International Law

Tough Trade Talk - Pennsylvania Edition

By Stan

Very interesting editorial that ran in a Pennsylvania paper recently. I frequently talk about protectionists and critics of globalization. Here is the argument from the local level and a glimpse into the thinking behind protectionist sentiment. The backdrop, of course, is the upcoming Democratic Primary in Pennsylvania.

A big red boot with a prominent yellow star is running roughshod over Pennsylvania, stomping on jobs in its wake.

Pennsylvania’s workers and business owners are well aware of the impact of its footprint, as are the state’s governor, legislators and the employees of Pennsylvania’s Unemployment Compensation office, who are processing job-loss applications faster than they can say “big boot.”

It appears that the only souls currently treading on Pennsylvania soil who have not noticed the state’s devastating and ongoing job losses to China belong to presidential candidates of both parties.

Although manufacturing still accounts for $73.9 billion of Pennsylvania’s gross state product, and is the largest individual contributor to the statewide economy, the state has lost more than 207,400 manufacturing jobs since 2000. Seventy-eight thousand of those have been lost to China since 2001.

As a result of its cheating on all economic fronts, China has accumulated the largest trade surplus in global history, and a $256 billion annual trade deficit with the United States alone.

Despite winning through dishonest trade, China has so far incurred no cost for its bad behavior.

Pennsylvania is an ideal manufacturing state. With a sophisticated highway and railway network and water transport links through its many inland waterways and Lake Erie, goods can be shipped quickly from Pennsylvania.

Note in particular the victim mentality that pervades the article. Pennsylvania is an ideal place for manufacturing. Pennsylvania has lost manufacturing jobs. Therefore an external cause must be to blame: China. Moreover, it has everything to do with "cheating" and nothing to do with simple economics. To admit that rational decisions are behind factory closings means admitting that Pennsylvania is no longer the "ideal" manufacturing location it once was.

International trade results in winners and losers - and overall gain in most cases. But it sure is tough to be on the losing side.

To muddy the waters further, we have this initiative:

A new advertising campaign designed by a coalition of domestic manufacturers and a labor union was unveiled Tuesday, aimed at getting the presidential candidates to take tougher stances on trade, particularly against China.

The nonprofit trade association, the Alliance for American Manufacturing, is made up of about 10 mostly steel companies, including U.S. Steel Corp., ArcelorMittal, and AK Steel Holding Corp., as well as the United Steelworkers union, a group that has traditionally worked together to back stronger protections for domestic steelmakers.

The ads are intended to move the trade discussion beyond the North American Free Trade Agreement or the prospective trade agreement with Colombia, which have dominated the news, said Scott Paul, the group’s executive director. "China is a bigger issue. We felt there needed to be a public education."

The ads, which the group plans to run through the April 22 Pennsylvania primary, cite the loss of 207,000 manufacturing jobs in the state since 2000, linking 78,000 to trade with China, and concludes, "China Cheats. Pennsylvania Loses."

I would be very curious to see the substance behind this "education" campaign. Whenever these folks throw around job loss numbers that are attributed to China, I usually catch a whiff of bullshit. Moreover, none of these people ever address the basic issues of why jobs have left (e.g. healthcare costs) and under what circumstances manufacturing jobs will come back to places like Pennsylvania (they won’t) as opposed to other developing nations.

Those issues are too complicated, I guess. Easier to bash China and pretend that the jobs will magically return if the borders are closed.

Full post as published by China Hearsay on April 14, 2008 (boomark / email).