One of Donald Trump’s signature issues during the presidential campaign was his assertion that bad trade deals had cost millions of American manufacturing jobs, and his promise to do something to reverse that doleful trend. As with many of Trump’s assertions, these claims brought only scorn from the purveyors of respectable opinion, who insisted either that the economic dislocations caused by free trade are comparatively minor and temporary, or that manufacturing job losses aren’t the result of free trade at all, but of automation, the same automation that is causing American manufacturing to be more productive than ever. President Obama, ever attuned to the demands of respectable opinion, dismissed Trump, declaring that “some of those jobs of the past are just not going to come back” and mocking Trump for suggesting otherwise. (It would take a “magic wand” to bring those jobs back to America.) It turns out, though, that the voters were interested in what Trump was saying. Indeed, it is doubtful that Trump would now be President if he had not taken up the cause of American manufacturing, since his victory was the result of narrow wins in Michigan, Pennsylvania, and Wisconsin, all states formerly dependent on manufacturing.
It also turns out that Trump was right, and respectable opinion wrong. As Gwynn Guilford notes in an important new article at Quartz, even academic economists are beginning to conclude that imports from China cost up to 2.4 million American manufacturing jobs between 1999 and 2011, and that “offsetting employment gains in other industries never materialized.” In addition, the belief that automation rather than trade is behind the deep decline in manufacturing employment is based “on a misreading of the statistics,” according to economist Susan Houseman, cited at length by Guilford. In essence, Houseman found that economists have imputed qualitative gains in the computer sector, a small portion of American manufacturing, to the entire manufacturing sector, thereby masking serious problems. Guilford quotes Houseman as saying that “We didn’t have the intelligent debates about what was going on with trade . . . because lots of people were denying there was any problem, period.” However, by removing the computer sector from the statistics, Houseman found that real manufacturing output was lower in 2016 than it had been in 2007.
Guilford cites other evidence showing that respectable opinion is wrong. Between 2000 and 2014, 78,000 American manufacturing facilities shut down, which would not have happened if American workers were being replaced by robots rather than foreign workers. After all, as Guilford notes, robots, no less than people, have to work somewhere. Indeed, American manufacturing uses fewer robots than most of our competitors, which is not what one would expect if automation had been the cause of the disappearance of a third of all American manufacturing jobs between 2000 and 2010—which stunningly represents a greater percentage of manufacturing-job loss than occurred during the Great Depression. Guilford also brings home why this is so important, noting that manufacturing jobs “tend to pay better, and create opportunities for learning skills that are particularly important to workers with less formal education.” In addition, “[f]actories also encourage innovation by attracting research and development (R & D) facilities. . . . [But] when plants shutter and are moved overseas, R & D centers almost always go with them.”
Some of the purveyors of respectable opinion are even starting to take notice. In February, Foreign Affairs ran an article entitled “How American Foreign Policy Got China Wrong.” Among those who got things wrong were “free traders and financiers who foresaw inevitable and increasing openness in China . . . ” National Review’s Rich Lowry, who devoted an entire issue during the Republican primaries to anti-Trump polemics, chastised his colleagues Ramesh Ponnuru and Jonah Goldberg for failing to recognize that, “On immigration and China trade, Trump is closer to the national Republican consensus than his conservative detractors.” Even more surprisingly, Lowry republished some warranted criticism of Treasury Secretary Mnuchin’s decision to suspend retaliation against China for her predatory trade practices in favor of talks intended to cajole China into reducing her massive trade surplus with the United States by buying more U.S. agricultural and energy exports. Even if China agrees to buy more American soybeans and natural gas, such a deal would do nothing to help American manufacturing. Indeed, it would help give America the export profile of a Third World economy.
In the past, the manufacturing sector provided well-paying jobs to millions of Americans all across the country, giving stability to many communities and also to American politics. The hollowing out of this sector has both devastated many communities and brought instability to our politics. Any effort to “make America great again” must include a revival of manufacturing.