(What’s Left of) Our Economy: Illegal Immigrant Poverty Rates Mock Claims that they’re U.S. Economic Saviors

Tags

Census Breau, citizens, illegal immigrants, illegal immigration, immigrants, Immigration, non-citizens, Pew Research Center, poverty, social mobility, taxes, Vox.com, {What's Left of) Our Economy

As the U.S. immigration policy debate rages on, claims continue that more lenient admissions policies, including amnesty policies that would clearly strengthen the magnet for more illegal immigration, are urgently needed to fix the nation’s demographically imperiled pension finances.

One of the latest examples comes from the left-leaning news and opinion site Vox.com:

“Economic estimates show that immigration would help save the Social Security system. Not just legal immigration — illegal immigration too.”

“Undocumented immigrants and immigrants with legal status pay billions of dollars each year into the Social Security system through payroll taxes. Based on estimates in the trustees report, the more immigrants that come in, the longer the Social Security system will stay solvent. That’s because immigrants, on average, are a lot younger than the overall US population, so their retirement is far off. And undocumented immigrants pay for Social Security, but they’re not allowed to get benefits.”

I’ve previously debunked such claims about illegal immigrants by showing both that their contribution to the national tax haul currently is much less a drop in the national bucket, and that it’s likely to stay tiny because social mobility in America has slowed to a crawl – meaning in particular that prospects keep getting bleaker for major income ladder climbing by the kinds of low-skill, poorly educated workers who dominate illegal immigrants’ ranks.

So it’s important to report that some recent data from the Census Bureau strongly confirms that mobility point – along with suggesting that one of the best ways to give illegal immigrants a leg up is to cut back their numbers seriously.

The statistics come in the form of figures kept by the Bureau on the “detailed social and economic statistics for age groups as well as racial groups that include the Hispanic, black or African-American, Asian and foreign-born populations.” These include numbers on poverty rates for native-born Americans, naturalized foreign-born citizens, and non-citizens (who of course by definition are foreign born). The latter aren’t necessarily illegals – for a variety of reasons, many legal immigrants never apply for citizenship, or don’t do so right away. But the non-citizen group would include all the illegals.

It seemed to me that the best way to tell if this non-citizen group and its illegal members are making noteworthy economic progress would be to focus on those in the 18-64-year old age group – i.e., those overwhelmingly likeliest to be employed, or seeking employment. The data go back to 1995 and up to 2015, so changes over a respectable period of time can be assessed. Below are the main findings, which also compare how poverty rates for non-citizens of working age have fared versus their native-born and naturalized citizen counterparts.

Year      native born 18-64s    naturalized 18-64s      non-citizen 18-64s

1995          10.8%                           8.4%                           25.7%

2001            8.8%                           8.1%                           17.8%

2007         10.0%                            8.5%                           19.9%

2009         11.9%                          10.1%                           24.2%

2015          9.7%                             8.9%                           17.9%

The most obvious takeaway is that the the poverty rates for the non-citizens of working age have remained much higher than those for the rest of the population of working age. And in absolute terms, for a high-income country like the United States, they’re exceedingly high.

These numbers also show that the poverty rate for the working age non-citizens has declined considerably faster than that for native-born Americans (-30.35 percent vs -10.19 percent). And that 30-plus percent drop contrasts especially strikingly with the change in the naturalized citizen rate – which actually rose by 5.95 percent.

So doesn’t that latter trend strongly suggest that illegal workers do keep increasing earnings significantly? Not so fast. First, remember that the performance of the illegals is undoubtedly worse than that of non-citizens as a whole. After all, illegals don’t have a heck of a lot of bargaining power at the workplace. Second, as RealityChek regulars know, the most accurate read on economic trends comes from comparing similar phases of the economic cycle – e.g., recessions with recessions, expansions with expansions.

And in that vein, what the data underscore to me is that the biggest drop in the working age non-citizens’ poverty rate came during the last half of the strongest and longest American expansion to date – that which lasted from 1991 to 2001. Between 1995 and 2001, it fell by 30.73 percent. During the bubble era expansion of 2001-2007, the non-citizen poverty rate actually increased (by 11.80 percent). Their fortunes improved notably during the first six years of the current expansion – decreasing by 26.03 percent. But that slowdown was more modest than that of the 1991-2001 recovery.

It’s certainly possible that since then, the rate has fallen further – and that this expansion will start speeding up, leading to additional improvement. But given the length of this recovery (more than nine years), that would be surprising – at least for any prolonged period.

Further improvement, however, could indeed be on the horizon because during the current recovery years, when that 26 percent fall in the poverty rate took place, the illegal immigrant population shrunk – from 11.5 million to 11.0 million, according to the pretty authoritative Pew Research Center. I say “pretty authoritative” because measuring activity related to illegality is always difficult. But these Pew data strike me as reasonable because all else equal, whenever the supply of anything (like illegal immigrant workers) decreases, its value (earnings) tends to increase.

So if the Trump administration can keep illegal inflows down, illegal workers’ poverty rates seem likely to fall further because of rising pay. But ironically, this development would also weaken the case that illegals will prove to be the U.S. economy’s financial salvation. For their incomes will remain very low in absolute terms by any reasonable measure, and their numbers will be smaller than their supporters seem to assume.

Moreover, the less illegal immigrant competition they face, again all else equal, the higher the pay of the much greater population of native-born workers will rise. Legal immigrants stand to benefit as well.

Something to keep in mind when you next hear some Open Borders enthusiast shout, “Abolish ICE [U.S. Immigration and Customs Enforcement]!”

Our So-Called Foreign Policy: So You Think Trump is a Dangerous Nut on North Korea?

Tags

Alex Ward, alliances, allies, Ana Fifield, Ankit Panda, Associated Press, BBC, CNN, Cold War, Council on Foreign Relations, David J. Rothkopf, David Jackson, deterrence, Diane Feinstein, Ed Markey, foreign policy, foreign policy establishment, Kim Jong Un, media, Nicole Gaouette, North Korea, nuclear weapons, Our So-Called Foreign Policy, Peter Baker, political class, Rick Gladstone, Stewart Patrick, The Atlantic, The Diplomat, The New York Times, Trump, United Nations, USAToday, Vox.com, Washington Post

Weird as it sounds, the North Korea nuclear crisis has created two significant benefits – though unfortunately neither has yet created either establishment or popular pressure to change an increasingly reckless American approach.

Still, it’s promising that dictator Kim Jong Un’s rapid development of nuclear weapons that can reach the U.S. homeland is not only revealing that America’s longstanding approach to defense alliances is now exposing the nation to the risk of nuclear attack even when its own security is not directly at stake. It’s also more recently begun exposing America’s many foreign policy and other elite mainstays either as ignoramuses or (much more likely) shameful hypocrites.

The reason? They profess to be shocked, just shocked (Google “Casablanca” and “Louis Renault”) that President Trump has threatened to “totally destroy” North Korea in order “to defend itself or its allies.” As if they’ve never heard of “nuclear deterrence.” And don’t know that such saber-rattling has been U.S. policy for decades.

To review briefly, since fairly early in the Cold War, and especially since the former Soviet Union developed its own impressive nuclear forces, American leaders have overwhelmingly concluded that the only reasonable uses of these weapons was preventing a nuclear attack on the United States itself, or a similar strike or conventional military assault on one of the countries it was treaty-bound to protect. The idea was that even nuclear-armed potential aggressors the Soviets and Chinese (and the North Koreans, once they crossed the threshhold) would think at least twice before moving on targets if they had reason to fear that the United States would launch its own nukes against those countries.

From time to time, some politicians and analysts suggested that the effects of such nuclear weapons use could be restricted to efforts to take out the enemy’s remaining nuclear weapons or otherwise fall short of “totally destroying” that adversary. But for the most part, the idea of limited nuclear war has been rejected in favor of vowing annihilation. And except for disarmament types on the Left and super-hawks on the Right (who supported the aforementioned “counterforce” approach), the political class comprised of office-holders and journalists and think tankers was just fine with the nuclear element of U.S. alliance strategy.

It’s completely bizarre, therefore, that almost none of the press coverage – including “experts'” analyses – of Mr. Trump’s September 19 statement evinces any awareness of any of this history. Instead, it’s portrayed the “totally destroy” threat as appallingly monstrous, unhinged rhetoric from an unprecedentedly erratic chief executive. Just as bad, President Trump is accused of playing right into Kim’s hands and shoring up his support with the North Korean populace.

For instance, here’s how Washington Post reporter Ana Fifield yesterday described the consensus of of North Korea specialists she had just surveyed:

“Kim Jong Un’s regime tells the North Korean people every day that the United States wants to destroy them and their country. Now, they will hear it from another source: the president of the United States himself.

“In his maiden address to the United Nations on Tuesday, President Trump threatened to “totally destroy North Korea.” Analysts noted that he did not even differentiate between the Kim regime, as President George W. Bush did with his infamous “axis of evil” speech, and the 25 million people of North Korea.”

Here’s the New York Times‘ take, from chief White House correspondent Peter Baker and foreign policy reporter Rick Gladstone:

“President Trump brought the same confrontational style of leadership he has used at home to the world’s most prominent stage on Tuesday as he vowed to ‘totally destroy North Korea‘ if it threatened the United States….”

Similarly, USAToday‘s David Jackson described the Trump speech as “a stark address to the United Nations that raised the specter of nuclear warfare” and contended that “Trump’s choice of words on North Korea is in keeping with the bellicose rhetoric he’s already used to describe the tensions that have escalated throughout his eight months in office.”

As for the Associated Press, the world’s most important news wire service, it was content to offer readers a stunning dose of moral equivalence: “In a region well used to Pyongyang’s pursuit of nuclear weapons generating a seemingly never-ending cycle of threats and counter-threats, Mr. Trump’s comments stood out.“

CNN‘s approach? It quoted a “senior UN diplomat” as claiming that “it was the first time in his memory that a world leader has called for the obliteration of another state at the UNGA [United Nations General Assembly], noting even Iran’s most fiery leaders didn’t similarly threaten Israel.”

For good measure, reporter Nicole Gaouette added, “The threat is likely to ratchet up tensions with North Korea while doing little to reassure US allies in Asia, said analysts who added that the President now also runs the risk of appearing weak if he doesn’t follow through.”

The Council on Foreign Relations’ Stewart Patrick, who served on the State Department’s Policy Planning Staff under former President George W. Bush, told the BBC that the Trump threat is implausible, and that “I think the folks in the Pentagon when they look at military options are just aghast at the potential loss of life that could occur with at a minimum hundreds of thousands of South Koreans killed in Seoul.”

For David J. Rothkopf, a former Clinton administration official and protege of former Secretary of State Henry Kissinger who went on to edit FOREIGNPOLICY magazine (where I worked many years before), the problem is much simpler: “The president of the United States chose, in a forum dedicated to diplomacy, to threaten to wipe another nation — a much smaller one — off the face of the earth in language that was not so much hard-line rhetoric as it was schoolboy bullying complete with childish name-calling.”

Many members of the U.S. Congress were no better. Said California Democratic Senator Diane Feinstein: “Trump’s bombastic threat to destroy North Korea and his refusal to present any positive pathways forward on the many global challenges we face are severe disappointments. He aims to unify the world through tactics of intimidation, but in reality he only further isolates the United States.”

Massachusetts Democratic Senator Ed Markey brought up a war powers angle: “The more the president talks about the total destruction of North Korea, the more it’s necessary for the country and the Congress to have a debate over what the authority of a president is to launch nuclear weapons against another country.”

What’s of course especially ironic about Markey’s words is that such a U.S. policy of “no first use” of nuclear weapons would effectively destroy the American alliances that liberals like Markey have become enamored with lately, and that President Trump is often charged by these same liberals as attempting to dismantle.

Some other news organizations and websites have behaved even more strangely – lambasting the Trump threat but then acknowledging deep inside their accounts that the President said nothing fundamentally new.

For example, the viscerally anti-Trump Vox.com website predictably led off one of its accounts with, “On September 19, President Donald Trump gave his first speech to the United Nations General Assembly. His harsh rhetoric toward North Korea stood out — mostly because he threatened to obliterate the country of 25.4 million people.”

Six paragraphs later, writer Alex Ward got around to mentioning that “A few [specialists] noted that it was similar to what other presidents, including President Obama, have said before.”

And in an Atlantic post titled, “A Presidential Misunderstanding of Deterrence,” author Ankit Panda of The Diplomat newspaper accused President Trump of using “apocalyptic rhetoric” and threatening “to commit a horrific act expressly forbidden by international humanitarian law….”

But then he immediately turned around and admitted,

“The remarks echoed similar, countless deterrent threats levied against North Korea by past U.S. presidents with more subtlety and innuendo, perhaps allowing for a more calibrated and flexible response. But ultimately vowing to ‘totally destroy’ North Korea if America or its allies come under attack is, in fact, not all that sharp a break from existing U.S. policy.”

If these treatments of the North Korea crisis were simply efforts to demonize President Trump by abusing history, that would be contemptible enough, but what else is new from America’s too often incompetent and scapegoat-addicted elites?

But something much more dangerous is at work here. Individuals who, for good reasons, have not been regarded as kooks are using Never Trump-ism to foster a genuinely kooky idea. They’re suggesting that the alliances so central to America’s foreign policy making for decades should be viewed as little more than kumbaya symbols, and that anyone speaking frankly about their possibly deadly and indeed horrific implications is beyond the pale – even though the proliferation of nuclear weapons has unmistakably rendered these arrangements far more perilous.

In other words, they’re spreading the worst, and most childish, of all canards about foreign policy, or about any dimension of public policy – not that a particular set of choices is sound or not (that’s almost always legitimately debatable), but that hard choices never need to be made at all.

Im-Politic: Signs that the Left is Getting It on Trump-ism

Tags

2016 elections, Arianna Hiffington, Bernie Sanders, Bill Clinton, cultural issues, diversity, Donald Trump, gender politics, Huffington Post, identity politics, Im-Politic, Immigration, Iowa caucuses, Jobs, John Judis, liberals, middle class, Robert Reich, sexual orientation, social issues, Trade, unions, Vox.com, wages, Wall Street Democrats, working class

On the eve of an Iowa caucus that could put Donald Trump firmly in the driver’s seat for the Republican presidential nomination, the nation’s intertwined political-media establishment seems pretty convinced of a remarkable trend spreading among long-time GOP fixtures: The party’s power structure is reluctantly but unmistakably making its peace with the idea that the bombastic real estate magnate and reality TV star will become their standard bearer and possibly the next president.

More recently, though, the chattering class has noted a development that might be at least equally important, especially for the longer term future of American politics. Many liberals are abandoning their standard portrayal of Trump as a simple racist, nativist, xenophobic, misogynistic, (ADD YOUR FAVORITE ADJECTIVE) demagogue.

Instead, they seem to be warming to the idea that Trump is a genuine economic populist, and one who is not only giving (needlessly crude) voice to widespread and legitimate working- and middle-class frustrations, but who is consistently pounding on specific themes with which progressives should be entirely comfortable. In fact, some of them have picked up on my claim from last September that there’s enough overlap between Trump’s positions and those of Democratic Socialist Vermont Senator Bernie Sanders to create the (eventual) possibility of a new and enduring left-right populist synthesis.

The latest sign has come from journalist John Judis, who for decades has been one of the few prominent media figures to focus on the politics of American economic issues and the economics of political controversies. Judis has just published an essay on Vox.com titled “This election could be the birth of a Trump-Sanders constituency.” In Judis’ words:

“Sanders and Trump differ dramatically on many issues — from immigration to climate change— but both are critical of how wealthy donors and lobbyists dominate the political process, and both favor some form of campaign finance reform. Both decry corporations moving overseas for cheap wages and to avoid American taxes. Both reject trade treaties that favor multinational corporations over workers. And both want government more, rather than less, involved in the economy.”

He continued:

“[E]ven if Trump and Sanders are denied the White House, their campaigns will have been extremely significant, perhaps even changing presidential politics forever. Their success in building a following in their parties is an early warning sign of discontent with the outlook that has dominated American politics for decades.”

I’d add, as I noted in my original post, that Sanders used to express realistic concerns about the impact of mass immigration on the wages and broader living standards of Main Street Americans. But when he decided to run for president, he apparently concluded that his campaign would make no headway among a critical mass of Democrats unless he went into full Hispanic-pander mode.

Of course, readers familiar with the national media world know that Judis has long been distinctive among his peers for recognizing how much of the Democratic party’s mainstream has drifted away from its working- and middle-class roots in favor of the kind of Wall Street-friendly outlook championed by former President Bill Clinton. I suspect he would also sympathize with the idea that many more left-leaning Democrats have become too enamored with an agenda centered around identity politics and cultural issues that not only offers nothing to their traditional – whiter – base, but that treats their own values with thinly disguised and often open disdain.

As a result, what really stands out about the Judis article is the venue. For since its launch in 2014, Vox.com has established itself as a bastion of elitist liberals who in particular strongly endorse the trade and immigration policies so harmful to native-born U.S. workers. Its staff is also keen on the idea that Democrats should be helping to speed America’s transformation into a society and economy that’s both younger and more diverse racially and ethnically, as well as one that’s more globalized and cosmopolitan, greener, and alienated from traditional beliefs about family structure, gender and sexual identity, and employment patterns. Think of hipsters enamored with the idea of the gig economy.

Moreover, the Judis piece isn’t alone. Last July, Huffington Post was so dismissive of Trump’s – then embryonic – candidacy on so many grounds that it famously announced that it would stop reporting on Trump’s run as part of its political coverage. Instead, the website explained,

“we will cover his campaign as part of our Entertainment section. Our reason is simple: Trump’s campaign is a sideshow. We won’t take the bait. If you are interested in what The Donald has to say, you’ll find it next to our stories on the Kardashians and The Bachelorette.”

At the end of last year, Huffington Post reclassified Campaign Trump. Arianna Huffington, the site’s founder, made abundantly clear that her contempt for Trump was as heated as ever. But just this morning, one of her Associate Politics Editors posted an item titled, “A Democrat Explains Why She’s Voting for Donald Trump.” The main reason? Her hometown of Dubuque, Iowa

“is suffering from a stagnant economy, and [she] is disappointed with Democrats for failing to adequately turn things around. When Trump, a wealthy businessman who espouses protectionist economic policies, rails against nations like Mexico and China, [subject Rebecca] Thoeni says she can relate.

“‘People at the company I work for, they lost their jobs. They’re sending those jobs to China,” she said.’”

For good measure, the article’s author contended that this Iowan “is one of many working-class whites who make up a large portion of the Trump phenomenon currently sweeping across the country. It is a coalition that spans Southern states and the Rust Belt, which has suffered from economic decline, population loss and urban decay. It also includes a good chunk of less educated Americans who do not have a college degree, and who feel like they’ve been ignored by leaders in Washington.”

A few days before, progressive stalwart Robert Reich wrote in a column about an epiphany he came to while touring the nation promoting his latest book:

“I kept bumping into people who told me they were trying to make up their minds in the upcoming election between Sanders and Trump.

“At first I was dumbfounded. The two are at opposite ends of the political divide.

“But as I talked with these people, I kept hearing the same refrains. They wanted to end “crony capitalism.” They detested “corporate welfare,” such as the Wall Street bailout.

“They wanted to prevent the big banks from extorting us ever again. Close tax loopholes for hedge-fund partners. Stop the drug companies and health insurers from ripping off American consumers. End trade treaties that sell out American workers. Get big money out of politics.

“Somewhere in all this I came to see the volcanic core of what’s fueling this election.”

Reich has by no means become a Trump-ite. But he acknowledged that”

“If you’re one of the tens of millions of Americans who are working harder than ever but getting nowhere, and who understand that the political-economic system is rigged against you and in favor of the rich and powerful, what are you going to do?

“…You don’t care about the details of proposed policies and programs.

“You just want a system that works for you.”

I could go on. But more important at this point is to note the publication of an article in The New York Times yesterday indicating that what’s happening is that the chattering class’ liberal wing is finally getting a message being sent it by the grass roots. The piece, by correspondent Noam Scheiber, reported a “form of anxiety…weighing on some union leaders and Democratic operatives: “their fear that Mr. Trump, if not effectively countered, may draw an unusually large number of union voters in a possible general election matchup. This could, in turn, bolster Republicans in swing states like Ohio, Pennsylvania, Michigan and Wisconsin, all of which President Obama won twice.”

And according to Scheiber, these Democratic stalwarts weren’t blaming American workers for succumbing to racism, xenophobia, etc. In their view, “The source of the attraction to Mr. Trump, say union members and leaders, is manifold: the candidate’s unapologetically populist positions on certain economic issues, particularly trade; a frustration with the impotence of conventional politicians; and above all, a sense that he rejects the norms of Washington discourse.”

There’s of course a distinct possibility that none of this will matter on Tuesday morning. Perhaps a Trump loss in Iowa – even a close one – will puncture the aura of invincibility and even inevitability that some believe is surrounding him, and trigger a collapse of his White House hopes. Or Trump could finally hurl one bombshell that turns off even his hard-core supporters. Or maybe once enough of his competitors drop out of the race, one of Trump’s remaining rivals could consolidate enough of the anti-Trump vote under one banner to send him to defeat. (Trump has never so far won a majority of Republican primary voters in any poll.)

But even if Trump flames out at some point, it’s increasingly clear that “Trump-ism” will remain with us. And if it finds a champion who can combine Trump’s passion with some softer personal edges and a somewhat thicker skin, both wings of the chattering class may regret that they don’t have The Donald to kick around anymore.

(What’s Left of) Our Economy: Open Borders, the Goose, and the Golden Eggs

Tags

Bernie Sanders, bubbles, central banks, developed countries, developing countries, Ezra Klein, Financial Crisis, free trade deals, Great Recession, Immigration, imports, incomes, investment, Jobs, New Economy, Open Borders, recovery, Sharing Economy, third world, Trade, Trans-Pacific Partnership, Vox.com, wages, {What's Left of) Our Economy

Since Ezra Klein is still young, he has time to learn what a bad idea it is to try being clever on unfamiliar subjects. Nonetheless, as made painfully clear in a new interview with Democratic presidential hopeful Bernie Sanders, the media wunderkind and Vox.com founder would be well advised to learn this lesson sooner rather than later, at least when it comes to how the global economy works.

Evidently trying to be clever, Klein tried to trip up the Vermont Senator by asking him how he could reconcile his avowed democratic socialism – and its presumed concern about global poverty – with his opposition to “sharply raising the level of immigration we permit, even up to a level of open borders….” Added Klein, “It would make a lot of the global poor richer, wouldn’t it?”

Sanders’ response was good. But he could have really humiliated Klein by reminding him that unlimited immigration would not only slash American living standards, but that it would ultimately backfire on developing countries as well. The reason is the same as that which argues, from a global perspective, against dropping all barriers to imports from the third world, and it springs from a reality as unmistakable as it is apparently unknown to Klein: American consumption is the goose that lays the developing countries’ golden eggs. To paraphrase that immortal adage, it’s “where the money is.”

Yet just as the United States ultimately can’t responsibly finance the consumption of enough third world imports to spur developing country progress unless its own economy remains truly healthy, it can’t ultimately provide opportunity for third world immigrants without maintaining genuine prosperity. And as Klein and other chattering class advocates of much freer immigration and trade policies should understand – but clearly don’t – the financial crisis demonstrated the heavy costs for everyone of forgetting this truth.

As I’ve written, thanks in large measure to more than a decade of U.S. job- and wage-killing trade deals focused tightly on developing countries, a critical mass of American workers lost the incomes they needed to support acceptable living standards by living within their means. Rather than change course on trade policy, the bipartisan Washington powers-that-be decided to enable the working and middle classes to at least run in place economically by borrowing, instead of earning. The economic meltdown and Great Recession that inevitably ensued inflicted damage worldwide.

Just as important, the historically feeble recovery that’s followed has claimed its share of third world victims, too. Slower American growth has helped crimp imports from China and the rest of Asia, thus sapping the vigor of these export-dependent countries. (Although, as this recent post shows, this phenomenon is easily exaggerated.)  The continuing U.S. malaise has also undermined employment opportunities for current and prospective immigrants from Mexico and the rest of Latin America. Meanwhile, because many global investors have become more risk averse since the last decade’s bubbles burst, and because Wall Street regulations have (necessarily) tightened up some, much international capital has forsaken developing country market and fled to the safety of the United States.

Do Klein and his ilk really believe that admitting a flood of overwhelmingly low-wage, low-skill immigrants will turn this situation around and help anyone, at least for any serious length of time? The only possible justification is a belief, contrary to the evidence and common sense, that the newcomers could rise up the U.S. income ladder as quickly as previous immigrant cohorts. The same question applies to boosting American imports from developing countries – which other supposed experts have touted as a prime reason for supporting President Obama’s Pacific Rim trade deal. Moreover, as I’ve just reported, import- and offshoring-friendly American trade policies could also start victimizing recent immigrants – and choking off opportunities for their successors.

In a perfect world, of course, inhabitants from poor countries could move to wealthier countries any time they wished, and they and the native-born populations would all live happily ever after. Alternatively, in a perfect world, third world populations could supercharge their incomes by providing their first world counterparts with an indefinitely growing supply of increasingly advanced products. Americans (and in principle, Europeans and Japanese) would all support themselves by finding themselves jobs in the New Economy, or the Newer Economy, or the Sharing Economy, or whatever fantasy economic utopians conjure up. Or maybe central banks could keep trying to shatter ever-soaring records for money-printing,

In that perfect world, however, we wouldn’t need economics, or economics. And we certainly wouldn’t need economic journalists like Ezra Klein.

(What’s Left of) Our Economy: TPP’s Import-Fueling Potential Should be No Mystery

Tags

free trade deals, imports, Korea, KORUS, Matthew Yglesias, Obama, TPP, Trade, Trans-Pacific Partnership, unions, Vox.com, {What's Left of) Our Economy

Matthew Yglesias, who covers economics for the Obama-worshiping Vox.com, is puzzled. Why are American labor unions so passionately opposed to the president’s Pacific Rim trade deal? Among the reason for his mystification: his confidence that “the TPP actually does almost nothing to increase imports of foreign manufactured goods into the United States” that could cost union members their jobs.

Yglesias provides no evidence to support his proposition; perhaps he is swallowing the White House line that, since other economies negotiating the Trans-Pacific Partnership (TPP) are much more closed than the U.S. economy’s, an agreement is sure to bring down more foreign trade barriers than American. But even if this outcome were likely – and I’ve explained why it’s not – all Yglesias needed to do was to peruse the Census Bureau’s website. The trade data he would find make clear that the U.S.-Korea Free Trade Agreement has had exactly that import-super-charging effect.

The Korea deal (KORUS) matters because the Obama administration has described its “high standards” terms as the blueprint for TPP. And the numbers show that since it went into effect, goods from Korea have flooded into the U.S. market. Since KORUS’ March, 2012 implementation, American goods imports from Korea have increased on a monthly basis by 33.65 percent (through this past January – the latest detailed trade data available). U.S. goods imports from the world as a whole during this period? They’ve actually fallen – by 4.97 percent.

Now the sharp-eyed among you will note that the above is not really a fair comparison. For America’s imports have been greatly restrained recently by the domestic energy production revolution, and South Korea doesn’t have oil and natural gas to export. Yet if you strip oil out, you find that U.S. goods imports between March, 2012 and January, 2015 rose only 6.18 percent on a monthly basis – less than one-fifth as much as the Korea increase.

Moreover, there’s a pretty compelling explanation for why the approach that has clearly failed with Korea will deliver similar results if TPP is approved: Korea, Inc., the secretive web of relationships between Korea’s government and so-called private sector that aims above all to push exports and boost trade surpluses, has not only survived KORUS’ efforts to limit its pervasive use of non-tariff trade barriers and subsidies. It’s still flourishing. (Click here to see how utter inability to analyze these practices threw Washington’s official projections for KORUS and similar deals off wildly.) That’s mainly why TPP, which includes Japan and other Asian countries using similar strategies, looks bound to flop even more spectacularly. And why America’s unions, which actually know what they’re talking about, are much more trustworthy on trade deal results than remarkably un-curious journalists.