President Donald Trump is unique among post-NAFTA presidents for rejecting the economic determinism that has dominated U.S. economic policy since 1993. His predecessors took it for granted that, given the exigencies of “free trade,” domestic manufacturing job losses were inevitable. Then they crafted trade policies that fulfilled their own prophecies.
During the signing ceremony for NAFTA’s supplemental agreements, Bill Clinton acknowledged that “some jobs will be lost.” “Outsourcing is just a new way of doing international trade,” N. Gregory Mankiw, chairman of George W. Bush’s Council of Economic Advisors, argued in 2004. Some manufacturing jobs “are just not going to come back,” Barack Obama declared during a 2016 Indiana town-hall meeting.
Trump has defied them all, in both word and deed. More manufacturing jobs have been created on Trump’s watch than under any other Republican president since the U.S. government began compiling this statistic in 1939. Trump even topped Democrat Bill Clinton’s record in June of this year—news that was ignored by the media. To borrow from Clinton’s “job score” presented at the 2012 Democratic National Convention: Trump, 348,000; Clinton, 313,000; Obama, minus 192,000; Bush fils, negative 4,543,000.
A key dogma of the economic determinists is that automation is the true cause of America’s manufacturing job losses. Members of the financial media simply repeat this like a mantra. According to the Financial Times, “Increasing protectionism is unlikely to override forces of automation.” New York Times reporter Binyamin Appelbaum declares that, “Because of automation, there are far fewer jobs in factories.” Another Times article, “Trump Picks Economic Winners, Guided by Nostalgia,” describes manufacturing as a “legacy” sector whose workers “have been hurt by globalization, automation and innovation.” Washington Post columnist David Ignatius simply states,
Manufacturing employment has indeed declined in America over the past decade, but the major reason is automation, not trade. Robots, not foreign workers, are taking most of the disappearing American jobs. Rather than helping displaced blue-collar workers, Trump’s promises of restoring lost jobs could leave them unprepared for the much bigger wave of automation and job loss that’s ahead.
FiveThirtyEight’s Ben Casselman advises manufacturing workers not take any encouragement from the news that a company is building a new factory in their community: “the factories they build here are heavily automated, employing a small fraction of the workers they would have a generation ago.” In sum: Displaced American workers should accept the fact that robots (owned by someone somewhere) have taken their jobs, stop complaining, and be happy with whatever government retraining program comes their way.
Business representatives attribute a worker shortage in the United States not to automation but to gaps in the American educational system, which has colluded with the determinists in discouraging the development of skills required for manufacturing jobs. The National Association of Manufacturers, citing Deloitte and the Manufacturing Institute, notes that
Over the next decade, nearly 3½ million manufacturing jobs will likely be needed, and 2 million are expected to go unfilled due to the skills gap. Moreover, according to a recent report, 80 percent of manufacturers report a moderate or serious shortage of qualified applicants for skilled and highly-skilled production positions.
Finally, some academics are challenging the unproved assertions of the economic determinists. “Contrary to popular wisdom, automation is not a job killer in U.S. manufacturing,” writes Jared Bernstein in the Washington Post. “Is Automation Really to Blame for Lost Manufacturing Jobs?” asks Susan Houseman in Foreign Affairs. MIT’s Suzanne Berger observes,
I don’t buy the argument that manufacturing is a sunset activity destined to disappear in countries with high wages and well-educated populations. There is no inevitability about it. It is possible to do profitable manufacturing in the United States.
Well-paying manufacturing jobs have a powerful effect on middle-class American communities. Healthy manufacturing towns offer abundant housing, educational, and recreational opportunities. A strong middle class anchored in manufacturing affords long-term prosperity to families across generations. Families aren’t uprooted from their communities when manufacturing thrives; they enjoy stability and establish deep roots capable of surviving recessions, an inevitable result of the business cycle.
Economic determinists ignore the societal benefits of a strong manufacturing economy. They also ignore the threat of China, where their opinions are not taken seriously. They have insisted that manufacturing jobs were “never coming back” after NAFTA and following China’s entry into the World Trade Organization. Yet Trump has presided over a manufacturing sector that has added net new jobs for 17 out of 19 months. He has decisively proved them wrong.