Raymond Richman - Jesse Richman - Howard Richman
Richmans' Trade and Taxes Blog
Keep the Focus on Net Exports
The favorite line or political strategy for those who favor trade deals that end up weakening the US economically is that the deal will increase US exports. President Obama bought this line. Many Republicans in Congress have too. The problem is that a focus on exports alone can be deeply misleading.
To think about why, let's start with one of the jokes my father tells periodically about why he quit vegetable and sheep farming in favor of other pursuits.
Exports are a good thing. Exports create jobs for those who work to produce the exports. And they provide countries with the means to purchase imports.
But just as selling pitchforks for less than one paid for them is a recipe for losses and debt, so too is making a deal that raises exports while raising imports much more. The jobs displaced in the import-competing sectors will not be offset by the jobs created by the much smaller gains in the export-competing sector.
Thus, when politicians speak of exports alone without also discussing imports, they ought to be taken to account. How will their proposed policies influence the overall picture of US trade?
Here are some other metrics to keep in mind.
Have policies that contributed to a decline in US share of global manufacturing value added from more than 25 percent in 2000 to 17 percent in 2014 been beneficial for US workers or for the strength of the US economy? Is the decline in US global export market share by more than 30 percent since 2000 been beneficial for US workers or the strength of the US economy? Has the decline in US manufacturing employment by about two million and the rise of China's urban manufacturing employment by about 39 million over the years from 2003 to 2014 been good for US workers or the strength of the US economy? From 2008 to 2015 US exports of goods (in constant 2009 dollars) increased by 214 billion. But US imports of goods increased by 296 billion dollars. Progress? Maybe it "beats farming." Maybe not.
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