Im-Politic: Evidence that Trump is Right. American Trade Policies Literally are Killing Us

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2016 elections, Angus Deaton, Anne Case, Donald Trump, faith-based voters, families, H1B visas, Im-Politic, Immigration, middle class, mortality, Nobel prize, Princeton University, Republicans, Rick Santorum, Trade, working class

Republican presidential candidate Donald Trump has drawn a lot of scorn from the Mainstream Media and the nation’s political chattering class by insisting that countries like China, Mexico, and Japan are “killing” America on trade. The vast majority of them know nothing about U.S. trade policy, and those with a smidgeon of familiarity with the subject don’t take seriously the idea (drawn straight from conventional economics) that growing trade deficits subtract from America’s growth and employment levels.

But last week, the nation received stunning news that Trump literally may be right, along with new insights into why a White House aspirant blasting U.S. trade (and immigration) policies in the harshest possible terms has gained such traction despite a personal style and background that are highly unconventional in elective politics – to put it mildly.

A new study claiming that middle-aged American whites have recently been dying at much higher rates than their counterparts in other high-income countries also points to a strategy through which Trump can dramatically improve his standing with the religious conservative voters who still view him with such skepticism, but who wield major clout in early caucus state Iowa, and early primary state South Carolina.

The study was co-authored by no less than Angus Deaton, the Princeton University professor who just won the Nobel prize for economics, and his wife Anne Case, also a noted Princeton economist. It purports to show that, between 1999 and 2013, there has been “a marked increase in the all-cause mortality of middle-aged white non-Hispanic men and women in the United States between 1999 and 2013.”

Moreover, according to Deaton and Case, “This change reversed decades of progress in mortality and was unique to the United States; no other rich country saw a similar turnaround.” And just as intriguingly, this trend in mid-life mortality, which marked a major reversal from an overall decline in death rates for Americans aged 45 and older, “was confined to white non-Hispanics.”

But what really links the Deaton and Case findings to economic developments are the data they present shedding light on the causes of increasing mortality among this white cohort – which they themselves argue reveals the connection. Their summary is worth quoting in full:

“This increase for whites was largely accounted for by increasing death rates from drug and alcohol poisonings, suicide, and chronic liver diseases and cirrhosis. Although all education groups saw increases in mortality from suicide and poisonings, and an overall increase in external cause mortality, those with less education saw the most marked increases. Rising midlife mortality rates of white non-Hispanics were paralleled by increases in midlife morbidity. Self-reported declines in health, mental health, and ability to conduct activities of daily living, and increases in chronic pain and inability to work, as well as clinically measured deteriorations in liver function, all point to growing distress in this population.”

The authors continue:

“Although the epidemic of pain, suicide, and drug overdoses preceded the financial crisis, ties to economic insecurity are possible. After the productivity slowdown in the early 1970s, and with widening income inequality, many of the baby-boom generation are the first to find, in midlife, that they will not be better off than were their parents. Growth in real median earnings has been slow for this group, especially those with only a high school education. However, the productivity slowdown is common to many rich countries, some of which have seen even slower growth in median earnings than the United States, yet none have had the same mortality experience.”

As Deaton and Case explain it, American workers’ feelings of economic insecurity are so much greater than those of their European counterparts mainly because their retirement arrangements are so much shakier. Most American employers who still provide pension plans have moved to the defined contribution model – “with associated stock market risk.” In Europe, by contrast, most employers still offer defined benefit plans.

I have no doubt that the authors have identified a big piece of the problem. But here’s another, and one that’s directly related to the Trump campaign: Whereas recent U.S. presidents from both major parties have pushed a long string of trade deals that have encouraged American businesses to offshore massive numbers of high wage industrial jobs, Europe’s governments have worked much harder to keep that employment – and the underlying production – at home.

As made clear in my book on globalization, The Race to the Bottom, the resulting job loss and wage stagnation (and often declines) have rippled throughout the entire American middle and working class. And although it’s eminently reasonable to believe that the U.S. economy has significantly outperformed the Europeans for many years, these death rate data indicate that this outperformance has been scarcely relevant to the most important test of a successful society by far – improving the lives of the great majority of its people.

And here’s another Trump-ian tie-in overlooked by Deaton and Case. European governments obviously have been as eager as the U.S. government to admit huge numbers of immigrants from very low-wage countries into their economies. But where European and U.S. immigration policies differ significantly entails their openness to immigrants with relatively high levels of skills and education. In other words, there’s nothing in Europe remotely like the American H-1B program, which has fostered major immigration-related job displacement (and therefore wage decreases) in white collar occupations that were supposed to be immune to competition from much cheaper foreign workers. More generally, this kind of offshore outsourcing has hit a wide variety of jobs in the professions in addition to technology positions.

So this is nothing less than a golden opportunity for Trump – both with the downwardly mobile whites in general who have flocked to him not only in great numbers but on a sustained basis so far, and with the so-called evangelicals who represent so much of the Republican primary electorate. For the causes of rising white mortality described by Deaton and Case are inarguably both causes of family break-up – especially divorce – and symptoms of the strains placed on families by economic angst.

Of course, faith-focused voters have long blamed the weakening of the traditional American family overwhelmingly on the rise of more permissive social and cultural values since the 1960s. But some U.S. politicians – notably pundit and former Republican presidential candidate Pat Buchanan, and former Pennsylvania Senator Rick Santorum, who has run this year and in 2012, have made the connection with economic forces. And the Eaton-Case study gives Trump the kind of ammunition that Buchanan – who, unlike Santorum, went after U.S. trade policy – never had. Moreover, Trump has the kinds of communications skills both to capitalize on the new data, and to present it in exciting and fresh-sounding – not to mention somewhat sensationalistic – ways.

The Deaton-Case findings aren’t accepted by everyone. But whose are? More important, in politics, it’s all too easy to make persuasive claims that have no credible sources. Making claims that come from supremely credible sources can be even more effective – including by blunting lots of Mainstream Media and chattering class scorn. So I’m really looking forward to Trump’s next appearance on “Meet the Press” or some similar brain-dead national media outlet, when he tells the moderator, “Our trade and immigration policies are literally killing us! And you don’t have to take my word for it!”

 

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Im-Politic: Where We Stand So Far with Trade and the 2016 White House Race

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2016 elections, Bernie Sanders, Carly Fiorina, Democrats, fast track, Hillary Clinton, Im-Politic, manufacturing, Martin O'Malley, Mike Huckabee, Populism, Rand Paul, Republicans, Rick Perry, Rick Santorum, Tea Party, TPA, TPP, Trade, Trade Promotion Authority, Trans-Pacific Partnership

“Something” is definitely going on with the politics of international trade in the United States these days – I just wish I knew exactly what it is. But in the last few weeks, as the national and Congressional debates over President Obama’s trade agenda have heated up, any number of apparently conflicting and potentially important developments in this area have broken into the news.

The chief inconsistency seems to involve presidential candidates in both parties on the one hand, and some new poll results on the other.

If you were just following the 2016 presidential campaign so far, you’d think that support for new trade deals like the president’s proposed Trans-Pacific Partnership (TPP) has become absolutely toxic. Among Democrats, declared candidate Senator Bernie Sanders of Vermont is dead-set against them, as is former Maryland Governor Martin O’Malley, whose announcement is imminent. Front-runner Hillary Clinton, meanwhile, has a mixed trade policy record, but even though she pushed the Pacific Rim trade agreement as Mr. Obama’s Secretary of State, she’s evidently so wary of alienating voters that she refuses to take a stand either way now.

Opposition to new trade agreements is just as pronounced – and in many ways much more startling – among many Republican contenders and hopefuls. The GOP’s Congressional leadership has become a bulwark of the president’s hopes for fast-tracking such deals through Congress and thus greatly enhancing their chances of approval. But lots of the current Republican field is marching to a much different tune.

Former Arkansas Governor Mike Huckabee was a trade policy skeptic when he last ran in 2008, and still is.  Rick Perry has no such history. In fact, he was last seen as governor of Texas welcoming with open arms investments in his state by Huawei, the Chinese telecommunications manufacturer that’s viewed as a likely threat to U.S. national security by the executive branch and the Congress. But despite supporting TPP, he’s expressed major reservations about its transparency and about entrusting it to Mr. Obama.   

And then there are the cases of Carly Fiorina and Kentucky Senator Rand Paul. The former, when she ran Hewlett Packard, defended her record of sending jobs and production to China with the (widely blasted) statement that “There is no job that is America’s God-given right anymore.” More revealing, she accused trade policy critics of naively seeking to “build walls around America” and “running away from the reality of the global economy.” Now she says she’s “very uncomfortable” with TPP.

Paul, of course, has been a darling of libertarians, but voted against fast tracking trade deals like the TPP through Congress. (Paul’s father, former Texas Congressman and presidential contender Ron, opposed many such agreements also, generally due to fears regarding American sovereignty and Constitution-related fast track concerns.)

The most interesting conversion, however, might be that of former Pennsylvania Senator Rick Santorum. As I’ve written, when he last sought the GOP nomination four years ago, Santorum was the only Republican who spoke seriously about the importance of strengthening American manufacturing. But he also upbraided his rival Mitt Romney for risking a “trade war” with China by supporting currency-related sanctions and generally during his years in both the House and Senate was a reliable “Aye” vote for new trade deals.

But this time around, Santorum is showing signs of recognizing that credibly championing manufacturing isn’t possible without opposing the trade policies that have done so much to weaken its production and employment levels – along with its innovation capacity.

I can imagine that many readers will respond by noting that many Republicans are so hostile to President Obama that they would naturally oppose enhancing his authority in any way – and doubly so since there’s such widespread anger regarding his other alleged unconstitutional power grabs. But Fiorina for one has also hit America’s poor record of monitoring and enforcing trade deal provisions against cheating-minded governments and noted that one of the most notorious – China – could be added to the TPP without any Congressional input. In addition, as I’ve previously noted, opposition to current trade deals has dovetailed with other major elements of Tea Party platforms and the movement’s values since its birth.

Yet despite the trade skepticism throughout the field in Campaign 2016 so far, polls keep showing that Americans have become more receptive to new agreements. Typical is one just released by the Pew Foundation. It finds that 58 percent of U.S. adults “say free trade agreements with other countries have been a good thing for the U.S., while 33% say they have been a bad thing.” Moreover, according to Pew, this level of support is ten percentage points higher than in 2011.

In what will be heartening news to GOP presidential trade skeptics, only 53 percent of avowed Republicans view trade deals so favorably – a majority, but a much lower share than for either Democrats or independents. Of course, by the same token, the results raise questions about the Democratic hopefuls’ so-far unanimous opposition to new agreements absent major changes.

Since primary voters – which comes from each party’s hard-core base – are more partisan and ideologically fervent than the electorate as a whole, it’s likely that for that reason alone, attacking current trade policies will remain a big feature of Election 2016’s first half, and that few candidates will send much time defending them. That’s essentially what labor unions and environmental groups want to hear from Democrats, and what movement conservatives want to hear from Republicans.

But the Pew findings themselves are odd in several respects that makes their political interpretation less obvious for the general election. For instance, the poll reported both substantial and growing overall agreement that free trade agreements have benefited the nation, and less impressive (43 percent) but still growing overall agreement that such trade deals have helped their personal finances. Yet it also shows that by 34 percent to 31 percent, the public believes that these deals have slowed rather than sped up economic growth. By 46 percent to 17 percent, respondents said that they have fostered job loss instead of job creation. And by 46 percent to 11 percent, that they have reduced rather than increased wages. Also noteworthy (especially given the personal finance result above), nearly as many Americans (30 percent) blamed free trade agreements for raising consumer prices as credited them with lowering them (36 percent).

I can think of many possible explanations for these apparently paradoxical results. All polls suffer from the tendency of respondents to tell researchers what they think the latter want to hear as opposed to what they actually believe. Further, Main Street Americans can’t be expected to understand fully how trade policy effects the economy, in part because the Mainstream Media does such a lousy reporting job on this front. At the same time, a case can also be made that the Pew survey underscores consumption’s dominant role in both the U.S. economy overall and on Americans’ economic priority scales. Why else would they be so keen on the agreements, while believing that they depress growth, employment, and wages? Unless most Americans don’t believe that trade deals really affect them much personally at all? Or that they themselves are reaping the benefits while largely escaping the costs?

So it’s anything but clear how trade issues will affect the next presidential election on net. But if they stay in the spotlight, as seems distinctly possible given that the TPP itself is still being negotiated, that itself would be a big change.