Making News: Protesting Too Much About My Trump Populism Article

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Economic Policy Institute, EPI, Making News, middle class, Populism, The American Conservative, Trump, working class

This “Making News” item will be a little different, since a new detailed crtitique of my recent American Conservative article challenging the charge that President Trump is a phony populist reveals so much about the agitated way so many Americans – including the so-called experts – discuss and debate public policy.

I’ll start by saying flat out that it was flattering to see two economists at the Economic Policy Institute (EPI) bother to take on my article. As I’ve written previously, I’ve long worked with EPI researchers on trade issues, learned a great deal from them, and believe that their findings in this area (the one with which I’m most familiar) unusually important.

At the same time, an October 28 analysis of my article disappointed for several important reasons. Principally, the authors got my overall argument wrong. Contrary to their claim, I never contended that the faster wage growth during the Trump years compared with relevant Obama years “justifies the vote-flipping” in most of the counties that supported Trump in 2016 after opting for Barack Obama twice “because the Trump administration has done something that has boosted wage growth in these presumably blue-collar counties.”

What I did say was that the faster wage growth was one development that “clashed loudly with the Trump-as-phony-populist charge.” And this conclusion seemed all the stronger given, as I noted, “the common companion depiction of the last Democratic administration as a working- and middle-class champion.”

After all, the phony populist charge implies that while sweet-talking the working- and middle-class populations of flip counties, the President has spent the last four years working on enriching his fellow one-percenters while leaving his less affluent supporters ever deeper in the hole economically.  

The EPI authors are correct in observing that during the first three Trump years, wage growth in these flip counties lagged the national average. But just how important is that point? As I made clear in the 2019 version of this article:

“The only grounds for economic complaint that Trump flip county residents might legitimately have concerns the gap between their well-being and the rest of the country’s. During the last two Obama years, the number of flip counties whose annual salary growth rates topped the U.S. average rose from 89 to 116. During the first two Trump years, their numbers dropped to 84 and then 83. (Between 2015 and 2016, the salary growth in one of these counties matched the national average.)

“But some context is needed here—and quite possibly it hasn’t been missed by flip county voters. Average annual U.S. salaries rose considerably faster during the first two Trump years (3.41 percent and 3.36 percent, respectively) than during the Obama years (3.08 percent and 1.21 percent, respectively). So since the national salary bar for the flip counties has been significantly higher during the Trump years, the fall-off looks pretty moderate, and in absolute terms, the annual increases remain an improvement.”

And son-of-a-gun: Although I didn’t perform this exercise for the latest article, a check of the same government data relied on by the EPI authors and by me shows that the “national salary bar for the flip counties” (which they call “pivot counties”) remained “significantly higher during the Trump years” through 2019.

It’s entirely possible that flip county voters are seething with anger because by this measure, inequality has widened. But it’s at least as possible that they’re mainly impressed that, for the most part, their own annual pay has risen faster under Mr. Trump than under his predecessor.

The EPI authors make a great deal of the argument that, although my factual case is correct, the President had nothing to do with the flip counties’ improved performance. As mentioned above, however, I never claimed cause-and-effect. I simply described the trend, and then did emphasize its great inconsistency with characterizations of Mr. Trump. Determining cause-and-effect entails both analyses of the many moving parts of the economy during the two periods in question, and then inevitably making judgment calls about the conclusions, and which conclusions count the most (e.g., as discussed, do absolute gains matter the most, or does closing the economic gap).

But I do find myself wondering why they say absolutely nothing about the Trump trade tariffs and immigration restrictions that surely helped the national labor market keep tightening, and wages continue their rise — especially for the kinds of jobs that lower- and middle-income Americans tend to hold.

The Shakespearian observation that it’s possible to “protest too much” is a wonderful description of complaints or rejoinders that are so over-the-top that they suggest more than a smidgeon of underlying doubt. That looks like a good way to describe EPI’s treatment of my recent Trump populism article.

(What’s Left of) Our Economy: A Backfiring Attack on Trump’s Trade & Manufacturing Policies

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Barack Obama, CCP Virus, coronavirus, COVID 19, Economic Policy Institute, election 2020, EPI, Great Recession, Joe Biden, manufacturing, offshoring, Trade, Trump, Wuhan virus, {What's Left of) Our Economy

For the record, the Economic Policy Institute (EPI) has done terrific work over decades on the domestic economic impact of U.S. trade policy decision and trade flow, and it’s been great to stand shoulder-to-shoulder with its economists and ther staff during many major trade policy battles starting with the North American Free Trade Agreement (NAFTA).

Which is why I have been absolutely baffled by a recent EPI report that shows signs of furnishing some major trade policy talking points for Democratic nominee Joe Biden’s presidential campaign.

Most puzzling of all: a table in the August 10 study purporting to show that (a) “President Trump’s erratic, ego-driven, and inconsistent trade policies have not achieved any measurable progress” in reversing the offshoring of U.S. manufacturing jobs and the related ,”decline of American manufacturing”; and in fact (b) that “Offshoring and the loss of manufacturing plants have continued under Trump, notwithstanding U.S. Trade Representative Robert Lighthizer’s claim that the administration’s trade policy is helping U.S. workers.”

Here are the main table figures that cover the first two Trump years and the record of its predecessor, the Obama administration (whose Vice President of course was Biden). I started with 2010 because during 2009, the first year of the Obama presidency, the nation was mired in a Great Recession for which he deserves absolutely no blame. In addition, EPI stops the table at 2018 because factory numbers afterwards aren’t yet available. (The gross output figures have been added by me to make further comparisons possible.)

             Change in factory #s            Change in mfg jobs        mfg real gross output

2010:            -11,283                               -755,000                        +5.37 percent

2011:              -5,155                              +222,000                        +2.89 percent

2012:             -2,938                               +223,000                        +1.93 percent

2013:             -4,220                               +101,000                        +2.86 percent

2014:             -4,056                               +121,000                        +0.79 percent

2015:             -2,129                               +192,000                        +0.54 percent

2016:                -999                                 +33,000                        +0.04 percent

2017:                -782                                 +50.000                        +0.99 percent

2018:             -1,005                               +216,000                        +2.31 percent

The first point that needs to be made is that, as must be obvious, these numbers show absolutely no consistent relationship between the annual change (and in this case, decline) in the number of the nation’s “manufacturing establishments” (what these official figures call factories) and the annual change in manufacturing payrolls.  

For example, in each of these years, lots of factories kept closing, yet manufacturing employment kept rising. It’s true that rates of annual change have varied for both categories during this period. But these variations don’t seem to hold any significance, either. If they did, why would the number of closures fall notably between 2011 and 2012, while those years’ manufacturing workers’ numbers rise by almost exactly the same amount? And why the big difference between the number of closures in 2011 and 2012 on the one hand, and in 2018, on the other, and the close resemblance of the employment gains for each of those years?

Further, although it’s true that factory closures continued during the first two Trump years, the annual rate of closures slowed dramatically. Indeed, from 2010 through 2016, the average annual closure rate was 4,397. For 2017-18, this rate was 893.5. That’s not progress? And let’s be fair and not count 2010, because the manufacturing job losses of the Great Recession continued through its early months. The 2011-16 annual average factory closure number was still much higher (3,249.5) than during the Trump years.

Not weird enough for you? According to these EPI figures, despite factories closing at a much faster rate during the Obama years than during the Trump years, manufacturing employment grew faster. From 2011 through 2016, manufactring jobs grew by an annual average of 148,670. The comparable number for the first two Trump years was only 133,000.

At the same, time, this seemingly paradoxical relationship between numbers of factories and numbes of workers isn’t so completely paradoxical after all.  For example, new kinds of machinery and other efficiencies have surely enabled many domestic manufacturers to consolidate their physical footprint, and actually boost production and hiring. Alternatively, manufacturing companies can increase their capacity by expanding existing plants rather than build new facilities.        

Speaking of production, if we’re going to talk about the decline of American manufacturing, we need to talk about output levels and their changes, too. After all, it’s tough to boost or even maintain manufacturing workers’ numbers if production isn’t rising. Yet the annual growth numbers I’ve added to the table (which represent inflation-adjusted gross output), don’t show much of a relationship with closure numbers or employment numbers, either – and that’s the case even leaving out the quasi-manufacturing recession year 2010.

Still, don’t the EPI figures make clear that manufacturing hiring during the first two Trump years was weaker than during the Obama years? They sure do. As mentioned above, from 2011 through 2016, manufacturing payrolls grew by an average of 148,670 each year versus the Trump annual average in 2017 and 2018 of 133,000.

But are the EPI numbers the right numbers? I decided to check since the 50,000 manufacturing jobs increase presented for 2017 seemed way off to me. And there’s strong evidence that my suspicions were justified. Here’s what I found on the Bureau of Labor Statistics website. They represent December-to-December changes, and they’re seasonally adjusted. But the unadjusted numbers aren’t terribly different:

2011:    +207K

2012:    +158K

2013:    +123K

2014:    +209K

2015:     +70K

2016:        -6K

2017:   +185K

2018:   +264K

According to these data, the average annual manufacturing employment increase during the Obama years was 126,830 (again, recession-y 2010 is left out) and the annual average for the first two Trump years was 224,500. So advantage Trump here. The current administration enjoys a big edge even adding in 2019, when industry’s payrolls rose by only 59,000. That performance brings the Trump annual average down to 169,330 – still considerably higher better than the Obama years’ performance.

The EPI report correctly notes that 2020 has been much worse so far for manufacturing employment, and reasonably argues that even though the CCP Virus pandemic has been mainly responsible, “If President Trump wants to take credit for the job growth at the tail end of a decade of recovery from the Great Recession, then he must also own this collapse, thanks to his administration’s mismanagement of the pandemic.”

But if we’re going to start blaming non-trade policy-related factors for changes in manufacturing performance measures, let’s at least be consistent. For manufacturing hiring and growth (1.30 percent) undoubtedly were held down in 2019 by the safety woes experienced by aerospace giant Boeing – and therefore by its vast domestic supply chain – and by the six-week strike at General Motors.

Combine those developments with the inevitability of manufacturing inefficiencies as companies and entire industries adjust to a dramatically different trade policy environment, and the Trump record looks remarkably good. Unless EPI (and other Trump critics) believe that a painless way to transform U.S trade and manufacturing policies (which the institute strongly supports) has ever been possible?

President Trump was clearly (though anything but disastrously) mistaken when he claimed in early 2018 that trade wars are “easy to win.” Let’s hope that the EPI report isn’t a sign that a Biden administration and other critics would peddle the same pipe dreams.