It’s been completely taboo in the national economic policy establishment to acknowledge that the freest possible trade flows might not always benefit the U.S. or global economies over significant stretches of time – so maybe it represents progress that one paper commissioned for the big Federal Reserve Jackson Hole conference mentioned the possibility prominently. But when you look at Fed chair Janet Yellen’s keynote speech to a gathering focused on employment issues, and in particular to the Mainstream Media’s coverage of the study, it’s clear that the progress has been minimal.
At least if Yellen’s treatment of the subject was confined to a single mention, it departed from the conventional wisdom. Research, she observed “suggests that the decline in real unit labor costs may partly reflect secular factors that predate the recession, including changing patterns of production and international trade….” That’s anything but a ringing endorsement of Washington heading further down the trade liberalization road, as President Obama and Congress’ Republican leaders seem determined to do with their pursuit of a Trans-Pacific Partnership agreement in particular.
The media’s treatment of MIT economist David Autor’s study of forces shaping labor markets in recent decades ignored the subject even more studiously. It’s true that Autor’s subject was the impact of technological change. It’s also true that his skepticism about the employment effects of recent advances in robotics and artificial intelligence contradicted the reemerging conventional wisdom in a newsworthy way. But what virtually no reporters told their readers was why Autor was skeptical that the latest stage in automation deserved so much blame in particular for destroying middle-skill American jobs, and for leaving labor markets polarized between very high-wage and –skill jobs and very low-wage and-skill positions.
As he stated in his conclusion, these developments seem “more closely associated with two other macroeconomic events. A first is the bursting of the ‘dot‑com’ bubble, followed by the collapse of the housing market and the ensuing financial crisis, both of which curtailed investment and innovative activity. A second is the employment dislocations in the U.S. labor market brought about by rapid globalization, particularly the sharp rise of import penetration from China following its accession to the World Trade Organization in 2001.”
Economists are often – rightly — accused of clinging to outmoded or just plain wrong theories long after the facts debunk them. But today’s Jackson Hole reporting makes clear that the Mainstream Media can be even more blindly dogmatic.