If TPP passes, @EurasiaGroup will add 10 US jobs. #GoBigOrGoHome
— ian bremmer (@ianbremmer) May 9, 2015
And even though all of them together may only number in the thousands, still a paltry total in the context of the entire economy, increased trade is about two things: 1) real people, and 2) ripple effects. However many (or few) jobs are created by trade policy, those jobs are opportunities for real people, often young people who've just graduated with a very, very expensive professional degree, and who had previously been staring down the barrel of student loan defaults; defaults which would damage their credit and thus close them out of housing and new car markets for years, depriving those sectors of new customers, growth and cause to make new hires of their own. In such circumstances demoralization quickly segues to a permanent lowering of expectations, and a generation of talent disappears into bleary mediocrity.
The answer is sure to come that this is all very dramatic, but that it pales in comparison to the hundreds of thousands if not millions of middle-class manufacturing jobs lost over the last 40 years or more. Fair enough. But the truth is that those jobs were not lost because the U.S. signed free trade and investment treaties. Rather, free trade and investment treaties were signed because both U.S. companies who'd begun to manufacture outside the U.S. and U.S. consumers would benefit if the products now being made in Latin America and East Asia could be imported into the U.S. at lower costs.
To reiterate: jobs didn't follow free trade overseas; free trade followed logically when manufacturing moved out of the U.S. for its own reasons. And in most cases, when the FTAs did follow, they did so either with countries of minimal impact for U.S. labor, or very late in the game, well after the exodus of manufacturing -- one of the oldest U.S. FTAs is with Israel (29 years), hardly a mass destination for formerly American-based jobs, and the so-called DR-CAFTA (Dominican Republic - Caribbean Area Free Trade Agreement), encompassing much of Latin America, didn't come into force until 2006. As I pointed out in a previous post, the lodestar of cheap manufacturing is China, and we have no FTA or investment treaty with China.
In the end, the simple fact is that manufacturing jobs are gone from the U.S. (with the slight caveat that lower utility costs in the U.S. resulting from the availability of unconventional natural gas and oil supplies may be making America an attractive destination for some manufacturers in high-cost regions such as Europe). And even if those jobs were to return, they would neither be nor support the kind of upper-middle and middle class jobs that my grandparents' generation knew. My grandfather, a WWII B-17 pilot with a business degree from Northwestern, raised five children more or less comfortably as a regional manager for National Cash Register (NCR, later bought by AT&T), a company which made and sold cash registers to the American retail sector. The 21st century equivalent of his job has nothing to do with manufacturing or selling anything to America's retailers. It has to do with the kind of analysis done by international firms in the financial and service sectors. These new jobs pay a lot better than his did. There just aren't enough of them. Yet. But if we can generate more of them through intelligent trade policy, isn't it all but a moral necessity to do so?
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