Adam Davidson of Gimlet, explains how free trade helps everyone a little bit, and also how it has directly ruined the lives millions of workers in certain sectors.
RACHEL MARTIN, HOST:
As we have heard time and again in this election season, Donald Trump supporters are angry. Many have seen their jobs disappear and they blame free trade agreements. That issue has become a recurring refrain in Trump’s speeches on the campaign trail.
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DONALD TRUMP: China is killing us. Japan is killing us. Vietnam - new one - killing us.
MARTIN: He’s not the only candidate talking about trade. On the Democratic side, Bernie Sanders has made it a central part of his message.
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SENATOR BERNIE SANDERS: When we talk about why the middle class of America is disappearing, one of the major factors is our disastrous trade policy.
MARTIN: And now that the primaries are moving through the American Rust Belt, conversations about free trade and its effect on the working class are going to continue to be front and center in this campaign. So to talk more about it, we’ve called up Adam Davidson. He writes for The New York Times on economic issues. He’s also the co-host of the podcast “Surprisingly Awesome.”
ADAM DAVIDSON: Hey, Rachel.
MARTIN: Even though they talk about it differently, both Bernie Sanders and Donald Trump blame free trade, to some degree, for the loss of a good number of American jobs, which, they argue, has put even more pressure on an American middle class that’s shrinking. So is there any truth to that?
DAVIDSON: Look, the United States economy has shifted in fundamental and very scary ways since the late 1970s. And we do look to trade as one of the reasons for it. But that being said, if we imagine a counterfactual - a world in which we had not signed NAFTA, we had not helped create and join the WTO and we had not dramatically lowered tariffs, I don’t think we would see Americans doing better. I don’t think we would see the middle class being stronger. Very few economists would say that trade has been the primary cause of our troubles or that there’s some option that government has had throughout to reject trade and therefore make life better for the rest of us. There is not free international trade. These are very complex trade deals. But where we do have free trade is within the 50 states in the U.S. Do you think your life would be better off if your home state had set up tariff laws with neighboring states - if you couldn’t sell your goods and services freely to other states and you couldn’t buy goods and services from other states? So the crude language of rejecting trade or trade has been the problem or that the U.S. government had some simple alternative option that would have been clearly better for everybody - that is just ridiculous. It’s unsupported by any evidence.
MARTIN: But to your example, you know, would our lives be better if individual states erected tariffs that impeded trade between states? I mean, Donald Trump would say that’s ridiculous because we are the United States of America, and we don’t have the level of competition between states as we do between nation-states. And nation-states have their own self-interests. And he argues it is in America’s self-interest to establish higher tariffs, that that would somehow create an opening for American manufacturers to get more competitive. Is there anything to that?
DAVIDSON: There is literally nothing to that.
MARTIN: Why? Why doesn’t that make sense?
DAVIDSON: First of all, the idea that raising tariffs will benefit a broad group of Americans is utterly rejected by the economics profession. It’s simply not a political idea. It’s an economic-illiterate idea. There was a poll, for example, several years ago when 97 percent of economists said tariffs are dangerous and not good policy. And I set out on a mission to find those 3 percent who said tariffs are a good idea. And the only ones I could find said yes, tariffs are a good idea for poor, developing nations. But I could not find a single economist - and I talked to very left-wing ones, very right-wing ones, centrist ones - I have never found a single economist who supports tariffs. And that’s for the simple reason that tariffs are an incredibly crude tool. They enrich exactly who you don’t want to enrich, the owners of less competitive, less efficient businesses. The higher cost of a tariff does not directly go to wages. It does not directly go to increasing employment. It simply goes to basically failed businesspeople - businesspeople who have not been able to compete in the economy.
MARTIN: If you’ve just told us that free trade is unequivocally better for the American economy, again, why do you think so many voters from both parties feel otherwise? Is it just they’re looking for something to explain their economic reality? I mean, they expected more from the economic recovery and didn’t get it and so they can assign blame to free trade?
DAVIDSON: To be clear, trade overall is better for the country as a whole. It is not better for every individual. And our country is filled with millions of people. Their lives are permanently worse because of trade. There’s no question. They do get the benefits. They get to buy cheaper goods and stuff imported. But overall, their wages have fallen so much, or they’ve simply become unemployable. And so there are lots of people for whom, individually, trade is bad. I would argue, and most would argue that overall, more Americans benefit than lose. But the benefits are very diffuse and dispersed. If you look around your house and kind of think, wow, everything I own was a little bit cheaper ‘cause of trade. It was a little easier to afford. My lifestyle’s a little bit better ‘cause of trade. But that’s not something you’re going to vote on. You’re not going to vote because your microwave costs $5 less. But if you lost your job and you lost your livelihood, you’re definitely going to vote.
MARTIN: Adam Davidson, he writes about the economy for the New York Times. He’s also the co-host of the podcast “Surprisingly Awesome.” Adam, thanks so much for talking with us and breaking all this down for us.
DAVIDSON: Thank you, Rachel.
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