Must-Read: Martin Wolf: Donald Trump Will Not Bring US Jobs Back

Must-Read: A truly amazing number of people right now are doing a great deal to submerge the distinction between:

• The effects of “trade deals” on the U.S. manufacturing sector (on net, next to zero)
• The effects of our macroeconomic and industrial–or, rather, financialization–polices on the U.S. manufacturing sector (highly destructive, most particularly in the administrations of Reagan and Bush 43)

To submerge this distinction is to allow–encourage–your readers to imagine Trump’s forthcoming abrogation of NAFTA will provide a significant boost to American manufacturing. That is false. And as Barry Eichengreen and Larry Summers pointed out in the FT last week, Trump’s policies–what we know of them–if there are “policies” rather than simply attitude–are highly likely to further weaken American manufacturing employment.

So why would people who ought to know otherwise submerge this–important–distinction?

It’s possible–and in fact correct–to think that (a) our macro-industrial policies have been disastrous for manufacturing, and (b) NAFTA didn’t materially accelerated mfg employment decline and NAFTA abrogation will not repair it. So many working so hard to keep their readers from seeing that is really dismaying. And why? Because they hope to steal Trump’s nativism and use it to energize their own preferred policy proposals? Or is there some other reason?

Martin Wolf: Donald Trump’s tough talk will not bring US jobs back: “Blame foreigners first. This strategy is always the companion of aggrieved nationalism…

…Trump’s ban on immigrants… his protectionism. A kernel of truth… bolsters a lie: my actions are enough to keep you safe and restore the prosperity you once knew…. The main explanation for the long-term decline in the share of manufacturing employment… has been the rise in employment elsewhere. In 1950, employment in manufacturing was 13m, while that in the rest of the economy was 30m. By the end of 2016, it was 12m and 133m…. Yet output of US manufacturing was not stagnant. Between 1950 and 2016, output rose 640 per cent, while employment fell 7 per cent…. The explanation for the contrast… is rising productivity. Yet no one is proposing to stop this….

The increase in the trade deficit in the early 2000s had a significantly negative effect on employment in manufacturing, but next to none on the long-term decline in the share of overall employment in manufacturing….

Daron Acemoglu of MIT and others concluded that trade with China directly caused the loss of about 10 per cent of the total number of jobs lost in manufacturing between 1999 and 2011. But analysis of linkages among firms and the impact upon local demand gives far larger negative effects… though… still less than 2 per cent of total employment…. The effect of import competition is often geographically concentrated…. The need to sustain demand and so ensure that new jobs replace the old ones in the economy as a whole…