of wars that benefited only a select few of the region’s residents have, mixed together, become what he calls a “powder keg” for terrorism across the region.

Piketty is particularly scathing when he blames the inequality of the region, and the persistence of oil monarchies that perpetuate it, on the West:

These are the regimes that are militarily and politically supported by Western powers, all too happy to get some crumbs to fund their [soccer] clubs or sell some weapons. No wonder our lessons in social justice and democracy find little welcome among Middle Eastern youth.”

Terrorism that is rooted in inequality, Piketty continues, is best combated economically.

To gain credibility with those who do not share in the region’s wealth, Western countries should demonstrate that they are more concerned with the social development of the region than they are with their own financial interests and relationships with ruling families.

The way to do this, he says, is to ensure that Middle eastern oil money funds “regional development,” including far more education.

(Syria and Iraq were to be destroyed because they tended to education, health and infrastructure)

He concludes by looking inward, at France, decrying its discrimination in the hiring of immigrants and the high unemployment levels among those populations. He says Europe must turn away from “austerity” and reinvigorate its model of integration and job creation, and notes that the continent accepted a net 1 million immigrants per year before the financial crisis.

The argument has not gained much notice in the United States thus far. It rests on some controversial principles, not the least of which is the question of how unequal the Middle East is compared to the rest of the world — a problem rooted in the region’s poor quality of economic statistics. In his paper last year, Piketty and a co-author concluded inequality was in fact quite high.

“Under plausible assumptions,” the paper states in its abstract, “the top 10% income share (for the Middle East) could be well over 60%, and the top 1% share might exceed 25% (vs. 20% in the United States, 11% in Western Europe, and 17% in South Africa).”

Those would, indeed, be jarring levels. They are the high end of the scenarios Piketty lays out in the paper. Whether they are a root cause of the Islamic State is a debate that is very likely just beginning.

Daesh erects statue to its founder: The ISis Magazine Dabiq wrote


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