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Sanders has been skeptical about the benefits of free trade
Sanders has been skeptical about the benefits of free trade Eric Thayer—Getty Images

Trump and Sanders Have Tapped Into a Dangerous--and Wrong--Anti-Trade Sentiment

Apr 14, 2016

Donald Trump and Bernie Sanders have built their campaigns on opposition to trade. Trump says the U.S. has lost manufacturing jobs because American trade negotiators aren't smart or tough enough to cut shrewd deals with China, Mexico and Japan. President Trump, he promises, will bring those jobs "home."

Sanders, on the contrary, says that business elites, their lobbyists and their willing accomplices within the political establishment know exactly what they're doing. They are the "one percent," crafting trade terms to enrich themselves at the expense of working people. "Why do I want to pay somebody in Michigan a living wage when I can pay slave wages in Mexico or China?" reasons Corporate America, according to Sanders.

Both candidates caricature reality. Globalization--the processes by which ideas, people, money, goods and services cross borders at unprecedented speed--has created two sets of winners. First, Sanders is right that the world's richest have increased their share of global wealth. Today, the world's 85 richest people own the same amount of wealth as the bottom 50% of the global population. There has been major progress--hundreds of millions of people in developing countries have been lifted out of poverty into the global middle class as emerging markets ramp up their industrial production. But between 2001 and 2013, America's trade deficit with China cost the U.S. 3.2 million jobs, three-quarters of which were in manufacturing. Trump is right about that.

The early losers are those in wealthier countries, like the U.S., who have fallen from the middle class as factory jobs have vanished. These are the men and women nodding along with Trump or Sanders. Their living standards are much higher than those of workers in China or Mexico, but their prospects aren't as bright as they were taught to expect. They have reason to be angry. The globalized marketplace has benefited workers in China, Brazil, Mexico, South Korea, Turkey, Malaysia and Nigeria because they will work for much more modest wages, and because multinational companies have found ways to lower labor costs by outsourcing their operations.

You might be surprised to learn, however, that manufacturing jobs have been returning to the U.S. for the better part of a decade. The demand for higher wages in China and other emerging markets, the easy availability of low-cost energy for U.S. businesses and the advantages of bringing production closer to wealthier consumers have together created nearly a million new manufacturing jobs over the past six years. "Reshoring" has increased the number of U.S. manufacturing jobs from about 11.5 million in 2010 to about 12.5 million today. Trump and Sanders haven't noted that.

But that's not the end of the story. The U.S. remains far below the peak of 19.5 million manufacturing jobs in 1979, and the longer-term trend is toward technological change that increases efficiency by eliminating jobs for good. Here's where the Trump and Sanders messages are especially dangerous.

Most of these jobs are never coming back. Just as the automobile killed the horse and buggy, so the automation of manufacturing will sideline the factory worker in coming years--in the U.S., in China and everywhere. The winner from globalization's next wave will not be the Chinese or American factory worker but those who profit from the fast-increasing efficiency of the developed world's machines.

Those who claim they can restore lost jobs and those who cheer reshoring are missing this, and they will ignore the urgent need to retrain workers for the (very different) jobs of the 21st century. Future factory jobs will go to those who can program, run and maintain fast-evolving high-tech equipment in the age of robotics, and those flexible and resourceful enough to succeed in many different roles. And there will always be fewer of these jobs than there were U.S. assembly-line workers in 1977 or Chinese factory workers in 2007.

The broader result will be a middle-class backlash against trade in both the developed and developing worlds, and greater pressure on governments to restore barriers. This trend will be much harder on developing countries and their more brittle political systems, but it will fragment the entire global marketplace, ignite nationalist passions and provide a platform for the next wave of Trump/Sanders-style populism--in rich and poor countries alike.

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