>Trade deficits eliminate jobs. There are no two ways about it. In the
>U.S. we've had manufacturing jobs replaced by lower paying service
>jobs. Our employment is high at the moment, while wage growth has been
>mediocre for most of the present recovery (the most recent years a bit better).
Actually, there are two ways about it. Trade deficits with any single
country (e.g., China) do not always eliminate jobs, since in theory that
deficit might be balanced by trade surpluses with other countries. Turning
to the empirical reality, we find that the US had trade deficits with a
whole bunch of countries, not just low-wage ones, not just ones that
repress unions, etc.
In the first three quarters of 1999, according to the 2000 ECONOMIC REPORT
OF THE PRESIDENT, the US had an annualized trade deficit of $148.5 billion
with industrialized countries, of $22.1 with OPEC countries, of $5.8 with
Eastern Europe, and $157.8 with "other" (poor countries, including the
"newly industrialized economies"). The fact that the US had a deficit even
with Eastern Europe suggests that something is happening besides low wages,
etc. We should think about the macroeconomics of the issue: the high dollar
exchange rate, the stagnation of most of the world outside the US, issues
like that should be considered rather than scapegoating China.
Jim Devine [EMAIL PROTECTED] & http://liberalarts.lmu.edu/~jdevine
