The Trump trade scam

Yesterday, presumptive Republican nominee Donald Trump gave a speech on trade, extensively citing EPI’s research which shows that trade deficits as a result of NAFTA and other trade deals, as well as trade with China, have cost U.S. jobs and driven down U.S. wages. It’s true that the way we have undertaken globalization has hurt the vast majority of working people in this country—a view that EPI has been articulating for years, and that we will continue to articulate well after November. However, Trump’s speech makes it seem as if globalization is solely responsible for wage suppression, and that elite Democrats are solely responsible for globalization. Missing from his tale is the role of corporations and their allies have played in pushing this agenda, and the role the party he leads has played in implementing it. After all, NAFTA never would have passed without GOP votes, as two-thirds of the House Democrats opposed it.

Furthermore, Trump has heretofore ignored the many other intentional policies that businesses and the top 1 percent have pushed to suppress wages over the last four decades. Start with excessive unemployment due to Federal Reserve Board policies which were antagonistic to wage growth and friendly to the finance sector and bondholders. Excessive unemployment leads to less wage growth, especially for low- and middle-wage workers. Add in government austerity at the federal and state levels—which has mostly been pushed by GOP governors and legislatures—that has impeded the recovery and stunted wage growth. There’s also the decimation of collective bargaining, which is the single largest reason that middle class wages have faltered. Meanwhile, the minimum wage is now more than 25 percent below its 1968 level, even though productivity since then has more than doubled. Phasing in a $15 minimum wage would lift wages for at least a third of the workforce. The most recent example is the effort to overturn the recent raising of the overtime threshold that would help more than 12 million middle-wage salaried workers obtain overtime protections.

Trump is absent or wrong on all these issues. He has said in the past that wages are too high. And he argues, without basis, that businesses are overregulated and overtaxed—further ingratiating himself to corporate elites and the party he now leads. Deregulation and tax cuts are have been tried and failed for the last four decades, simply enriching the rich without stimulating any growth.

Trump’s latest take on trade is a scam. He claims to be offering a path for workers, but is actually just offering mostly empty boxes on trade. What exactly is he trying to accomplish with renegotiated trade deals? And if is he so keen to help working people, why does he then steer the discussion back toward the traditional corporate agenda of tax cuts for corporations and the rich? Some pro-worker, anti-elite populist Trump is.

  • Brian_Dell

    Well, then, what does the EPI propose to do about America’s existing trade deals if not renegotiate or repudiate them?

  • CBCalif

    Trump at least is proposing action to attempt to end China’s currency manipulation, whether one agrees with his approach or not.

    Unfortunately, the Democrat candidate seems uwlling to take any action on this front, and instead is trying to sell her “mythical — never to happen green industries (phantom) economy which will never employ anyone let alone millions. An economy the government will create and an industrial environment they will create by words spoken on high from non-business experienced politicians and their Career Campus Employed Advisors.

    One of the EPI articles proposes countervailing currency interventions in foreign countries — but fails to note who is going to finance the hundreds of billions required to make that effort meaningful. The U.S. CANNOT emulate what the Chinese did by lowering the costs of their manufacturing products through gvernment intervention and by allowng an unhealthy low cost manufacutring environment to exist and thereby obtain the cash through export sales needed for countervailing currency intervention.

    Also, Trump is a businessman — not an economist, most of whom have zero real world business experience. He understands how to read and interpret Income Statements and Statements of Cash Flows. If this country imposes a high enough tarrif on Chinese manufactured / assembled goods being exported into the U.S. and effectively raises the selling company’s “Cost Of Goods Sold” to an non-comptetitive level, that would force businesses to again manufacture in the U.S.

    As for affected companies raising prices on their products, that is unrealistic. It’s a textbook fallacy. First, middle / working class people will not buy their higher priced products until they appear in the 99 Cents store, in Marshalls, etc. That’s why Macy’s is closing 100 stores. The same products they try to sell at a higher price are available around the corner of the mall at 1/2 to 1/3 the price at Marshalls or new or used on Ebay or on Amazon — for example. Real underpaid customers will not waste their money in this economy. They will simply wait for the Discount Stores to get the products, and they will be there in large quantities.

    Further, I am sure you realize that the S&P 500 Corporations have experienced a 300 to 400 percent increase in Profits compared to the period before Bill And Hillary Clinton (the team) and their allies in the Republican Congress brought the U.S. into the WTO. Those high profits provide a substantial cushion that will enable the businesses forced to return to the U.S. to absorb the higher costs required to manufacture here. Their profit levels will merely return to those they earned pre-Free (Costly) Trade. A lower profit profit level that supported an annual rate of GDP growth more than twice that of the post-Clinton era Free Trade Business environment.

    I do enjoy and agree with most of your well thought out papers / articles, but don’t let one’s dislike of Trump’s personality to get in the way of realizing that he is a very succesful businessman and understands economic matters from a real world prospective. We could use a lot of people with his business management experience in Congress, rather than the lawyers and other that populate that place — most of whom like Paul Ryan and Marco Rubio have no real world experience.

  • DiligentDave

    I understand the benefits of globalization. But I also understand the detrimental effects it can (and does) have.

    So most all nations, to some extent, and in some way/s, “manipulate” their currencies, from time to time. China has long been a kleptocracy. Reducing the value of the renimbi to the detriment of people who hold renimbi (mostly Chinese people), and also to the benefit of Chinese corporations and the Chinese government; and to some extent, to the detriment of some American workers.

    With the likes of the Chinese and Japanese having bought much of our governmental debt, they are holding IOU’s for the “hamburgers” we eat today (Popeye’s “J. Wellington Wimpy’s oft-repeated proposal, “I’ll gladly pay you Tuesday for a hamburger today.”

    Problem is, seniors for 80% of a century have been living on this ‘Wimpy’ principle. Over 70% of what the US government spends is on MediCare (mostly), Social Security (somewhat less), and MedicAid, and interest on the accumulated national debt mostly for these programs.

    The Chinese, Japanese, European and Middle Eastern (mostly) holders of US Government Treasuries bills and bonds can hold us hostage when we, as a nation, are unable to pay back this money (with INTEREST). Then, our total bankruptcy will be suddenly fully evident.