Many good points and recommendations in this column. But it is worth reminding readers the overwhelming majority of those jobs lost to China after it entered the WTO in 2001 were the result of US companies closing factories in the US and opening them in China. So the profits flowed back to US companies. Chinese goods kept prices and interest rates low for the American consumer. No one was complaining then about China. On the contrary American workers seemed to be one of the main beneficiaries...until it dawned on them that they were the goat. In 2007 JibJab created a prophetic musical parody : https://www.youtube.com/watch?v=pKv6RcXa2UI While the heyday for US companies is China is now past, they are still doing well as are most US consumers who benefit from well-made and priced Chinese goods as well as low interest rates.
"What does education do?"
I'll tell you what it does:
*It creates student debt.
*It creates a time drain during an employee's best earning years.
*It creates a "GLUT" of newly qualified potential employees that come out of the student pipeline to discover their field is already saturated.
*It creates salary commoditization. When enough lemmings have received their qualifications. Suddenly that $100k+ career is a $35-$40k commodity. Oh! And you still have to pay off that student loan...
I see people running around like chickens without their heads (yours truly included) chasing the elusive skill set du jour.
Let's try something else for a change. It's called ON THE JOB TRAINING - WITH PAY! It used to exist in the dark ages of the 1980's and 1990's.
22
As for joining TPP, I hope you mean the new TPP and not the old TPP. You know, the one that forced up the duration of copyrights (why?), forced new protections on Big Pharma's "biologics" (why?) and expanded the ability of multinational corporations to sue (among others) state and local governments that might dare to enact any new regulations for health, safety or the environment. Funny how all the most egregiously business-friendly sops were all imposed by the US, and have now been jettisoned thanks to Australia and New Zealand.
11
And while encouraging higher education among our young people, I would also strongly discourage their participation in organized religion. It's pushed as an equitable substitute for knowledge while being responsible for discrimination and constant attempts against civil rights.
12
Two things any leader serious about making US labor globally competitive needs to address: energy efficiency and nationalization of healthcare.
Americans overpay for under performing healthcare direct costs by 30-50% with associated higher than necessary indirect costs. Combined, a drag on the U.S. economy of well over $1 Trillion annually.
Nationalized healthcare would also decouple employment from healthcare so employers could stop wasting resources on non-core activities.
Regarding efficiency, American energy intensity (btu/$ GDP) is higher than many peer nations yet the U.S. has relatively low export levels. US GDP is around 2/3 consumption. America consumes more energy than others just consuming. Gotta keep that fat alive.
As a layman I don't understand all the intricacies of the trade arguments re China. As a consumer I do sense something that is not being discussed. When China's markets opened to American businesses, the rapid expansion in the importation of Chinese goods was often due to American manufacturers finding that they could have their products made in China for much less, often not lowering selling prices, and reaping much higher profits. Many people in the U.S lost their jobs due to their own employers closing shop here and buying there. The occasional anger people express about "everything is made in China" hints at this. The problem for so many people here has been the lack of attention paid to protecting workers from their own employers. Unions, whatever their faults, do just that. If I see that a majority of the merchandise in a big department store is made in China (or low wage Asian countries) it is the fault of the companies importing them, not of the government or workers where the products are made. It is the ugly side of Capitalism.
9
Education and work ethic do not help older workers who have everything but youth.
2
"So what would a smart American president do?"
If only...
3
The national dialogue is about race and inequality, rather than on education and training. We cannot expect to educate and retrain our own citizens if we continually accept poor, undereducated people from around the world (and if we allow illegal migrants to remain here). Having to subsidize refugees and familiarize them with our culture, which is often completely different from their own, having to educate children whose parents have no more (and in many cases, less) than a grade school education, do not speak English, and who may not understand the value of an education, and trying to help our own citizens whose parents have lost income due to the flood of undocumented workers is consuming us.
Undocumented migrants need to take the knowledge they have acquired while living here, and return home to better their own countries. We need to be more strict about whom we offer asylum, carefully checking out their stories. Countries that have too many children, and then fight over the limited resources should adopt family planning. (This includes Syria, Somalia, and the Rohingya.) Our country cannot serve as a release valve for the world’s over-population.
Let us return our attention and resources to educating and retraining our own citizens.
6
Iris DeMent wrote "Our Town" after visiting entire communities, not just jobs, decimated by the shift to China.
And you know the sun's settin' fast
And just like they say nothing good ever lasts
Well, go on now and kiss it goodbye but hold on to your lover
'Cause your heart's bound to die
Go on now and say goodbye to our town, to our town
Can't you see the sun's settin' down on our town, on our town
Goodnight
Up the street beside that red neon light
That's where I met my baby on one hot summer night
He was the tender and I ordered a beer
It's been forty years and I'm still sitting here
CHORUS
It's here I had my babies and I had my first kiss
I've walked down Main Street in the cold morning mist
Over there is where I bought my first car
It turned over once but then it never went far
CHORUS
I buried my Mama and I buried my Pa
They sleep up the street beside that pretty brick wall
I bring them flowers about every day
But I just gotta cry when I think what they'd say
CHORUS
Now I sit on the porch and watch the lightning-bugs fly
But I can't see too good, I got tears in my eyes
I'm leaving tomorrow but I don't want to go
I love you my town, you'll always live in my soul
But I can see the sun's settin' fast
And just like they say nothing good ever lasts
Well, go on I gotta kiss you goodbye but I'll hold to my lover
'Cause my heart's 'bout to die
Go on now and say goodbye to my town, to my town
Can't you see the sun's settin' down on my town, on my town
Goodnight, goodnight.
5
But then
This administration doesn't have any competence that level.
That simply means we are doomed.
1
Everybody should read this article and someone should tie Trump to a chair and read it for him.
6
`One of the hardest things to accept for all of us who want Donald Trump to be a one-term president is the fact that some things are true even if Donald Trump believes them! `
I used to think of Tom Friedman as thoughtful and even enlightened commentator. Now he is apparently so biased that he would not be willing to accept time of day if Trump stated it.
3
After reading Tom's article I feel that our previous presidents, economic advisers and political class who promoted free trade were really traitors who promoted Chinese factories and economy at the expense of American workers and American interest. Otherwise, how can they allow China to charge tariffs at the rate of 25%-50% on American products and allow to import to this country at a rate of 2.5%. It destroyed our industries, but increased profits of companies who moved their business to China. Tom Friedman is still acting as an enabler of those traitors who promote Chinese interest by trying to discredit Trump who wants to right the wrong. Regarding TPP, it was not supported even by the "smart" lady who ran against Trump.
4
So, go talk to Trump and his trade team. I, too, have wondered why we don’t reciprocate the way China puts tariffs. Give them the same treatment that they give us.
3
China would not have achieved the dominance of many US markets (clothing, electronics, toys, etc.) that it has, if wages for the middle and working classes had not stagnated for the last 30 years. Americans turned to cheap Chinese imports because their incomes were not rising while their expenses for housing, education, and medical care were soaring. Something had to give.
Paying less for Chinese wares than union-made American ones allowed us to believe the illusion that we were keeping up. But the reality of many of those Chinese goods is that they are shoddy (unlike the Japanese ones in the 80's such as cars that were actually both cheaper and better made). You can buy a shirt for less now than one cost in the 80's, but the fabric is flimsy, the stitching poor, and it is a rag after a few washings. The lawn mower you buy for $199 will break down after a season or two. Americans would never have settled for such garbage if their wages had kept up and they could afford better. The thing we needed to protect was not our manufacturing, it was our share of the national income. Fix income inequality and you may find that suddenly, US manufacturers become competitive again.
4
Mr. Friedman, I think you're right about US - China trade relations, but only up to a point. For years, Chinese trade policies have been mercantilist, while the US has acted as though Free Trade prescriptions apply to all circumstances. Because patterns have ossified over the years, the situation may have become even worse than your description. Moreover, where technologies (note the plural) are concerned, your policy prescriptions, sensible as they are, inadvertently ignore critical facets of the long-term problems.
Your reciprocity-based "get-tough" adjustments to China trade, e.g., matching Chinese tariffs and joint venture rules with rules of our own, are fine – but only for the moment. They concede important future advantages to China because the US is ahead in most fields. What can top American firms gain from forcing less advanced Chinese firms into joint ventures? Shotgun marriages will perpetuate technology leakages to less sophisticated partners.
You're on the right track, Mr. Friedman. But where a host of advanced technologies are concerned, you need to develop more discerning and sophisticated domestic and international trade policies. I hope to be in your cheering section.
4
The premise is that a "smart" president would join TPP. But, Mr. Friedman, Mr. Trump is not a smart president. He is a wishy-washy, no-policy president. He does whatever he feels like in a moment with no concern for long range effects.
The smart move would not be new tariffs, but new education for workers in declining industry. That takes vision, something this administration is notoriously short on.
When figuring out job loses you have to take automation into account and come up with a fair analysis. When Phil Knight was asked as to when Nike will bring manufacturing back to the US his response was when they were fully automated, this is a US corporation. All third world countries have hefty tariffs on manufactured goods coming to their countries. India has 120-180% tariff to cars coming into India, they have begun exporting automobiles and tractors into US. They own Range Rover and Jaguar brands, so it is not only China.
1
Even a broken clock is right twice a day.
I'm glad to see Friedman embracing what hopefully will become a new bipartisan consensus on Chinese unfair trade.
One structural problem with the WTO and the TPP and other trade agreements is that, high level, we trade away access to the U.S. market in return for foreign protection of American IP. Because we need foreign governments to police American IP otherwise it is too easy to steal, pirate or copy. For example, look at the market in China for Microsoft Windows (Microsoft is literally giving it away for free). Same thing with other fundamental "rule of law" principles -- we actually have to negotiate (i.e., offer concessions) to require other nations to enforce property and contract rights.
So then "round two" of the trade talks continue and we ask for reciprocal access to the foreign markets. So then the foreign nation demands something equally as valuable from us -- but we already gave them access to the U.S. market in round one!
So our advanced economy's reliance on the value of IP, and our trade negotiator's prioritization of international IP protection, means we are too easily squeezed.
How do we solve? We need to play serious hard ball. No way around it. That's where I at lease hope that "madman" Trump and his team can make some inroads where prior administrations have utterly failed. And where I hope we can unify as a nation on these trade issues.
2
Two points:
One. Free trade is the automatic punching bag when trade inequality between the US and China is discussed. But what about (whataboutism, so?) countries where free trade is not only beneficial but critical to their survival? Singapore is a good example. With absolutely no resources, having to import even water and sand, it strives on total free trade. Industries come and go. There is no such thing as jobs for life. You are expected to reskill, retrain and adapt.
Two. Education is rightly recognized as important. But look at the dismal standard and absurd cost of education A university colleague once commented, if you set aside MIT, Harvard and a few notable universities, you can forget the rest. This was borne out when I lectured for a NY state university in IT. The standard is so appalling that my daughter in her eighth year was doing work more complex than my students could. Tests such as PISA exposed any myths that US education is in good shape. So, with all the protectionism, will this augers well for the future as technology leaps ahead?
I think you've left out the elephant in the room. There is no free enterprise in China. Entrepreneurship simply does not exist. It is either the Communist Party or the government that controls everything. There is no respect in China for patents. There is no independent banking system. There is no free enterprise. It is all for the state and by the state and of the party.
5
But you are wrong about what to do about it.
Seems to me that the description of China's economy as "reformed and closed" means that protectionism CAN work, if applied correctly. Or is successful protectionism the prize won by the first to protect, and so we have lost the race?
Globalization is profitable for US firms because capital is more mobile than labor. Period. If labor was equally as mobile as capital (hard to imagine, because you would need worldwide open borders and some way to get rid of the cultural/linguistic/etc. obstacles to movement), wages would tend to equalize worldwide.
So, how do we fix that? It would be nice if we could repatriate the capital. However, efforts to do that by offering incentives to keep jobs in the US, at least as currently practiced, seem to be ineffective. Companies find ways to pocket the money and still shift the jobs abroad (consider the Carrier debacle). We seem to be unwilling to actually ban offshoring.
If we can't ban, or adequately regulate, globalization behaviors, then we have to redistribute the extra profits derived from it, shifting them back to workers and consumers and away from shareholders and CEO's. Yep, it's called taxation.
Simultaneously, if we want to use education to lift US workers, (a) pay for the education, don't finance it on the backs of the workers via loans, and (b) stop supporting foreign competition with US workers -- end the H-1B visa program now. Entirely. Period.
4
FJP,
China is the 800 lb gorilla in trade. They have a large internal market. India has a large internal market. Together, just these two alone are 1/3 of global market.
Do you know US companies sells billions in China? Do you know China is GM’a largest market? Do you know US sells billions in weapons to India? Do you know India is the largest market for P&G? Why do you think India is allowing These companies to sell in its market?
The answer is ‘Quid pro quo’. US has to allow Indian software service companies access to US market. So H1b is not going anywhere. US is the largest beneficiary of globalization. How many Indian companies or Chinese companies do you know? American companies are household names in India and China. Do you want to bring them all back in return for stopping H1B visa and sending Indian companies back? Who do you think will be the bigger loser? Who do you think will lose millions of jobs?
That was the main reason that President Trump was elected, in that he spoke about issues that had been ignored, and not dealt with for decades, including fixing all of the immigration issues, drugs streaming over the southern border, unfair trade deals, and taxes, ignorant, inconsistent, and destructive foreign policies, etc. The problem with him, is that he didn't have any plans, doesn't know how to follow through, and caves every day, as in the non backbone about gun policies.
9
Yeah Trump wasn't the answer what this nation is ailing, that was clear as the day he declared his candidacy since 2015.
One year ago, NYT reported "President Trump has won preliminary approval to register 38 new trademarks in China for industries including restaurants and advertising.."
https://www.nytimes.com/2017/03/08/business/china-trademark-donald-trump...
Ten months ago, NYT reported ".. Mr. Kushner’s relatives are working feverishly to solicit overseas money for projects in the United States, and they are highlighting their ties to Mr. Kushner as they court investors."
https://www.nytimes.com/2017/05/06/world/asia/jared-kushner-sister-nicol...
America's Duck Dynasty HAS US HANGING upside-down in a Chinese butcher shop, while it walks and talks like a crime family of self interests. Which Majority Party in Congress HAS ZERO ISSUE with the perception of financial conflict of interest, even now as lobbyists hired by WH get waivers?
Three weeks after Trump's election, NYT reported "The Office of Government Ethics has informed lawyers for President-elect Donald J. Trump that only a divestiture of his financial stake in his sprawling real estate business will resolve ethical concerns about conflicts of interest as he assumes the office of the presidency."
https://www.nytimes.com/2016/11/30/us/politics/donald-trump-business-pre...
1
Too bad neither Trump nor Wilbur Ross will read or given this article any consideration.
A very interesting and astute column that emphasizes that with the right education and initiative, the American dream still exists despite the lack of vision of our leaders. But the halcyon economy that many yearn for was built on the ability of those without education (but with initiative) to get on the ladder to the middle class (and thus educate their children). They did this via good union jobs in factories. Those factories are gone to lower paid workers overseas and, as Bruce Springsteen once sang, they ain't coming back. So how do you reconstruct that ladder? By making the jobs that are now available to the relatively unskilled as lucrative as the factory jobs of yore. That will come about when McDonald's and Amazon and Wal-Mart etc. are all unionized and pay good wages and provide decent benefits. Maybe your Big Mac would cost a little more, but so what? And Wal-Mart and its ilk make most of their profits from selling low-cost made-in-China goods. They should distribute more of that money to their workers who no longer can get decent wages in the factories that used to make those goods.
1
There's very little daylight between your views and those articulated by Trump. The TPP is a flawed pact and by definition watered down by the participation of unreliable and self aggrandizing co-sponspors. Since the US suffers most in this trade imbalance, we should confront them directly in this negotiation. We should however fairly measure this imbalance. Often, as assemblers and 'last to touch the product', the Chinese are unfairly ascribed the whole cost of the value-add. The 'parts explosion' of the iPhone chronicled in your newspaper's pages some years back showed that China was ascribed the entire $350 cost of sales of the iPhone when in fact their value add was a small labor assembly of 10% of that total.
On the IP front however, they have engaged in wholesale hacking and theft. This must change. If their markets aren't opened, then ours must close - this will hurt them far more than us, and is only fair.
2
If you get educated in America today, and have a good work ethic, you are going to be rewarded.
--------------------------------
I guess the validity of this statement depends on what one means by "rewarded". If working 10-hour days with few or no paid vacation days, no paid parental leave, weak universal health care, poor job benefits, no pension, paying off $200k student loans and the possibility of being fired at-will is a reward then I do agree with this statement. Otherwise, the average white-collar worker needs to look towards Europe (especially Scandinavia) for guidance.
3
China is set to leave us in the dust because they are developing the technologies of the future and with government subsidies. They educate their populace and subsidize modern energy technologies.
Trump denies scientific facts, puts a non educator in charge of the department of education, and pushes an agenda of oil and coal. Why? Coal and oil are the horse and buggy of the 21st century.
5
It would be interesting to know if Professor Autor included the social costs to our country in analysing our trade deficit. If you included the costs of unemployment insurance, law enforcement, drug rehabilitation, family counciling, etc in the cheap imports that we buy, it might be wiser to not to import as much. It seems that it is no longer necessary for the US to "develop" the rest of world's economies by giving them free access our economy at the expense of our own citizens.
1
Trade tariffs are the least of our worries. By his disrespectful actions and his upending of societal norms, and with a compliant Congress, Trump signals to every would-be dictator in the world that it’s possible to get away with anything. Does the UK imagine that Putin is concerned about the dismissal of diplomats when Trump has allowed the decimation of our Diplomatic Service? When Bannon can stand up in France and say: “Let them call you racists. Let them call you xenophobes. Let them call you nativists,” ... “Wear it as a badge of honor.”, (as reported in The Times on March 10). When Poland can deny complicity in the Holocaust? When Ji Jinping can, in effect, call himself leader for life? And it’s little comfort that we’ll perhaps up-end Congress in November. That’s a lifetime away. Wake up world. Danger is afoot.
6
This is an administration under siege. Bitter staff in-fighting and a man with low approval ratings, now looking for loyalists. A cabinet aggressively unaccountable.
An apparently absent Government Accountability Office. Unrestrained spending.Unbelievable expenditures. Contorted explanations. Where are the auditors?
A bunch of businessmen running amuck in a candy store. Rhetoric but not the facts. An erratic president without a compass. Informational cones of silence. Disturbing treatment of the press. Torturers considered for key positions.
3
Like a lot of other people, I'm older and more set in my ways, but I must admit this statement opened my eyes about the enormously poisonous effect of China's calculated destruction of our older manufacturing industries. These include, of course, its continued absurd protectionist policies now that China has achieved her blast-effect takeoff into the economic stratosphere. The agricultural states who benefit so glibly from our grain trade with China don't appreciate these destructive effects, and I confess that I am one Kansan who did not comprehend what Mr. Friedman had to say until he said it. Even so, he has rightly reiterated the catastrophic effects of Mr. Trump's gratuitously absurd retaliation against Mr. Obama's achievement in the Trans-Pacific Partnership. Who reading this can deny that Mr. Friedman was right in his recent statements calling our President a "towering fool?"
1
Even George W. Bush was right 5% of the time.
1
And another thing! Companies like Amazon and Google that are looking for new places to plant their factories, etc. need to look outside the areas that already are teched out and priced out of the housing market. They owe their customers, that's the rest of us, the opportunity to get the same advantages Boston, NYC, Chicago, the Bay Area, Portland, and Seattle have without adding to the traffic jams and lack of housing, and cost of living rise in those areas.
We already have a glut of educated people in the US. The problem is that most are not interested in acquiring "tech skills" mentioned in this article. These skills are things like running a modern CNC machine...essentially an assembly-line task, albeit with a computer interface. Who is clamoring for their son or daughter to be (essentially) a machinist? I'm sure there are exceptions, but it's definitely not the rule.
No, our children want and get medical and business and computer science degrees. I work at a university, and there are good STEM majors...but we probably need more advanced technical tradesmen to compete with China, and our children don't want to do that. And you don't want them to do that either; if your child is not getting a baccalaureate degree, you probably feel like you did something wrong. I guarantee the writers at the NYT don't want their children to be vocationally educated.
How do we change that?
5
You know what would be helpful? What if we had a trade agreement with a huge bloc of other economies concerned about China's trade practices that could exert influence on them? A partnership that spanned the Pacific.
Someone should get on that!
2
With the unemployment rate down to 4.1% the skills argument largely makes no sense.
Don't worry that will not be permanent,
When Brick mortar jobs lay in the graveyard.
When the taxi, truck driver lay in the graveyard.
When AI started to invade your life profoundly ( 5 years down the road max)
"U.S. tech firms ... offer cloud services to Chinese citizens have to store the data in China on servers operated by a Chinese partner. The U.S. has no such regulation."
For reasons having nothing to do with trade. It allows China to monitor their citizens.
1
Great column! Really, implementing a trade policy with China which mirrors the way in which they choose to deal with us is only common sense. That it hasn't happened is mystifying but better late than never. I think the original thinking was that China was a 3rd world country with great possibilities for American businesses to prosper and we should get China up to speed. Looking back that was certainly naive on our part totally ignoring Chinese nationalism and their unstated desire to dominate the area and protect against western encroachments that they suffered in the previous decades. China is a country that existed for hundreds of years as an imperial dynasty subservient to no one and now they have a new Emperor intent on launching a new dynasty. Unfortunately at present it appears all the U.S. can muster for its own benefit is a team of Bobble-heads. Howdy Doody and Phineas T Bluster.
2
Too many pointless anecdotal comments that pretend trade is the problem and not simply how the US approached it. Too many overlooking that overall prosperity around the world has risen as a result of trade and supply chains, while abject poverty is at least 40 percent less. Many more have done well than not from trade and immigration. That's the reality.
The other reality is Trump is completely wrong regarding every aspect of what the problems are and how to derive solutions. Walking away from TPP was monumentally obtuse at every level. Tariff and trade wars are equally moronic. Trump is and always will be the dumbest guy in the room when it comes to facts, data, policy and reality.
We know what's wrong, but we don't have a functioning president to help make things better. He can only make them worse. This is the status quo until 2020, when voters fix the problem.
Eclectic Pragmatism — http://eclectic-pragmatist.tumblr.com/
Eclectic Pragmatist — https://medium.com/eclectic-pragmatism
1
"we need to ... create the conditions for every American to be constantly upgrading skills and for every company to keep training its workers. That will matter whether the challenge is China or robots."
This was the message of Bernie Sanders. It found an audience in those willing to take the responsibility to upgrade their skills.
Trump had a stronger message, one that found a wider audience: no need to take responsibility. The government will impose tariffs and reduce immigration. Your job will return, and you won't have to do a thing.
1
Trade imbalances don't matter. I have a trade imbalance every time I use my credit card to buy something - I am using credit to buy goods. No one trades goods for goods any more, the pure bartering nature of economies is long gone. As along as I can pay off my credit it's not a problem. The US should be focusing on it's budget deficit, which dictates how affordable our credit is.
1
The name of the game is RECIPROCITY. Yes, Reciprocity. Say it again and again to our trading partners. We'd do unto them what they do to us. And the process for retaliatory actions should be made easy and automatic without vesting discretionary powers to any official, agency or department discretionary powers to ponder over what to do.
Another solution I suggest is that we think of using a comparative second supply source, like India, for the production of goods that require intensive laborforce at costs comparable to those in China. This would also add to peace and stability in the region and contribute to our defense and security.
3
The trade imbalance is difficult to tackle because we are a democracy but China is not. I have met many Chinese scholars in my line of work. Growing up in their political-economic system, these scholars have a hard time grasping the fact that the private sector of the US is as powerful as the government on economic matters. In their minds, the Government has total power on the economy. I do not know if our system of democratic capitalism will eventually win over the autocratic capitalism that China practices. However, I do know that in my line of work, our system of freedom, however messy or ineffective it may appear at times, still wins - we are still more innovative and creative than our peers in China.
2
I think when the trade agreements were agreed, the developed countries never imagined that the less-developed countries would actually develop. They somehow imagined that they’d always basically remain only a source of raw materials and a market for manufactured goods.
3
It was a job-killing mistake to have let China into the WTO. It's a dictatorship that does not practice free trade.
6
He used this same line for Bush. Know your audience.
I agree with Mr.Friedman and Mr.Autor. In American politics 'spending money for education' is very unpopular and dirty things to say. The GOP politicians hate the department of education and educating the future of our land. The education secretary is trying hard to decimate and dismantle the department. I think free trade is good for our economy and our country but it should not be 100 percent free. I do not believe Tit for Tat but China and Japan are not reciprocating with us at all. If any country does not open up for our business then we have to be hard on them provided we do not punish our citizens. One more thing I agree with Mr.Friedman that we have a incompetent president.
"... some things are true even if Donald Trump believes them!"
No. Mr. Trump's approach is characterized by believing some true things in a completely false mental system. Also clear facts, if misinterpreted, build an alternative reality. Thus, even when Trump is right on some things, he's wrong.
I would like to believe there is such a thing as a meritocracy but I turn on the TV and there's Trump...
The American business system is built on how can I get over on the next guy, not how can we use what we each has to make life better for both.
The American business system is built on what can I get today, not what do I need to do today to ensure a better tomorrow.
The American business system is built on winner take all, losers take a hike.
Tech education is a grand idea but ask people in the tech industry how great their jobs are, how secure they are, how well they're paid and you'll likely find out the hours are horrible, the pay is not great and they are the constant target of outsourcing to inexpensive competitors in foreign nations. More than likely tech workers are contract employees with few benefits. Education isn't a be all end all... A highly educated populace with no jobs for them is a waste of resources. The confounding factor is the Federal government retracting from its role as the steady hand in research and international business development. China is doing what's right for China. The US government is doing what's right for China. American business is doing what's right for China. American consumers are doing what's right for China and now we complain that China is eating our lunch?
4
And let's not forget the history of the Middle Kingdom. After all, they've just installed a new dynasty. I'll guarantee that the Chinese government's tolerance of the flood of fentanol and other synthetic opioids flooding into America, through the US Post Office and over the Mexican border, is being justified morally in China as payback for the Opium Wars. Problem is, I don't much want to be punished for the faults of my ancestors, and I certainly don't want my grandchildren to have death dealing drugs supplied to them.
1
I wish Friedman would write an article on education in America, really examine it.
I want especially some sense made of this fact available to all: A high school education in America only, which is to say an education only to that point, really leaves a person only capable of underclass status today, which is to say when we consider how little a high school education only brings a person socially, culturally, financially we have the astonishing fact that it's as if a person for the first 18 years of life is essentially considered a person in the negative, a numeral less than zero, which after high school is only worth underclass status, which is virtually identical to the process of a person being rehabilitated in prison and being released back into society.
For a person then to succeed, to not be underclass, higher education must be sought which immediately puts the person in the red financially, and supposing one struggles to say a masters degree or Phd one is considered an expert in this or that, whence incredible jealousy and envy sets in, or already has set in, and one is virtually identified with the degree and is righteous as all heck about it because of the money and work spent toward it and...
Well you get the picture, and it's not a pretty one. A jealous, insecure, constantly plagued by imposter syndrome educated class, the very best even in society consumed with reputation, symbols of power, wealth, etc. A very fine education that seems to be. Pretty sad.
2
Good article as usual, Mr. Friedman.
The sad fact is that people like trump, his billionaire cabinet, and the GOP his donors (i.e., the only real constituency of the right) don't care a whit about the country, intellectual property or competitiiveness. They WANT the inequality. The Koch brothers want theirs and the rest of us to eat cake. They will cry - Oh! ... look at the neoliberals whinging for more of the same of what got you, Joe 6-pack, in the trouble you're in.
Solid analysis. But where will the political will come to get it done? The current administration are incompentent, to a man. The last one, worried too much about politics and appearances (and TBH I'm a huge Obama fan). When will politicians decide they are Americans first, and dems or repubs second? I fear those days are long gone....
Did you hear Donald's new campaign motto? Keep America Great!
He thinks he's doing well.
"At the same time, we need to be much more serious about using every tool we have — tax incentives, Pell grants, community colleges — to create the conditions for every American to be constantly upgrading skills and for every company to keep training its workers. "
All programs the republican in Congress want to end.
If the focus is on leveling the playing field with China, why is the so called president focused on yelling at Europe, Mexico, and Canada?
Because the Chinese "president for life" gave him a parade.
Maybe the European Union can organize a continent wide parade for him. Start in London, move on to France, then Holland, then Bavaria; all the great Nations of Europe could lavish him with parades. This should keep him busy for at least 6 months, during which time he can do no real damage to the U.S. or the rest of the world.
Thomas, can you really believe this administration could do anything in secret? Without his tweety, twitchy fingers bounding across his phone's keypad he would be just an empty suit.
Sorry, I forgot myself. He will always be just an empty suit.
"Don't believe everything you think."
--bumper sticker
1
Trump's interest in "manly" jobs is at the core of his tactics: symbolic shtick which will not do anything to undermine the business model of crony oligarchs getting wealthy in the current distorted economy.
The useless "wall", the junior high name calling, the NFL "anthem" riff, the braggadocio, the 'tude, the misogyny, the drama and "chaos"...when it comes to short circuiting gray matter and continually stimulating the reptilian brains of us--his marks--well, PT Barnum had nothing on this guy.
We're all attending Trump University...and the bill for this misdirection/miseducation will be enormous.
1
Americans are too focused on "inequality porn"?
What precisely is he referring to precisely with his remarkably inarticulate description of the reality of income distribution? Since 2008, virtually all of the growth in wealth generated by the American economy has gone to a privileged elite of wealthy investors and techno-barons, not skilled working people. Since Mr Friedman is being so imprecise, and frankly ignoring the most important facts pertinent to the subject of his piece, perhaps he could explain his metaphor about a house with just a floor, and no walls and ceilings, as being his ideal house, and home. Mr Friedman, walls still protect us from intruders, natural and human, and life and health threatening exposure to what used to be called "the elements", as do roofs - ceilings are irrelevant to the moronic metaphor. Since, in an attempt to seduce, Mr Friedman whispers sweet nothings in our ear while trying to pick our pockets, perhaps his words are best described as "inequality prostitution".
This all makes sense.
I'd be interested to hear whether Friedman would applaud Trump for unilaterally voiding the Broadcom attempt to purchase Qualcomm, even though it involves Singapore?
Singapore, of course, did sign the TPP.
Many progressives, by the way, could have supported TPP if it didn't have the (un?)intended consequence of allowing Big PhRMA in the US to come through the back door of TPP and drive up prices for prescription drugs -- especially to Medicare and Medicaid -- even higher than they obscenely are in the US, compared to the rest of the world.
It would be useful:
1. To have Friedman write a column or two on trade and Big PhRMA.
2. To check to see whether Friedman is getting any emoluments, however indirect, from Big PhRMA.
Why, you ask, hold Friedman to a higher standard than, say, Paul Krugman or Dave Leonhardt?
http://www.nytimes.com/2003/06/04/opinion/because-we-could.html
Friedman's 2003 "Because we could" panegyric to the Iraq War.
Nuff said for why this man has to ground his bona fides every time he opens his computer -- forever.
But, of course, Friedman is, comparatively, pure as the driven snow when it comes to possible conflicts of interest on anything, intellectual or otherwise.
Jared Kushner trying to make deal in China under the intended! guise of being a presidential adviser?
Or in Russia, where they have the pictures?
And there is no intellect involved there. Just business as (un)usual.
1
Having worked in China and negotiated in China I agree 100% with everything in this editorial. But I must point out that trade negotiations have always been done in secret - because they have to be. You can't play poker while showing your hand. Negotiations by tweet? Only an idiot would try that.
2
When you entrust your enterprise to an ignorant bully, certain outcomes are inevitable.
You are a sadist Thomas, President Trump believes he knows better, one can never learn anything that way.
Throughout its history the Middle Kingdom believed it was the most important power in the world, and it was often true. China recovered from its "humiliation" after the Opium Wars and the rest of the world must learn how to coexist with it. While most of Mr. Friedman"s views are true, I doubt that the United States, with our present regime, is capable of insuring that we are not the victims of a resurgent China, just as we did not choose to oppose a resurgent Russia.
1
China is guided by a philosophy of long-term strategic interests, unlike our national focus on short-term goals. Chairman Mao's favorite book was Charles Darwin's "The Origin of Species," leading him to create a society built upon the concept that survival depends upon facilitating the most fit to thrive, in academics, finance, & science. So in my China teaching experience, the students are incredibly motivated to achieve, and success is rewarded by promotion. This is in part why Xi Jinping is striving to eliminate cronyism and corruption, as it creates a non-meritocratic pathway to success.
China is truly embarked on what Michael Pillsbury describes in his book "The 100-Year Marathon," to reassume the role of global hegemon it was in the 14th Century. And it is doing so by a range of strategy including building an infrastructure of academics, transportation, global relationships that feed strategic materials, and governmental control of export/import structures as Friedman describes. With our government led by gut instincts, kleptocracy, ignorance of risk, and lack of strategic focus, we are at massive disadvantage. I see little evidence of realism of these risks in our current government.
2
Perhaps the most important message here is not the substance of the article, but the title. Too many of us are so locked into our partisanship that we cannot bring ourselves to dig into the underlying issues.
2
As with many "policies", the devil is in the details. One extremely insidious one, apparently included in the scrapped TPP and now part of the minus-America version just agreed on, is the ability of a corporation to sue a "sovereign" nation, if they think their profits are being affected.
"Free trade" is largely a slogan, much like the "invisible hand of the free market." It may be very hard work, but to understand the implications and then advocate for specific policies, it is necessary to get past the bumperstickers, the individuals and groups advocating one way or another, and deconstruct the details, always allowing the wiggle-room needed to ameliorate possible negative effects from unintended consequences.
12
America’s chickens have come home to roost.
I would recommend the HBO documentary “Schmata, Rags to Riches to Rags” to anyone interested in the failed leadership of this nation. In 1963 over 95% of the clothing worn in this country was made in this country. During the Reagan years it was about 75%. By Clinton’s Administration about 50%, by Obama’s around 5%. Today it is less than 5%. This chain reaction of implosion has been seen in many other industries.
This trend has been driven by the financialization of the US economy and represents a strategic failure of American leadership and investment in American civilization.
The seeds of this farce in several acts were sown before Reagan but sprouted with his administration and were duly tended by Clinton and Bush. The true colors of the GOP were revealed in its refusal to cooperate with Obama on anything amounting to infrastructure investment or seriously supporting the industries of the future.
One of the most future oriented civilizations on Earth is in the process of ceding global leadership on multiple fronts as it descends into cynicism and hopelessness.
Regrettably the US has gotten precisely what it deserves.
1
Just for the sake of argument, let's imagine that the United States was part of the Trans-Pacific Partnership.
How would that affect American workers? How many would lose their jobs, and in what segments of our economy?
How would our government deal with the loss of jobs to rehabilitate the affected workers and get them back into the work force with no appreciable loss of income or benefits? Would our government do this at all? Should our government do this?
Too often we've entered into trade agreements with no real idea of what is going to happen, and no plan in place to deal with the consequences of our participation in the trade agreement. NAFTA is a good example.
Government is supposed to serve all the people. To allow some of them to be metaphorically thrown away, as were the workers who lost their jobs because of NAFTA, is government at its worst.
1
Why can't we start imposing restrictions on China now before re-engaging in TPP? Mr. Friedman's prescriptions for solutions to the China trade issue has some political problems. First, TPP was never explained properly to the public, so, particularly in the Midwest, as a "NAFTA for Asia", and right or wrong, many people see NAFTA as a job killing trade bill. Second, if there is to be a president who is not Trump after 2020, that president will have to win an election which also means that he/she needs a public plan to handle trade issues. It might be quite difficult to sell the American public on a secret plan to rebalance trade with China, particularly since all of Trump's plans are public. Third, universal income and lifelong training are well accepted among democrats, but that's roughly it. Quite a large number of Americans still believe that we live in a capitalist system and that a "floor" and the safety net are for snowflakes.
12
"We needed to be, and still need to be, much more serious, and generous, about creating “wage insurance” and community reinvestment policies for people and places whose employers are suddenly wiped out by a trade shock. Because this one won’t be the last."
Read Janesville by Amy Goldstein. She chronicles the effects of the closure of a large GM plant in Paul Ryan's hometown from 2008 to 2013. Though unemployment there, as in the rest of the country, is now low, the impact on the community was devastating because the closing wiped out good paying jobs: jobs that provided college education funds for the next generation.
2
I have an alternate approach: we simply tell China that the trade deficit will decrease by 25% (of the original value) each year until after 4 years it reaches effective 0. And by the way, no more technology transfers, and purchases of real assets like companies and real estate don't count.
If we try to do it rule-by-rule, we will be playing whack-a-mole with an opponent who is larger, has more control, and takes a longer view. We can't win that way.
Trump outflanked HRC by going to her left on labor (i.e., protectionism, anti-immigration). Democrats have yet to develop a counter to that, which basically goes like this: Overall we're richer with free trade, but we should take steps to help those left behind, namely raising taxes on the rich to fund education/retraining and healthcare.
I agree about "inequality porn", except that it does exist in this very article. I was deep in the apparel industry when China first opened to the West. They were hungry for knowledge and were willing to play a long and slow game. I saw and learned through my conversations with them that they were not copying our manufacturing skills, they were copying our Capitalists, the 1%. Except they were playing the long game version. And so, they steadily bought the cheapest goods and machinery (all they could afford) while gaining the confidence of their suppliers. Then they convinced those suppliers that it would be cheaper for them to be taught how to make patterns and run the more complex machines at home, than to bring them over here to work, Capitalism! In this way, they learned our technology until they did not need us anymore. I remember remarking to my client at the time who was deep in this transfer game, "once we have taught them, why would they need us?. Repeat in every industry and at every level. It took them less than 40 years to learn it all and replace us. But hey, we have their cheap goods to buy. Until we can't afford them anymore.
2
We should not be doing business with China. They are a country whose values are in conflict with everything we stand for. They are a country that wants to take our place in the world. They have stolen our ideas, attacked our businesses and government, and caused problems for our friends around the world. We, through our trade with them are financing their trouble making and their military. In the not too distant future we may have to face that military.
There are plenty of countries around the world who either are, or want to be, our friend. Let's give our business to them. Let's lift them up and make them prosperous. There is no need for a trade war with China, just stop doing business with them.
This is a strategic issue for us. It is time to look at what is in our country's best long term interest, not just the quarterly profit and loss statement. Trade with China is not in our interest, we should take our business elsewhere.
1
The sad reality is that the 1% already have theirs, so most see no reason to invest in education or social safety nets for the masses (or even their own employees----looking at you Walton family).
(The latest proof---what are most doing with their big tax cut? Buying back stock to enrich themselves, not--not!--investing in training centers or programs for even their own employees---not to mention the public at large).
More education, training and social supports sound great, but who will pay for it? Higher taxes on the rest of us? Too many people right now (and historically) resent how much of their tax dollars go to education.
2
We also allow the Chinese to take advantage of our colleges and universities. For all the derision the GOP likes to cast at our educated elites, our institutions of higher learning are still the best in the world. The Chinese are the largest group of foreign students. Our universities love them because they pay full tuition, and without them many STEM departments would be far emptier.
They're studying the hard sciences and math, they're not majoring in French literature and philosophy and European history. Then they leave and take their education back to mainland China. What other country aids and abets their enemy like this? And yes, it's a trade war, and China is the enemy. They've made no attempt to hide their goals and intentions by their statements and actions. They intend to win the 21st century.
And we're letting them.
4
Why did the US government allow the explosion of "unfair trade" and Chinese imports around 2002? I would submit it is due to the Chinese supporting US government debt, which also exploded with the Iraq War in 2003. Chinese buying trillions of US government debt was the incentive, and it allowed the Republican Party, the "spend and borrow" Party, to cut taxes on the rich while raising spending. GOP voters backed them, and Democrats trying to reduce debt were attacked by Republicans as "tax and spend" profligates. This lie worked with too many voters, and prevented responsible progressive taxation. The GOP was, and still is, willing to sell ownership of the US Treasury to Beijing so Republicans could cut taxes on their plutocrat backers.
5
I would maintain that China's population of 1.4 billion people has much to do with its economic policies overall. The fact that that they must be fed should tip off nations with a food surplus as to how to right a trade imbalance.
1
Friedman: "Imports of Chinese goods alone equal two-thirds of the global U.S. trade deficit today."
bad writing or confused thinking. Does this mean that the total value of US imports from China (a gross number) is equal to 2/3 of the US trade deficit (net number)?
Or is the China related US deficit 2/3 of the entire deficit?
In any case, there are third-country plus US inputs in Chinese goods, and vice versa. We live in a multilateral trading system.
As a bleeding heart liberal, I favored open markets, supported NAFTA, wanted more trade with China since 1980s. I welcomed the export of low-wage jobs. My thinking was predicated on an erroneous assumption that we would continue our innovation engine, develop new technologies and applications that required high end labor; that industry would participate in educating and training the workforce, and we would have even improvements in standard of living.
Innovation occurred. But in finance and accounting. In knowledge intensive firms. Both served to produce massive inequalities and major and horrific socio-cultural externalities (drugs, dependency, drop-outs). We took a giant leap toward a third world banana republic.
Trump is right that we need open markets. Particularly China, EU, Japan - with whom we run close to a trillian dollar trade deficit per year. It is unsustainable. We've got to get other countries and markets to play ball.
But I am horrified by his "I will kick, subdue, deport, kill, ban 'them' in order to restore your pre-civil rights powers." I am also horrified that he has nothing to say beyond a tariff (and have Mexico pay for a wall). I.e., he has no long game, just short term, Twitter-friendly petulance. Day one of tariffs produces a successful rally. What happens on day two, after Boeing has laid off a 1000 machinists?
Trump speaks loudly while carrying a very small stick when the exact opposite is necessary.
Kalidan
2
I’m just an average guy, yet for years I’ve been amazed at the trading ecosystem disparity between China and the US. We would slavishly give up the store, including the “keys to the kingdom” intellectual property, just to get in that Yuge market...and that’s despite well known intellectual theft. For China to come from the “Red Guard” days, to what they are now, is breathtaking. I would say to my wife, “once China reaches “critical intellectual mass”, and doesn’t need us anymore, they will wither our presence there by offering equivalent high tech quality at a significantly lower price. They already produce far more PhD’s than we do. They’ll have the brilliance to make an Apple equivalent and a huge $2 labor force to make it. I’m sure I’m oversimplifying the situation but that’s what it appears. To reject TPP seems too great a loss of our influence in Asia. Trump should target specific trade problems (dumping, IP demand and theft, abusive tariffs, currency manipulation, etc.) and not upset the rest of the world apple cart. But, all that from a President who didn’t drink from the fountain of knowledge, he just gargled.
3
So many of our mass retailers and consumers loved the lower costs of China manufactured goods that little was done to deal with it.
1
Friedman's appraisal with NYT Picks is a breath of fresh air amidst the boorish bullying of Trump that does nothing to advance our interests on the international scene. For more than two years I have been participating in an educational outreach program to educate Chinese mental health professionals sponsored by CAPPA, the Chinese American Psychoanalytic Alliance guided by Elise Snyder MD from Yale. The Chinese mental health professionals with whom I have engaged have proven to be talented, eager and collaborative participants seeking to grow their professionalism and impact on their patients thus improving treatment outcomes. They seem to me to be sincere and emotionally well attuned to their patients. It is a mutually rewarding relationship. Yet, viewed through the lens of discerning appraisal of that initiative within the broader socioeconomic realities so well articulated by Freidman and the readers comments in the NYT Picks I find myself faced with a rather unsettling question. Can we collaborate without being consumed in the daunting reality of cool minded search for dominance with only profit as a goal? The intent of my psychoanalytic profession is to facilitate emotional and relational development with the intent of augmenting concern for other amidst the passions inherent in each of us that serve only self interest. Is there the possibility of generating common goals that are mutually beneficial without the taint of economic competition and dominance?
8
C'mon Tom. While there is much merit in your pep talk to get educated and its a value to which, as a long time educator, I will always subscribe, you are aware of sophisticated analyses of "late stage capitalism".
First off, in late stage capitalism, capital roams the earth searching for cheap labor to do their work. When you can build a textile mill in Malaysia and pay the workers a few dollars a day, why pay an American $ 30,000 a year plus benefits? Sorry North Carolina. The same with the furniture business....
Late stage capital scours the world for the cheapest labor. In the theoretical models developed in your finest business schools whether its Harvard, Wharton, Stanford, etc. they do not include human and community values; it's only about profit and rates of return. The models of the MBA's systematically exclude values like making for a vibrant community with a prosperous middle class.
The recent letter from Larry Fink the CEO of Blackrock is a clarion call addressing this huge blind spot is the way valuations of companies are done on Wall Street. Until this bottom line thinking is overthrown in assessing the true success of a company the same principles of late stage capital roaming the earth for exploitable slave labor and defunding other too expansive workers like Americans will continue.
Until labor standards, standards of living, and levels of compensation are raised across the globe American workers won't be `competitive' again.
5
Here is another aspect of "what's wrong." The USA has squandered blood, treasure and soft influence by our endless military misadventures on steroids. There is no sign yet that ANY leader of EITHER party has recognized this as the national catastrophe that it is.The portion of our GDP that has gone to the MIC is out of proportion to all of human history, save perhaps Rome during free-fall. We could have had world-class public education and healthcare for all, but instead-- we chose war. The damage these forays have done to our own people is immeasurable: maimed bodies; needless deaths; PTSD as an epidemic (caused by internalized guilt?); militarized police departments that see We the People as the enemy; a demand that we glorify those employed by the military (faux thanks for your service, flag lapel pins,yellow ribbons, gold-star moms, etc.); and of course-- our national gun-fetish. None of this cultural militarization has been good for our psyche, physical well-being, or sense of unity. Further, these constant invasions of countries not worthy or deserving of the attacks-- combined with our chest-thumping braggadocio-- have destroyed much of the positive influence America was able to yield in the years following WWII. Now that good will is so far in the rear-view mirror that much of the world sees us as dumb, loud, and buffoonish-- just like the man a clear minority of us voted for as president. Allies and enemies alike enjoy seeing us slip further off the world stage.
3
The wto could declare China is no longer a developing country, which gives them an appreciable edge over the US and others.
1
"But while Trump’s gut instinct is right, he’s so ignorant about the facts, he’s so easily swayed by the last person he talked to or by ill-considered promises to his base, he’s so weirdly obsessed with protecting “manly” industries...that affect our allies more than China...that he can’t be relied upon to navigate the China trade issue in our national interest."
What's unfortunate is that millions of us knew this about Trump well before he was elected and continue to know it. When he sees a problem that actually exists (as opposed to making some of up just so he can rail against them to benefit his own popularity) all he can do is tell you there's a problem. Most anybody can explain problems, leaders need to bring people to where they can see the solutions.
2
If you really want to understand the problem here it is:
"Tesla founder Elon Musk tweeted it right when he said that “no US auto company is allowed to own even 50% of their own factory in China, but there are five 100% China-owned EV auto companies in the US.” "
The problem is to level the playing field for investors and the obvious solution is to make it easier for American companies to invest in China. That ought to help American workers a lot!
Unfortunately this is precisely the way in which the rules for "free trade" and the "global market" are conceived. How do we create opportunities for the 1% to get even richer.
4
Exactly right. But, the beneficiaries include the consumers of China's output - us - in the form of much lower prices. Notably, Walmart and now, to lesser but growing extent, Amazon. The hidden problem is that lower prices come at the possible expense of quality (both in product and the conditions that workers are forced to endure). Imposing a 'quality' standard might just work to signal that there is indeed a very distressing trade imbalance. It might also benefit retailers who are typically caught in the disastrous episode of factory tragedies.
2
Tom Friedman told me that he never reads comments on his OpEd pieces. Nevertheless Tom, I hope you read this.
I don't think anyone doubts that China follows unfair practices in trade to benefit itself. However, so does the U.S; hence your article is pretty disingenuous. The U.S. restricts trade in many different ways, not just using tariffs. When the Japanese car companies were beginning to make inroads into the U.S. market, we changed the rules and added a number of "domestic content" regulations. Today, my research shows that the Japanese cars have more U.S. domestic content that any Ford or GM car. The U.S. regularly dumps agricultural goods on many parts of the world, frequently financed by the U.S. government under the guise of "aid". It is well known that U.S. textiles are protected by having country-specific quotas. Both textiles and agriculture essentially affects poor countries quite negatively. What about trade in services where software engineers are restricted from working in IT services even though they are much cheaper than the domestic counterparts. (You have written on this topic and know it quite well.)
Perhaps what is happening is a change in the global economic order and that even with all the restrictions that the U.S. imposes on trade with other countries, these other countries with China in the forefront, are emerging very strongly and taking away global "market share" from the U.S. and the past colonial "masters".
4
This thesis assumes that the average American is smart enough to take advantage of advanced education in whatever form. Thanks to the sad state of underfunded primary and secondary education in much of America, most of the labor force lacks the essential skills needed to take advantage of the advanced training that will keep our industries competitive. For proof of this just check out where American students place among G 20 nations in the areas of literacy, science and mathematics.
5
Focus on "high-value-added manufacturing and intellectual property" and thus concede the easy, large gains from processing raw material into finished goods to overseas suppliers. Sounds like more gig economy stuff. And an academic economist advocating for more enrolment in post-secondary institutions? No surprise there. Easier to reform China.
2
Mr. Friedman's and Mr. Autor's ideas make far too much sense to be ignored. However, given the war-like and xenophobic proclivities of the current and previous Republican administrations, it is likely that it would require the work of a Democratic president and a Democratic/moderate Republican Congress to make these ideas a reality. And therein lies the rub. If a Democratic president (say someone like Barak Obama) tried to lead us down the path recommended by Friedman and Autor, the right-wing noise machine would go into Code Red HIgh Dudgeon. The Fox channels, the think-tankers from Heritage, Cato, and Americans for Prosperity, the "conservative" magazines, and the right-wing bloggers would, in unison and loudly, weep, wail, and gnash teeth. The purveyors of "dark money" would be backing up semi-loads of cash at the various capitals, including the national capital. Imagine the panic of a group of people living in the fear that broad, affordable educational opportunities might make them a little less rich and much less influential. Let's call this sensible, well-thought-out plan laid out in this column what it really is: a Friedman Apocalypse.
38
I don’t disagree with much in your column. Can you imagine the uproar from Republicans if a Democratic President had tried to do what you described? So perhaps the one good thing about the Trump presidency might be a greater willingness to confront China in the next administration. When either party opposes the others policies just because it is the others, the country becomes weaker. This is a good example.
2
Certainly, education is king but without support from the Federal and State Government and those necessary taxes, we are on the losing side of the equation.
Trump has surrounded himself with the most incompetent cabinet, example Secretary of Education.
We have reached the pinnacle, how do we proceed when many Americans despise Government and taxes? We need good Government to navigate these untraveled paths, necessary for our survival. Think about Regulations and investment in Infrastructure along with Education, these help us grow because they are good for society against our self-interests. Is it possible that we have become a house divided and our fall is enviable?
2
This is yet another ill-informed column by Mr. Friedman.
“What does education do? It gives you a skill set and enables you to adapt to change better.”
WRONG: It gives you a massive debt that strangles you for life and allows the 1% to live off your carcass.
He knows, or should know, that the TPP would hand over control of Law to Private Corporations and allow no rights to citizens. It creates a perverse Welfare State for the 1%;
He knows, or should know, that the USA always negotiated Trade deals to its own advantage. China was too large to be bullied by USA and the USA is too much in debt to China now to be able to play the bully.
23
I am somewhat familiar with the practices of US agricultural and industrial equipment manufacturers. Starting in the early 1990s component after component (e.g. drivelines; gearboxes) got outsourced to China from US and European suppliers. The decision was always based on lower cost. At first everybody complained about the quality, but eventually the quality got better. So American consumers benefit. But good-bye to US industrial output. It's not complicated folks. If you buy machines from companies that pay their workers $1 an hour, chances are they'll be cheaper.
10
I am somewhat familiar with the practices of large and small appliance manufacturers. As a consumer and a former wholesale salesperson. Washing machines for one, once were made in the USA and were expected to perform as long as the American men who made them did. Not now-- ten years max. All made in China. I formerly sold and used Mr. Coffee coffeemakers-- proudly made in the USA, excellent coffee and long life. This winter I bought the *highly recommended* machine I now make my daily brew in-- not nearly as full flavored, and coffee is initially warm. Made in China of course. Neither of these items is cheaper today. Household equipment is not the same as a 10.00 tee-shirt but we the conned American is expected to accept this crud as the norm.
2
We need to leave The Donald out of this discussion. He has no plans or long term goals, the last shiny object that he saw has 100% of his attention.
A sane US trade policy would be jumping back into TPP and developing a comprehensive trade policy that mirrored the policy of each of our partners.
If China puts 25% on our cars, we put 25% on theirs. If China requires 100% Chinese steel in the production of cars on the China land mass, the USA requires the same.
It is not possible that The Donald will ever put together a rational or even sane trade policy. We must wait for the next man or woman up.
Meanwhile, a US Citizen boycott of all things Chinese would go a long way to motivating the GOP enablers, like Walmart, to make a push for trade policy reform.
37
This is exactly why I was forced to vote for an idiot like Trump. He was the only politician addressing the fact that American jobs were transferred enmass to China over the last 20 years. Politicians and economists are very condescending to Middle America lecturing them about how they just need a better education while American factories were forced to relocate to China just to stay competitive! Why wouldn't any company want to move their factories to a country where the labor rate was 1/10th that of America labor and no tariffs to level the playing field? Republicans and Democrats share equal blame for this and were too busy playing Red Team vs Blue Team to do anything about it or even acknowledge it. So I was forced to vote for a clown like Trump because (at least) he was talking about it.
3
Dundean, Indeed DJT talked about this a lot. And many of the voters who put him over the top remain convinced that coal, steel and aluminum are about to greatly expand and take up the job slack that cars and airplanes will shed due to the latest tariff moves. He also talked about lots of other things that seemed to fire up his base, from Mexican rapists to building a wall. Is your defense for voting for this guy that you are a "transfer of jobs overseas" voter and he seemed to be talking about this issue. Is it of any concern whether he understands the issue or the solution? Do you still accept his assertion that "only I can fix this"?
1
You weren't forced to vote for Trump, or any other candidates! You chose to. Are you willing to take personal responsibility for the implications and consequences, shorter and longer term ones which are documentable, to people and systems affected by Trump's violating words and deeds? As well to unsaid needed words and deeds which could help to bridge current divisiveness? Diminished mutual respect between so many; people whom we know as well as strangers?Diminished trust? Daily!Diminished caringness? Diminished mutual help, when and if needed?
Trump has been the wakeup call that our politicians sorely needed. Since the recession I've been laid off three times. In the first lay off my customer service job that I had been doing was moved offshore and I got to spend a month training my replacements to get a severance. We went from 8 US call centers to one. My second layoff was because my employer only hired temps so they didn't have to pay benefits and that was at a warehouse. My final layoff came three years ago and once again I got to train my replacement from Costa Rica. The thing that made the last one so hard was it was a medical customer service company founded in the 90's but our new owner just cared about profit even though most employees had been there 10+ years.
Yes trade with China has been good for the wealthy. American consumers were seduced by lower prices and didn't consider the cost to American workers. But now we've reached a point where the masses are angry and something needs to change. China isn't to blame for American greed.
Countries fall when inequality becomes so perverse that there's no hope for upward mobility. Offshoring jobs, outsourcing jobs, the gig economy, h1b visas, might be great for corporate America but it sucks for American workers. China may have taken advantage of our greed, they're not to blame for our current circumstances.
Teddy Roosevelt's square deal philosophy was the belief that labor, corporations, and the consumer all deserved equal protection. Still true.
14
One of the most cogent and persuasive columns I have ever read. If only an audio version could be snuck into the first bedroom and played while our bull in a China shop president slumbers.
2
You are so right!
Here's the intractable problem:
48% of Americans were willing to elevate a dangerous imbecile grifter to the presidency with no understanding that he would infuse the government with incompetent stooges and be incapable of dealing with complexity on any level.
In China the best and the brightest make policy!
In America - the least qualified (with the exception of individual blue state policy makers) are running the show.
Game over!
3
This was a rambling piece that, not surprisingly, included the notion that the discussion "on the 1% versus the 99%" has become "inequality porn." There is nothing more pornographic that having the uber rich getting more taxx breaks while the hoi polloi pay more than their fair share of taxes. David Autor, as he is wont to, muddles up the role of imports and tariffs so as to minimize the real culprit - tax breaks for the uber rich - in the income and wealth inequality that afflicts our society today.
Don't worry about these Chine imports; just fix the tax system and make it more progressive.
8
Therre is something scalled the Luxuryy Tax which all of the writers from the NYTimes are too young to remember-- altho they should redall the one for the GHW Bush era.. and too -- whatever-- infavor of protecting the Connecticut yacht indsutry -- why it was done away with. Of cousse when one has secret wished to climb up the social scale and make lots of $$ -- sorry ladies a mixed race divorced actress got Harry at least for the moment (so deliciously scandalous). I think it's another manifestation of Stockhomn Syndrome. Identify with your abusers..
1
The lack of real meritocracy, says Friedman, is hurting the US. I've been arguing against nepotism for over 40 years. NNot only does a person need to learn job skills, he needs a whole slew of skills like finding out what the company clothes culture is. He needs to learn about smart nutrition. He needs good transportation. He needs to know how to interview for a job.If meritocracy is the only way you, and tens of others, you have to research your companies. Learn your skills kids and study assetiveness, collaboration techniques, as much asyou can at the libraries that have ancient texts.
Getting a job is, also, a numbers game. The more times you apply for a job the more you are abe to get a job. And remember one thing: see yourself not as a brand; see your self as a solution.
1
Having Donald Trump as our President is like having the biggest dotard student in your Econ 101 class take over the lectures.
2
Trump is the wrong answer to the right questions.
3
I agree, whether Mr. Trump believes something has nothing to do with it being true or false. The real question is whether an issue like trade policy can be labeled with the characteristics of right or wrong.
Unemployed rust belt workers vs a power elite. It all depends on which side you are on.
My first president was Eisenhower. Each administration (D&R) has promised to “retrain our displaced workers.”
Each administration has failed to do so adequately.
I’m confident Secretary DeVoss’ persistent effort to privatize public education will further erode economically distressed Americans.
You can’t pull yourself up from the bootstraps if you have no one to help find your boots.
You certainly can.. It's called Coursera, EdX and Udacity... for the kind of educaion that involves book learning. OTOH learning a craft is very different.. and that schools have decided to do away with handwriting -- which trains small musclesin the hands to do intricate work is appalling.. and will add to the number of people who lack skills and after awhile it becomes too late to aquire them.. Note the agees of the Olympic athletes... and you know something. Hand eye coordination can be super impt.
1
As with Russia, China is led by a virtual dictator. Could THAT be the reason why Trump is pursuing policies that help China too? Probably not - he's not smart enough to understand, as this article suggests.
1
One solution, Walmart which sells Chinese goods should pay its employees a living wage with benefits. Throw in the other big retailers like Amazon and Target, et al. It was obvious America was not prepared for poor Americans to lose jobs. And why should it have been? The rich got richer.
2
China is a problem, but one of our own making. We are addicted to cheap stuff. Our consumer society demands regular shots of ever cheaper goods.
China as a developing economy benefits from protecting its industry from foreign influence. That’s a common occurrence.
However trade barriers need to come down slowly and China’s economy by now is robust enough to allow this adaptation.
The Western developed economies should work together to nudge China to adopt fair trade rules.
But Donald Trump has achieved the opposite with his populist steel tariffs. They punish mostly our allies, and hardly China. As retaliation for retaliation he has threatened tariffs on European cars. He alienated the countries the US needs as natural partners.
He abandoned the TTP that would have been an tool to pressure China into compliance with open trade.
It’s easy to be right on China and it seemed almost impossible to mess up an international coalition to pressure China. Trump failed bigly. But we have expected this. He is an empty suit at best and a laughing stock at worst.
39
Mr. Friedman reminds us of the value of seeking out expert opinion. What a radical campaign promise that would be in today's political arena.
First rate. Let's start those secret negotiations.
Mr. Friedman has a view of where China was headed in 2010 and what the U.S. could have been doing about it them, not a clue about where it's headed now or what the U.S. could be doing about that.
1
Expecting higher education to prepare displaced workers for new jobs is wishful thinking at its worst. There have been several highly successful models of private/public partnerships between trade schools and domestic companies which provide job specific training, followed by immediate employment. To the extent that we remain a job-based resource distribution economy, that model needs to be emulated all over. For at least the next generation or so, periodic retraining will be the norm. College for everyone is a pipedream.
2
Job training for the job of the moment, over and over again, always to begin employment at the bottom rung, if there is any ladder at all. Not a cheerful future.
Meanwhile, important work benefitting everybody goes undone because corporations are interested in competitive advantage, not the general welfare.
2
This is my candidate for best Friedman column. Free trade may be the best and most efficient system over the "long run", but remember what Keynes said: "In the long run we're all dead." Don't let the free trade-worshipping economists rush to nail us up on the cross of comparative advantage. Easy does it.
1
Paul Kennedy's book (The Rise and Fall of the great powers,1500-2000) concludes this seemingly obvious point: history is replete with somebody wanting something someone else has, mobilizing to capture it, and then eventually spending essentially all of their new resources to protect it, then relinquishing it to another bigger and more stable power. And on and on it goes. We are in that defensive mode, and vulnerable beyond description, to having the next power accomplish the historically inevitable. But of course our short term goals are just too hypnotizing. Walls and wars and tariffs will not stop history from repeating itself. We are doomed by our own ignorance .
1
China may have demanded that corporations live by China's rules but the corporations did't have to agree to them. They could have declined to do business in China. However, corporations couldn't resist the chance to make billions of dollars in the Chinese market. This is what corporations do. Only the bottom line matters. So don't ever speak about patriotic corporations or think that they will consider the interests of American workers over profits. This is a given and should not be considered as a moral failing. This is why the government needs to regulate corporations and under Republican control (Obama may have been President but the congress is run by Republicans who refused to work with him least he succeed) this was never going to be allowed. Republicans are - in the main - responsible for the plight of American manufacturing. Democrats are culpable because they have been ineffective in getting the voters to understand the situation.
71
China's rise has eaten up manufacturing jobs worldwide and has strengthened a totalitarian regime which is now masquerading as benign force on Trade and development ( witness their 'buying' of Africa). This regime is almost impossible to be toppled by those who want and believe in freedom, be they Chinese citizens or those of Hong Kong. Soon China may become a ne-colonial force enforcing its will on the countries that are lapping up the money thrown at them. The rise of China has been nothing but an unmitigated disaster for human civilization.
3
I absolutely love that the long time expert on China was 100% wrong about China entering the WTO. As a person who has studied economics, has both a J.D. and an M.B.A., I love it when the left hides in the middle of the article that the experts were wrong. Then they proceed to tell us why we should continue to listen to the experts.
China does not accept or believe in our values. We should respect them enough to understand that and treat them as they are. Not all of the world accepts Western reasoning. The failure to understand and appreciate that is why we keep getting beat.
I am a free-trader, however tariffs can be a good thing for the U.S. if there is no retaliation. The President is creating an environment where other countries are afraid to retaliate because no one knows what he is going to do. That can be very useful for the U.S. The madman theory works.
Lastly, this is one of those things people say you can't say, but is of course true. There is no power on this earth (save God) that can force the U.S. to pay its debt. If we wiped it out and refused to pay it there would be no war with China or anyone else. There would be some economic upheaval, but within a relatively short period of time America would be right back at the top. If China ever gets to big for its britches we should threaten and/or act on refusing to recognize their debt claims.
12
Great analysis about China - US but I beg to differ on the debt. Thanks for raising that topic; no one else is. I believe if we reneged on the debt, which I think we must, the dollar would crash and wipe out our country's wealth, particularly cash holdings. Other assets would recover to lower levels. Then the dollar would also be replaced by an international currency. As concerned as I am with the China rivalry, this worries me a lot more
You need a good macro economics course.
Most US Treasury debt is held by Americans and American corporations/funds/endowments. Refusing to honor our debt to give China a haircut would instead shave the heads of Americans.
2
I wholeheartedly agree. There's an important point to mention though. You'll notice China's current trade position is the direct result of Bill Clinton's legacy and George W. Bush's active policy. The Obama administration spends years setting the stage to change course and correct the imbalance. What do Democrats do? They nominate another pro-global Clinton. Democrats must think those millions of displaced workers have a very short memory.
Trump was obviously ignorant, lying, or both. However, he had the correct message for the demographic that ultimately got him elected. Democrats chose to ignore this same message coming from Bernie Sanders. Even when planks from Sanders' platform were reluctantly adopted, Clinton never spoke directly to the grievance of trade displaced workers. She didn't even visit two of the most impacted states. Other factors were at play but don't kid yourself. Democrats served Trump the White House on a platter.
3
I agree that withdrawing from the TPP was a serious mistake that will impact our economy in the long run. There are other elements to the “China equation” that should also be considered that you touched upon and need emphasis: China’s efforts to expand its sphere of influence from a military and naval perspective; U.S. cyber security against Chinese hackers; and questions about our ability as a nation to manufacture, on our own soil, the technological products needed to navigate the 21st century.
3
In other words, the people hurt the most by our trade imbalance with China elected a guy who is doing precisely the wrong things while promising to help them. And they keep supporting him and will likely vote for him again in 2020, because they either don't understand the forces that are actually hurting them or are insufficiently motivated to adapt by acquiring new skills or are swayed by his macho posturing. And the rest of us are supposed to feel sorry for them?
2
Richard, to some degree we must feel sorry for the trumpists becasue they are hurting (destroying?) all the rest of us. For instance, the smart folks know we need the EPA to preserve our fragile natural resources and preserve our heritage of drinkable water, must to name one necessity. We need an independent judiciary to preserve the rights we claim to value. We need great public schools to preserve communities and nurture our futures. In other words, we are CONSERVATIVE, interested in conserving. The GOP of today is right-wing radical group, funded by right-wing wealth, supported by right- wing ideologues, whose fables are told by an unprecedented array of right-wing propagandists. "feeling sorry" for those tricked by this cabal is a matter of self-preservation.
1
“If you get educated in America today, and have a good work ethic, you are going to be rewarded.“ That’s a maybe, not for sure. Of course it improves your employability to have a marketable skill. But the fact remains that wages are stagnant, even if a job can be found.
And the larger issue is that meaningful jobs are not being offered because they lie in the public domain, and government is an anathema. Public needs are not being met: the environment, education, rehabilitation, infrastructure, child & elder care, addiction, affordable housing, ... you name it. That’s where work needs to be financed, but corporations aren’t interested and chant: less regulation, lower taxes, fewer benefits. Emasculating government needed to keep the fabric of society together.
1
Maybe. But I'd suggest that if Trump believes it, the matter needs to be re-examined.
Time and again, since long before he made a run for the U.S. presidency, Donald Trump demonstrated that he is one of the worst negotiators in modern American history. “The Art of the Deal” meant only that Trump consistently overpaid for assets, having to reduce his losses by stiffing suppliers, shoving the remaining losses to his investors and pocketing whatever remained.
Bankruptcy was common for Trump, and he had trouble surviving in spite of frequent bailouts by his family. All of this occurred in a real estate development industry with a sweet-heart tax break for developers from the I.R.S.
Donald Trump’s arrogance has put the United States at the mercy of the Chinese, and Trump simply is not smart enough to figure it out.
If Donald Trump is allowed to finish his first term in office, we will be so far behind China other Asian countries, it will take generations to catch up. In fact, we may never get back to where we could have been if Trump had never been in the White House.
This article ended in a cacophony of " you have to..."Paraphrasing Paul Klee, you have taken a line for a (mantraed) walk." I missed the part after the MIT diagnosis WHO and WHAT will initiate this complex, dynamic, multidimensional process of changes? In addition to current known individual and systemic, anchored, barriers to posited needed changes who and what are the influential hidden ones? What kinds of "bridges" will enable new, effective, policy explorations?With what types, levels and qualities of supportive, sustainable, underpinnings? What is necessary, and reasonably viable, to go beyond your knowledgeable words in an unmentioned reality of uncertainties. Unpredictabilities. Randomness. And lack of total control notwithstanding the types, levels, qualities and time spent in our efforts?
2
Quite amusing. All rising economies used protection of own base as a means to grow to the status of being able to overlord all others. That is the truth of the British Empire. That is the truth about USA. Only when they had reached the status strongest, they began to talk about free trade and free access. And imposed on all others a trade system that first of all benefited themselves. But because China has been able to protect itself from the absolute plundering of the West, it has been able to rise. And are slowly gaining the competition status that has allowed to stop that plundering. That is what the article call lack of access to the Chinese market. It is really the closed opportunities to plunder China. Western capitalism has miscalculated its strength. It thought it could conquer the Russian economy, and failed. It thought it could conquer the Chinese economy, and failed. All rising economies with ability to protect themselves are a part of the problem. And the problem can only be solved with a trade system that protect every country's right to have an economy built on the souvereignty over it's own natural resources and most vital and basic interests. A trade system that benefits all countries and all peoples. So it is not China that is the problem. It is the fact that Western capital lost the interest in its own peoples and thought it could feed on revenues from foreign countries.
1
One commenter used the phrase China is creating billionaires and slaves.. this is where the US economy is heading if there is no reversal in present policies.
Not a rosy future for the majority of Americans.
2
Corporations run America. Trade deals stack the deck against the average American; this is fine for mainstream democrats and republicans, including Clinton(s), Bush, Obama, and today's democrats who are rewriting Dodd-Frank and who love their China-made iPhones and who love the flood of cheap Chinese money into the U.S. to fund our debt-driven economy, pump up the profits of multinationals and keep the campaign contributions flowing.
Take human rights away from corporations and return power to actual living human beings.
1
Great insight, as usual. We should have fair trade with China. However, there are many low-wage countries and our corporations are free to outsource jobs to them with impunity. We also should accept that we can't fix the inequality/left behind problem pre-tax; we have to fix it after-tax, which is entirely in our control. Higher taxes on the rich to fund education and healthcare for all addresses much of the impact of being a high wage country free to trade with low wage countries.
2
Great article! Friedman rarely disappoints. Ending with the importance of education and skills acquisition and the need for greater access by all to high quality education for US citizens, one is reminded that Ms. DeVoss is heading up our Department of Education. Trump, his actions on the one and perhaps only area where he was thought to be by both sides at least "savvy" - Trade - and his choice of the "team" to support and carry forth his views and notions, all geared to make him the hero he hoped to be - all these things - are screaming at us now as what NOT to do. This shows the importance of leadership. It also shows us that when leadership is absent, or when it is simply uninformed and inadequate, action must taken locally by communities, regions, and states to do what our leaders are not doing - like bolster our schools, support common sense action on safety, and replace the non-functioning and uninformed leaders. Yes, integrity, dependability, intelligence, decency, empathy and compassion, representation of the majority view, and governing experience all are important qualities, if not required, of anyone we vote for. We need not be influenced by highly paid advertising that lobbyist have designed to manipulate us. WE must do the research. We must establish the standards for who is qualified. And we cannot depend on our current leaders to act in our best interests. We must do that, each of us, every day, starting now.
1
I whole heartedly agree we need to be tougher on China and level the playing field. What concerns me is the end of the op-ed. My wife and I are beyond merely financially comfortable in our retirement. I did not finish my career doing anything remotely like I thought I would be doing when I finished school and I have less than zero sympathy for those who refuse to recognize the change that has always been coming. I have seen way too many interviews with workers whose jobs are not coming back where they say 'My daddy was a coal miner or worked in a steel mill and I am 35 and I started out as a miner or steel worker and that is all I ever want to do.' In the not too distant future a lot of jobs now deemed "high tech" will be lost to automation as well. I have no sympathy for anyone who refuses to face facts. Only a very few of the workers who made buggy whips in 1905 were making them fifteen years later.
2
Wal Mart also has to be examined for the trade imbalance with China. When the largest retailer in the US demanded lower prices from its suppliers, many of them moved their manufacturing to China and other low wage countries in order to meet Wal Mart's demands.
5
I have friends that use to call Democrats, especially President Obama socialist/communist...but they went to China once a year to do business with communist cause they could get stuff real cheap and "American Labor" wanted to be paid too much. Funny, they never saw the irony.
Watch out advertising. It's always about the lowest price. Would love to see "yeah, you pay for it but it'll last forever and you definitely get what you paid for!"
1
Great Article.
Question: When people talk about trade deficit do the include in that number all the profit made by US companies that actually go to this Off Shore companies like what Apple, Google, etc have been doing for years in Ireland or other countries?
At the same time its not the same to have a trade deficit because one country sells a Car than a company that sells the same amount of money but in a Intellectual Service or Product, right?
Doesn't Trump believing something mean it is ipso facto false?
1
Autor says, “they are also playing by a set of rules that others would be naïve to ignore.” China has a highly professional and competent government that manages the economy in a massive way. At the same time, China permits small-scale start-up companies to be highly innovative, based on original research and development. My China fund has been performing extremely well in the last several years. I believe there are many worthy parts to the China model too, and it helps grow my wealth. China having lunch is my having lunch too.
In the U.S., we have a government that is strongly minimized by liberty-loving individualist Republicans who believe in the eighteenth-century ideas on the coiled snake flag with the phrase “don’t tread on me.” It is utterly naïve indeed, and in developing economies everywhere, ideas from the China model are going to out-perform in growth compared to distributed wealth holdings of typical American people. Wholly outsourcing economy management to big corporations and the financial sector is not the best thing for typical American people. Getting and keeping American mojo is not about raising that snake flag on the pole out front.
The world looks at what the U.S. democracy-like electoral system has brought, in an unbelievably tolerated, ignorant and incompetent president.
I think Tom Friedman has his finger on a big part of what is wrong. If I were president, Tom would be my chief advisor, if he would tolerate me.
96
The Chinese model of a managed economy is best suited to play catch up down a known path.
The American model is best suited to lead by innovation into new ideas. American growth is opening new paths, and Chinese growth is following the Americans.
Yes, there is a problem in our trade relations with China, but it is not because they are a managed economy and we are free.
4
@rpatterson38: All that had happened started with Clinton and continued through Obama. Yet, Friedman, after noting this, somehow blames Trump. When his pals on Wall Street and in the boardrooms of multinats saw that billions could be made opening the huge China market to US investment and crushing US unions by offshoring production to a low wage/low environment standard country, "free trade" was "trumpeted."
No country in history practiced free trade, Great Britain talked free trade, but protected its foreign markets through Imperial and Commonwealth preferences. The US and Germany industrialized by means of protective tariffs. Later Japan and South Korea followed the approach laid out by Alexander Hamilton and Friedrich List. They also added a Mercantilism twist by manipulating the exchange rates by using part of their trade surpluses to buy US government debts (an American "export" on Capital Account).
The PROBLEM faced by the US now is the result of nearly two decades during which Clinton, Bush and Obama sold out the American worker for the benefit of their contributors. If Trump is inadequate, look at the gift he was given by his predecessors. And by harping on the fantasy of free trade, Friedman and his ilk are just repackaging the poison that has led to America's relative economic decline.
3
It might help if the US didn't view industrial policy as Communism.
4
Mr. Friedman makes some good points, but there is a massive disconnect between his recommendations.
The TPP was negotiated in secret. Among the negotiators were thousands of corporate representatives and few if any union leaders, much less rank and file members, those million blue-collar workers from the Midwest who lost their jobs and communities to savage Chinese mercantilism.
Mr. Friedman is correct on two points: Trump and his supporters know there is a real problem, and Trump is far too stupid and ignorant to do anything useful about it.
Other writers make good points. For over a decade I've been looking and labels and asking where things are made and avoid anything made in China (this is hard to do). China ships us products that are not merely shoddy but sometimes defective and dangerous. Why doesn't Mr. Trump order much, much closer inspections of everything coming from China, to protect his base and other Americans? Of course tit-for-tat tariffs on Chinese goods; of course no full Chinese ownership of American manufacturing, of course no storage of cloud info outside of the U.S.
None of this will change under the current administration. Yesterday's election (close, but not yet decided) is a start. Whether Republican or Democrat, we can only start to fix things when we elect educated, intelligent, mature people to office. Let's hope the wave of ignorant, stupid, infantile politicians (yes you, Mr. Trump) has crested and is receding.
Dan Kravitz
8
Tom writes:
Once a smart president restored participation in TPP, he’d start secret trade talks with the Chinese — no need for anyone to lose face — and tell Beijing: “Since you like your trade rules so much, we’re going to copy them for your companies operating in America: 25 percent tariffs on your cars and your tech companies that open here have to joint venture and share intellectual property with a U.S. partner — and store all their data on U.S. servers.”
The above should be a plank in every candidate for president's platform.
5
The last part about the value of education is good and true. The first part is probably wrong. Tom either free trade is good or bad. If it’s good then by not trading freely China hurts itself by raising costs for the Chinese and using inferior products. If that is so, then why would we be so dumb as to follow suit? Now one may answer it isn’t all good or all bad, it’s mixed. But that’s a dodge unless you can prove it and I don’t think it can be. A more likely culprit for us is failure to upgrade our skills to focus on higher profit and higher tech goods. This failure on our part can be remedied by better education at all age levels, especially in sectors where we don’t compete well. And this is where inequality porn comes in— appropriate taxes will raise revenues needed for the human and plant and infrastructure retooling we need. Beggar thy neighbor is a losing proposition. Winning by superior training and product is a much better special sauce. But we can’t beat trump Tom until you stop drinking the trump defeatist lemonade.
Mr. Friedman, I’m afraid you nailed it: “a smart president.” We had one before this one.
3
Tom, one question. What did Obama do about China Trade during his 8 years?
6
The same things Dubya did.
3
But Tom, the Republican party presently controls trade and EDUCATION policy in the US and they rely on ignorance, superstition (aka religion) anti-science dogma and social division to hold onto their political power. Surely there is no value in us recognizing the true problems with economically competing countries if enough of us are purposely made so poorly educated and unenlightened we elect ignorant, anti-science, hypocritical, racist bigots to represent us in the contest for ideas and political power!
2
Free trade is a complicated issue. For 20 years the American middle class high standard of living has been based on american wages buying cheap imported (from china and others) goods. If Americans had to only buy the things they made we would all have a lot less. Back in the 50's when American was much more a closed market, imports were only 3-4 % of the market we all had a lot less "stuff". The high standard of living with high American manufacturing wages buying cheap imported good is and has been non sustainable and we are feeling the crunch. The only out is moving to high skill high wage jobs, not going back to 1950.
4
Trump is so self-absorbed that he probably avoids the subject of China because he doesn't like the way "Alex" Baldwin parodies his pronunciation of the word.
2
What Tom knows but never says is that money and power always win, so, unless steps are taken to level the playing field, the rich get richer, and the inequality gap in wages and property grows larger, leading to chaos.
5
It's just terrible the way foreign countries hold a gun to our heads and force us to buy their products while we're shopping at Walmart, Target or Hobby Lobby. Uh, duh.
10
Exactly If we only bought what we made here with high American wages we'd all be shopping at Five Dollar General
Friedman makes the same mistake the editors of this paper constantly make, you act like Trump has a brain. The man who just got fired T Rex said it "he's a moron", and it's true. This is not the abstract or exaggeration. Trump can't understand trade, economics, health care. These are complicated issues that take great minds to hash over for years. Honestly he does not understand really any issues or basic things like cause & effect. He knows how to self promote and wreck things, that's it. Having said that, the loss of manufacturing I think is not do mostly to trade deals. It's the fact that workers here get paid 20 - 30 dollars an hour, even more, (and they should). Many had pension plans that could not be maintained by companies. And of course health care. In China or Mexico a worker is probably paid half that, even less. Health care is taken care of by the government. How can we compete? Plus add to the fact while China has taken some steps towards pollution regulation, it's not like the regulations we have here. I see photos of people walking around with protective masks on bad days. Hopefully trade deals like TPP address these issues. Trump just tore it up. He didn't know what was in it, or NAFTA for that matter. He just cancelled the biggest tech deal in history with Singapore. What was it 115 billion? This man is dangerous in that he is so stupid; and he is letting, (cause he could care less) the ultra right wingers take over and steer this country into the abyss.
5
NAFTA was bad for the middle class, the TPP was going to be bad for the middle class, we should be talking to North Korea, torture works... denial of those facts are why America got sick of the Democrats, and denial of that fact is why Trump will get re-elected. Unless maybe if the red states realize their taxes went up, they lost their health care, they are about to lose social security and Medicare, the public educational system is has been destroyed, and that despite his being correct on a few basic truths, the Trump cure is worse than the disease.
3
Some things are true even if Tom Friedman believes them. After all, even a broken analog clock or watch is correct twice a day.
1
Trump attacks steel because Pennsylvania, Indiana, and Wisconsin vote, but in fact China supplies 2% of our imports per Politifact. Of course our ignorant president doesn't know that. Thx for clear, informative column on complex issue even for us educated political junkies!
3
This wouldn't have happened if it weren't profitable for Wall Street. Clinton pushed favored nation status for China, real Democrats like Dick Gephardt opposed that. Free trade works for business investors, buying Chinese steal works for business investors.
The horses left the barn years ago, the 1% made its killing and are leaving the future of America in the hands of Ping and the Chinese Communist Party.
5
Every floor is a ceiling. It astounds me that this man is a millionaire for writing things like that.
1
an open and shut no-brainer. make China play fare. mirror their own protectionist trade policies if they don't.
2
The people who worship at the alter of the wide-open U.S. market and their free trade temples—Walmart and Costco—may not even know that U.S. industry once dominated in selling Americans clothing, televisions, shoes, cars, tools, appliances, etc, Sears products were actually made here. (Remember Sears?) The Japanese set the precedent for one-sided nontariff barriers to U.S. goods—even Washington State apples. China observed us well and applied this lesson: our appetite for cheaper exceeds our hunger for equitable. “Buy American” has the same place in our history and our hearts as “Whip inflation now.” If we don’t practice these constraints here, why should anyone in China?
87
Friedman stands on the wharf bemoaning "unfairness & protectionism" as he speaks of a ship that not only sailed long ago, but remains mute on the face of corporate greed that launched a thousand ships, all coming this way.
Better late than never, Friedman. Now I wait for you to demand that the USA send carrier battle groups into the South China Sea to "protect the free world's interests." All while declaring that with free trade "we can both thrive at the same time."
3
Hey Friedman, you and the establishment thinkers have been wrong on so many issues. Concerning your advice in this article, answer this:
Suppose a 50 year old loses a job to foreign competition and spends a few years acquiring a new "future oriented" skill at a community college. Who is going to hire a 52 year old with no experience in the new field ?
8
Coming from the sales side of the business world all I can say is that every major US company has been focused on the China market.....they all know that its the future and the US market is the past. Growth comes from China and that growth is the engine that will make us all susscessful. Of course ti’s Not just China but also India, Brazil etc.....but China is the big dog. We’re obsessed with our so-called power, so we spend on the military and bankrupt our country. Meanwhile we’re losing the economic war. And we elect an economics fool to be our president. Get rid of the Republicans and Trump but stay away from Bernie and the crazy left.....they don’t know what TTP is either. Obama did know but the Reds (Republicans) kept him from doing anything.
2
But if we stay with the same script presented by Democratic Party managers we are back in the same place. Look at the track record since 2010! i.e., election results. Who was the head of the party? Barack Obama!
And by the way, TPP was basically an investor rights agreement written by both corporations and government to serve both corporations and the projection of American “power”-that same American power which is eviscerating our country by overextension of empire. Its protection of patent rights is an especially egregious form of protectionism- imposing significant extra costs on consumers, especially of prescription drugs. And it’s adjudication process is an end-around from the American judicial system- a true transfer of our sovereignty. And who is the primary beneficiary of all this? It’s not the general population!
It’s bizarre that TPP will be offered as a solution.
1
Growth occurs IN China because the Chinese economy is export led. I disagree that companies are targeting China to boost their own sales.
I come from the pharmaceutical industry - and there is no money to be made in China because there drug prices are capped and new drugs are pirated by Chinese companies to sell at generic prices - and there isnt much money in that either.
I would be curious to know who's making money in China.
My Trump rule: Do not trust. But verify.
2
Notably the best TF article I have read. China has certainly out played the U.S. And until self-appointed 'genius' PotUS wakes up soon our standard of living is going to fall. Presently, the U.S. thinks our economy is good, mostly from the low unemployment rate, but look at those low paying service jobs and tell me how much you are saving each month. Again, manufacturing is the central stable of a strong nation, something we gave up a long time ago for easy, short term profits.
2
No wonder trump likes the uneducated; they (and he) would never grasp these concepts, and do much better with mindless rhetoric. Then they can go back to their tweets and funny internet memes.
We are truly doomed.
1
Even if a mental midget knows there is a burglar in the house, he may not be the best one to confront the unknowns of what the burglar will do when confronted in the dark of night. So also with Trump; even if he is right, and a third grader would know this much, skillfully managing the situation might take a grown-up.
1
This all makes sense if you recognize we are living in 2018. It makes no sense to individuals who think they are living in 1953.
1
Mr. Friedman could have found out 15 years ago what effect China's entry into WTO had on American industries, just by talking to the 'deplorables'. There was no need for input from a MIT economist. And it beats me why all the intelligent Presidents who came before Trump never addressed China's mercantile practice and the harm it did to America? Why did it take a so called buffoon of a President for American oligarchs and their mouthpiece media to wake up?
As for Trump tearing up TPP without even glance, he knew his voter base will not trust any trade treaties after what NAFTA and WTO did to them.
4
The absolute best policy on trade with china:
“Since you like your trade rules so much, we’re going to copy them for your companies operating in America: 25 percent tariffs on your cars, and your tech companies that open here have to joint venture and share intellectual property with a U.S. partner — and store all their data on U.S. servers.”
1
Barack Obama worked hard on the TPTP to combat this. At the time everyone from farmers to CEOs railed at his work. The idea was to bring China to heel by roping its neighbors into a pact with the US.
Here we sit on the other side with a man who needs help to tie his shoes and suddenly everyone understands.
My faith in humanity and its ability to do the thing wanes further every day. We are vicious enough to survive but we aren't smart enough.
2
"But while Trump’s gut instinct is right, he’s so ignorant about the facts, he’s so easily swayed by the last person he talked to or by ill-considered promises to his base,"
Friedman's piece confirms a fundamental point about the state of the US today.
Donald Trump is the Dream President -- Agent of Chaos-- for America's two main adversaries, China and Russia. Certainly, Beijing and Moscow are looking forward to his reelection in 2020.
1
Don’t forget the rampant theft of intellectual property by the Chinese military reported in this paper many times. Tariffs on products made from stolen IP should be very high. Otherwise that’s just anothe way China is stealing our future.
2
So much common sense in this article.Too bad Trump and his supporters wont read it.
3
Finally, a NY Times article that is not promoting the great virtues of "free" trade and predicting catastrophe if we do anything to counter China's unfair practices. It's about time someone stood up to China, and it clearly was not going to be Gary Cohn--a Goldman Sachs Democrat who cares not a whit for American workers, only for the financiers who make profits in fees from selling American companies to Chinese state-owned entities.
I'm a Roosevelt liberal, and I'm sick of China getting away with unfair practices at our expense. If Obama wouldn't stand up to the Chinese, and Trump will, well...more power to him.
We also need to stand up to China in the realm of militarization of the South China Sea. The once proud US Navy, now prone to accidentally running into container ships, seems too timid to patrol the South China Sea any more. Time to send in the Marines, and make it clear that we will not be bullied into giving a huge territory of ocean to the Chinese government.
From Russia to China, we have let ourselves be bullied for too long, in economics and the military. I'm glad Mr. Friedman, for one, agrees.
3
'...after it joined the W.T.O and it (China) led to the sudden loss of about one million factory jobs' in Ohio, Michigan, Wisconsin and Pennsylvania.' Trump won all of those states' Why? it was because the populace had been dumped in a cavalier fashion into a state of economic desperation by Globalism; and how come 'globalism' has not attained the pejorative status of 'populism' could it be that in the US one now lives under the diktats of an overwhelmingly left leaning press - thank you soi disant educated Professors yes all those tenured hermeneutes for engineering a liberal stampede in journalism which currently fuels the division in the USA and causes the liberal media to run about as if their hair was on fire whenever Trump voices anything. Brexit, Trump, Austria, Hungary Italy Poland Germany there is a counter movement taking place here which is undeniable. People holding on to a core belief that this is not happening despite the evidence may hold on to their core belief by rationalizing away evidence, however they are consigned to live with the cognitive dissonance and fear of that new dawn, it is just there! on the horizon and like any new dawn, appears rather beautiful.
Hurrah for Tom Friedman in emphasizing the importance of educating our youth if we are to compete. But he misses the basic point. I'm nearly 70, and long ago I concluded that free trade could be deadly to our society, because to maintain our relatively high incomes it would require us to achieve a high-end niche in world trade which required skills beyond the willingness or ability of many US workers. How many people in your high school class were likely to achieve MAs or PhDs? Yet that was the ultimate requirement of the free trade world we were entering if we were to remain "top dog." Those who fell behind (meaning most/many of our fellow citizens) were likely to be out-competed by cheap (and increasingly educated) Third World labor and thereby reduced or impoverished n their lives.
So I know that free trade produces greater wealth overall (and I'm a beneficiary thereof), but the issue is: greater wealth for whom?? And at what cost to our society and politics? I hate virtually everything Trump stands for, but I do believe that some protectionism deserves a serious look...not on economic grounds, but on grounds of social and political solidarity and survival in our nation. So, Tom Friedman, I like your instinct to look at the big picture, but I suggest you throw shibboleths aside and look at the even bigger picture on this issue.
56
He does mention and support secret trade talks that concentrate on equalizing the tariffs between the US and other nations, China in particular. Trump, the supposed great negotiator, doesn't even seem to understand the word or how the world works on these issues.
1
Germany solved the problem of competing in manufacturing in an age of globalized trade. And they did it without producing a higher percentage of MA's and PhDs than we have. Or even as high. And they did it essentially following Friedman's prescription, making sure less academically inclined young people had access to technical training and apprenticeships. Even Trump has touted their apprenticeship system.
2
Look at how Sweden puts a floor under every Swede, offers free education and retraining of workers. Workers don't fear new technology because they know they can get retrained.
2
Great piece on trade.
Trade Shock is what elected Trump. What you just wrote about is most Americans. When you say millions lost their jobs 2001-2007...then the Great Recession hit. Millions more lost their jobs = >10% unemployment.
Obama was only allowed one or two things. Al he was able to do economically was "patch the boat" so it could limp. He could not have bothered with Obamacare and instead went full force Newer Deal? Who knows how that could have turned out?
2
I believe this is the first time Mr. Friedman actually acknowledged the need to create “wage insurance” and community reinvestment policies" to answer the inevitable displacement of workers. A beginning, if insincere and tepid. For years, he's been blaming the workforce for not seeking those absolutely essential skills which he somehow is never able to specify, but is certain exist because he just spoke to a CEO somewhere. Under Friedmanism, as in Lake Woebegone, everyone is above average.
4
A good deal of what China sells to U.S. consumers comes from factories set up by American companies.
2
We have gotten ourselves into this mess because our politicians have followed the advice of people who think like Mr. Freidman. Now they are trying to stay relevant by saying that they know how to fix a problem that has been festering for decades that they only recently admit that exists. Sorry, it is too late for your prescriptions, Mr. Freidman, you have been wrong for decades and you are still wrong. Why should anyone listen to you and the rest of the pro free trade crowd?
Seems to me that David Autor has it right. He must shop at Wal Mart. But the big question is what we do now? His suggestions are all good but the problem is in implimenting them. In the state of Florida 40% 0f the high school age kids only get one meal a day. A stagering 20% have no parents. It is safe to say that our priorities have broken down while we are off fighting wars all over the world.
Change is always met by intransagence so it is going to take a purposeful individual to carry them out but it is clear we change or become a failed state
1
America has attempted -- many times -- to negotiate with Asian trading partners, especially China and always to the advantage of China.
...
We need to treat China the way China treats the USA -- STOP technology transfer as a bribe for "limited access" to the China market. What can they do to retaliate? Refuse to send cheap, shoddy flashlights and CD-players at low prices to Wal-Mart stores?
...
Simply say "N-O, NO!" when China demands part ownership of everything "American" in order to "protect their culture". What is wrong with protecting American culture?
...
I am sure that eventually the Chinese people will either demand access to American goods and services or just become a huge, sealed off "Korea".
...
As long as we can destroy them all should they decide to retaliate militarily we will win in the end by ending Chinese thefts and trade deficits.
2
Oh, so Friedman now finds out that the World is NOT Flat... Some of us knew that the whole time he was babbling about how the Chinese authoritarian government did not really control Chinese corporations. Those who thought Cina would "play by the rules" after being granted MFN status were deceiving themselves and were told so. And what were we and are we doing while the Chinese steal (not eat, steal!) our lunch? Fighting two wars in Muslim countries where we can 't win and fighting an unending war on terrorism while China fights no wars but like the US intimidates its neighbors and distracts us by using North Korea as a cat's paw. In short, we bought a Friedman flat earth trade theory and took our eye off the ball running our country on debt instead of taxing our most wealthy citizens and enabling our most forward looking manufacturing industries - wind turbines are solar, among others. And education does not exist in a vacuum. It's hard to pay attention in class when you are ill-fed and ill-housed and one (or both) of your parents is in jail or deported.
4
America First could mean take care of Americans. We're so unconcerned about the bottom 50% of America that Trump is more expected than surprise.
The New York Times talks more about poverty and inequality than most media, but really, not too much about it. We play lip-service to poverty and want and desperation in the lower-middle-class. Those in control are doing well and don't want too much rebellion going on.
Globalism is not working for the working people. Wages are low, rents and all other costs rise, and we expect things to work out? Greed is our greatest sin.
Greed pervades; we all want more money. See how much more wealthy Clinton and Obama are, and will become, after the Presidency. Greed may fuel and run the Republican Party, but Democrats suffer the affliction as well.
Who speaks against concentrated wealth, income, property and power? Who says that billionaires are actually a sickness in a society of unequals? Who stands for 'equality' and real 'community'? I don't see it.
China pays slave wages to slaves and we buy their goods. They say their Communists but create billionaires and slaves. And we buy their goods. We don't care. We want cheap products. We have no morality (and now we have the President to match).
Yes, training and education helps people, but technology and robots are here for many of our jobs, too. Who gets the good jobs, good pay, good homes and schools, and vacations and health care? Well, it should be all us. US.
No more lies about US.
7
The focus on the 1% is because that's where the money needed for skill development resides.... it's the root cause of "...the inequality in the ability to acquire those skills" needed to compete against China or robots. If the money doesn't come from taxing the 1%, where WILL if come from? Are our corporations today going to spend money to train the less skilled workers if their CEO is penalized for diminishing the profits for shareholders? We DO need to strengthen the floors under every American... but before they can climb onto those floors too many Americans need a safety net... a means for those who reside in areas where they cannot acquire the skills Mr. Autor calls for to move elsewhere.
Friedman is right about China. Trump may not have the answer but neither have the Democrats. Liberals & progressives have idly stood by while Beijing has destroyed the livelihood of millions of American workers. Trade wars are destructive but we didn't start this one China did. Beijing is openly & explicitly waging an ideological global war against the “rules based” global economic order, the rule of law, everything. Even worse, you can look back over the past 40 years, & all of the shiny forecasts about trade with China, every premise of every policy, all of it, has been lies. Rising American dependence on Chinese products coupled with unfair Chinese trading practices have hollowed out the US manufacturing sector. Between 2001-15, around 3.4 million U.S. jobs, 75% of which were in the manufacturing sector, were lost as a result of the trade deficit with China. China violates every rule there is on normal trading relationships. We know that. We have a trading relationship that doesn't work. The U.S. trade deficit expanded from $83 billion to $367 billion since China joined the WTO. That resulted in China owning more than a $1 trillion of US debt. This level of debt could give Beijing leverage over the US economy. China knows its trade practices are unfair. The surprise is only that it has been able to get away with it for so long. Not responding & accepting the status quo isn't working. That policy has been a disaster. I find it unbelievable Democrats don't realize this.
3
As a retired, global business executive who has spent a lot of time in China over the past several decades, opening and operating businesses there, it is obvious to me that China takes the long view. That's not to say that it does everything right, or that the results are always good, but it's an important element in its conscious investment in the future by focusing on the long term.
American businesses, on the other hand, and even our political structure with Congressional elections every two years, are far more focused on short-term considerations and results, often at the expense of thoughtful deliberation and longer-term goal orientation. Short term results, or the appearance of them, are not always consistent or compatible with long-term, game-changing achievements.
These are philosophical and cultural matters, reflecting an impatience, an unwillingness to sacrifice for the longer good, and a seemingly unquenchable thirst for instant gratification.
This is where good leaders can make a difference. The "bully pulpit" available presidents is not the same as bullying from a pulpit, the approach favored by Donald Trump. What we need is thoughtful deliberation, sober analysis and a leader who convincingly puts stakes in the ground while motivating the country to overlook short term frustration for the sake of longer term achievements and stability.
I'm not sure that Trump believes that truth, but the Chinese certainly do, and it's at America's expense.
7
Best column in a long time. Thanks!
I hope that readers notice that David Autor is a national treasure.
3
Your solutions to our China problem in trade--and by the way we have a version of the same one with the EU - are fine as far as they go in this year of 1998.
Oh my mistake, it's really 2018. Whoops the barn door is wide open and the idea that we can close it by putting a "police line do not cross us" is not going to cut it. The Democrats and NYC liberals may be should see there are real reasons why the hurting people of the great lakes states did not elect Clinton. Until the left really understands the real needs of all the people, the forces of simple minded reaction will have the downward leading upper hand.
3
China and the US share lots of similarities but are on two separate tracks. China seems to embrace the politics of success, and increasing adeptness in aligning goals with the future. In contrast, the US seems to embrace the politics of envy of someone else’s success, which must rub off on the entire country as it looks backward in the rear view mirror to be inspired. China has established the long term power of the presidency with an unlimited term. Will term limits in the U.S. be ditched in order to keep up with China? Americans feel righteous in what they want, but they want a lot of the wrong things. Americans could prove to be less intelligent than previously thought in the not too distant future.
35
The issue is not what Trump believes is true. Understanding what matters and what does not is key.
Economics is not a science. There are too many variables and unknowns to use double-blind controls to provide repeatable and predictable results. Economics is gender, color aka race, ethnicity, national origin, theology, sociology, anthropology, politics, law, history plus arithmetic. Economists are closer to oracles at worst and historians at best than they are to scientists.
When it comes to economics all nations are not created equal. While China has the nominal number two national annual GDP after the USA on a per capita basis it is number 79 right after the Dominican Republic and Iraq. Both China and America are motivated by political necessity to preserve and protect their national economic advantages while minimizing their disadvantages. In a global economy since trade is multilateral focusing on bilateral trade from an American perspective is deceptive and duplicitous.
With 1.4 billion people nearly 20 percent of humanity is Chinese. And with 4x as many citizens as America, China has the same amount of land. The ethnic Han majority is aging and shrinking with a huge male imbalance. In addition to demography there are other factors such as geography, geology, biology, meteorology and oceanography that significantly impact economics. And economies include manufacturing along with customers, services, mining, agriculture, finance and government.
1
Quite a few American companies, among them quite a few high tech companies (first and foremost "Apple"), have outsourced their production to China, because of the lower costs. That's just what Havard Business School, and Capitalism (i.e. in conservative minds: god's little brother) told them to do.
1
Wars, as in WWII, are obsolete. We have atomic bombs. Now, a country without democracy , say China, invests heavily but does not consume much. The current population tightens its belt. In time, China rules the world economy in that it owns the factories and makes decisions that pay big dividends to its population. In the future, the Chinese people will be the richest of all. China will, in a sense, be the capitalists. The US and other countries will supply the labor. Is this bad?
Well, at least I made it through an entire Friedman article this time. Yes, China is a huge problem. The main issue is they have now established outposts throughout the world, including multiple in the States. These will undoubtedly grow. Think of chain-migration on steroids. This article shot off its wheels when it slid into education. "And cities and towns anchored by universities tend to reinvent themselves more easily; they’re engines of adaptation.". I live in a city with two universities. Those two universities have used the new rules and economic incentives to force out and essentially take over the core of our town and push out the truly educated that built the highly educated center they now embrace. It has only attracted ephemeral "seekers" with zero desire to learn skills. They want a vacation. The Chinese are not on vacation. The Chinese are working and winning. Time for all of it to stop or Americans are in big trouble.
3
Seems a little disingenuous as so many companies have willingly relocated to low cost centres like China to increase profits for shareholders. These are captains of industry giving over your nation's interests to foreign powers, for profit. American business must seriously look itself in the mirror before casting the first stone.
1
Through mostly greed and deep naivety in the 90s ad 00s most US corporate leaders swallowed the utterly false premise that China offered a billion consumers. They still believe this lie; there is no billion consumer market in China if we don't have equitable means to operate there. Read Kissinger's book On China and you'll plainly see that China will never (NEVER) give up internal markets.
2
There is much to be learned from an in-depth case study of specific industries and strategic technologies. Let's start with solar panels. What happened there? PV was an American innovation and a new industry with no established players. Now a few years later we have tariffs in place to protect the shreds that are left of what is now a $300B market. So who killed (or failed to nurture) US solar? There were so many hands on the knife. The Chinese to their great credit recognized its importance and targeted it, subsidized it, and developed it. Maybe they are just winning the future because their heads are in the game while we trip ourselves up with our dumb politics. On the right we have endless bleating about Solyndra and "picking winners" while they shut down all the DOE renewable energy labs and subsidize our extractive industries.
4
As someone that has helped box up parts of five southeastern factories for shipment to Mexico and China, I charge that you're forgetting several of the criminals involved. Namely Bankers, US Management, and Stockholders seeking not just profits, but insane and often unobtainable profits from the lure of $4.00/hour (Mexico) and $4.00/day (China) labor. They might not be the 1%, but they are they thugs that are right below and serve the 1%. They'll probably never get their true reward for the disservice they've done to thousands of American workers.
2
The biggest take-away from this piece- one we have all heard how many times- is the essential importance of tech education.
And since the late 80's we have seen nearly a 30% reduction in Federal and State appropriations for state institutions, which 80% of students attend.
Our student loan debt in the U.S. is now over one trillion dollars, up 50% since 2010!
Why do we permit our government to allow this greedy privatization of our public education?
We can always give more money to the Pentagon, thinking it in our best interests.
Somebody has always got to make big money off of everything, or it will not fly.
And this is accidental ignorance?
235
A lot of the problem lies in our educational system. We have the best graduate education in the world and a K-12 system that is mediocre or worse in too many places. An educated and public spirited public would have considered more than low prices in their purchases. A public-spirited business elite, broadly and not just technically educated would have considered more than maximizing profits.
It is also useful to remember that rural America was once a technology leader. The state university systems developed in post-civil war America disseminated information to farmers on everything from crop rotation and pest eradication techniques to paint formulations suitable for barns.
2
More like willful ignorance, sustained, and perhaps created and enabled by a culture in which personal accountability, and personal responsibility, exist as little more than words. Not as consensualized norms. Values. Sustainable processes and outcomes.
"Why do we permit our government to allow this greedy privatization of our public education?
We can always give more money to the Pentagon, thinking it in our best interests."
Agreed. We need to improve our government so we return to heavily and effectively investing in public education -- for everyone.
And while we're at it, why don't we take some money from the Pentagon to help establish a universal basic income (UBI) in the United States? And when will we start discussing this idea more seriously and with greater frequency, from all sides?
3
Mr. Friedman: You've taken the intelligent approach to presenting a reasonable and accurate analysis of trade patterns. Several additional areas come into play. The equivalence in trade policies between trading partners does require balance. Western politicians and diplomats knew, that when China entered world trade, they eventually would become a powerful exporter. The industrialized countries allowed China to charge much higher import duties on Western produced goods. China was given a unique opportunity as very low tariffs were assigned to their exports. This was claimed to be important so as to give China's nascent manufacturing companies a chance to grow and prosper while they learned the ropes. Unfortunately, they now own the ropes. I never understood the reasoning behind this type of favoritism. I believe the underlying reason was to give capitalism a boost in China and hopefully, their politicians would be more favorable towards western policies and political thought. The S. China Sea mess shows that we've lost out on trying to have China modify their political objectives. Currency relationships have their place, too, in making trade balanced. It's important to understand that the adaptation of new technologies is responsible for a large number of lost jobs. The US can take several steps, quietly as you suggested. We need to improve our education system. We must increase R&D in the areas in which we excel and keep our currency at a level that supports our exports.
78
One other thing that is true is that Trump does not understand implications of his decision to impose tariffs on steel and aluminum on what appears to have been a whim and, more importantly, done without consultation with our allies or his own cabinet officials. Like much of his impulsive behavior, it is fraught with danger for the United States and our allies.
3
Too much emphasis on the one percent versus the 99%? I don't think so.
Let's remember who it was that benefited from free trade and the ability to simply avoid American workers and American wages: the one percent.
8
What people ignore is that success in America largely depends on serving that 1%. People who do that get ahead, those that don't don't get very far at all. You aren't likely to hear much about plans to share the wealth more widely or even create wealth where the 1% doesn't get its share.
1
Yes, some things are true even if Trump believes them. And a broken clock is correct twice a day.
The real truth is your analysis on things that might be done to correct the problem. Trump has no real grasp on problem solving. His entire Presidency is about being a TV star. He told his staff early in his presidency to imagine that they were in a TV show where every day he vanquished an opponent. Trump wants to appear to be strong and decisive and a winner for two reasons. One is it suits is personal needs. The other is that he started running for reelection on 1/21/2017 and intends to be reelected. That is his only goal. If he happens actually to do some good in the process it's a bonus. If he does some bad, he will just deny it. Do not believe for a second that Trump will solve any trade or other problems that we have.
20
The problem with this article is that it should have been written in 2001-2002, because most of the effects of the entry of China onto the scene were apparent or foreseeable then (and kept getting more obvious as time went on). But the party opposed to Mr. Trump kept to its tight focus on domestic American matters. It bears a lot of responsibility for not seeing the canary in the coal mine. If we were to draw the lesson, it would be to listen and talk to the persons across the aisle. That is, listen and talk to each other, all of whom are fellow citizens, as Mr. Mark Lilla says in his recent book. We need to grow up in this country. We need to see what we have in common and build on that, seeking more consensus and not less. This is going to be a difficult economic problem to get out of--all of us need to work together on it.
11
No, Mr. Trump's party was in charge at the time this cites, and for another eight years. They created the problem this tries to blame on the other guys.
1
The effects of our trade policies were predicted by the folks that opposed NAFTA in the 1990's. And the supporters of those policies have basically repeated the same arguments about the benefits of "free trade" while the actual policies fail to achieve those benefits. This is not an intellectual problem. It is a political problem. The folks in power are getting rich, the rest of us not so much.
1
Trumps party was in power from 2001 to 2009, not the party in opposition.
1
Navigating the US-China economic and political rivalry is now our prime world challenge.
The trade one is well underway; the projection of Chinese military power around the world is just starting. The US dollar is at risk of losing its reserve status as the currency in which international transactions are denominated. This would be a severe blow to US status, wealth and leverage.
This doesn't mean the Chinese will emerge as the winner but it does mean we face a foe unlike the former Soviet Union. The Soviets never emerged economically. China is re-shaping the world economy.
In the absence of an effective trade agreement with the Chinese we will continue to lose ground.
6
Trade is not the problem. Our economy and per capita GDP are larger, by an enormous amount, than they were when we had millions more manufacturing jobs twenty or forty or sixty years ago. There is more than enough business and money in America, today, for everyone to earn a decent living. The problem is that all of the benefits of our economy have been seized by the richest few.
The number we need to be working to lower is not the trade deficit with China or any other nation, but the CEO-median employee pay ratio.
10
I mostly agree with Tom Friedman's analysis but have few observations. First and foremost; we should impose tariffs on China not on our allies with whom we have negotiated verifiable trade agreements (EU, Canada, Mexico, etc.). Additionally some of the agreements were drafted decades ago when Chinese industrial fabric was in its infancy. Trade agreements need to be updated to take in account new realities. So the fact that President Trump wants to renegotiate some of them is not a bad thing, although bullying your way into negotiations is sub-optimal at best. Finally, the U.S. government was not coerced to sign trade deals in the first place; it did so because it allowed U.S. manufacturers to access new markets and to build cheaper products and increase profit margins.
4
Solving the U.S./China economic problem, trade, etc.? Even more broadly, turning the world from a zero sum economic game, or worse, descent into war, into a world international, cosmopolitan, of mutual benefit to all?
For all Fukuyama End of History, all Friedman The World is Flat, for all Pinker Progress (he of the Enlightened Steven), the world over the 20th century and into the 21st has demonstrated economic growth is indeed zero sum, and if kept from zero sum turned little more into a bland internationalism, "mutual progress of all". We have watched great cities such as New York, Paris, London, Berlin, Rome, Tokyo decline, (indeed Japan seems determined to invent the cultural style High Cutesy) and other powers pour into the openings.
In short, nothing like overcoming the problem of rise and fall of cultures has occurred, nothing like prevention of zero sum game economically/politically, nothing like mutual growth and above all cultural development for all. The best that seems achievable so far is bland internationalism, high cultural/intellectual life wiped out, and a technocratic/bureaucratic culture worldwide created. Today we hear of little but morality and more morality of this and that stripe emanating from both the left and the right, always more technological/bureaucratic advance. What a dry, dry world. But I guess we'll get more water by climate change, melt of ice caps. Can we progress today without primarily creating merely mediocre human beings?
1
Thomas Friedman makes a very compelling case China looms like a giant cloud over the US making too many inroads into the USA. Yes and yes there alarm bells are ringing if America takes a punch at China. There are many aspects to this subject of the US trade imbalance: Germany is the largest exporter in the world. IF allowed let me the obvious. China as the factory of the USA making stuff Americans prefer to avoid like assembling APPLES using cheaper and reliable Chinese workers. Recall the days in the 1970's when Americans obsessed about Japan. Americans were mad with rage as Japan made better cars than Ford (pinto). Eventually Ford awoke just in time. The real fear is that China produces millions of engineers probably educated in USA. The truth is the US has made China what it is today. The Chinese must be confused although the presence of the US navy off the coast in their shipping lanes proves something is amiss in terms of American perceptions of China. PREDICTION: USA will not win any international trade war. The US should apply its soft-power like adjusting USD as with revaluation of Japanese Yen in 1990. The human race always tend to over-react?
3
The GOP Congress is bought and paid for, does what its donors ask them to do. So I guess the problem is the corporations calling the shots are not too clear on their own welfare? Or could it be that they are the wrong corporations, mostly buying and flipping, financial whiz kids? Or could it be that they’re making money anyway, even if they outsource all their manufacturing, downsize and merge, and sell imported cheap goods?
12
"The GOP Congress is bought and paid for, does what its donors ask them to do."
Yes, and the Democrats ran a campaign that was "bought and paid for, does what its donors ask them to do."
That left us with no options, donor control vs donor control.
That is why our first political struggle must be to get an option we can support. We can't let donors define all the options on the ballot.
2
Trump being right about unfair trade across the board with all nations is an erroneous conclusion. China is the problem and that is where we need to focus. China trade has been out of balance since they joined the WTO. I can't speak to the TPP, except that it did allow the US to work with Asia and exclude China. Tariffs on Chinese goods, control of Chinese ownership of US companies and access to the Chinese market without onerous rules of Chinese participation need to rectified in the very near future.
4
Our problem is trade with China. A trade agreement that excludes China is not able to fix our problem with China.
The TPP was both a military exercise in neocon aggrandizement, and a boondoggle for the limited elite interests who were allowed to know its contents and participate in shaping it for their own benefit.
If we need a trade agreement in the Pacific, it is with China, not excluding China. It is for the benefit of those damaged in our economy, not for the benefit of those who've done the damage so they can do even more.
It seems our economists have forgotten their own sayings when it comes to the three legs of capitalism: Land, Labor and Capital. When the short term capitalists of Wall Street rewarded the destruction of American labor unions they emasculated the counterbalance that held the chair upright. To earn a few more Porches and ski lodges in Aspen they killed the vitality of our economy and its future. Now that the toothpaste is out of the tube they've needed the government (the one they hated) to bail out the system with debt. Thanks B-Schools, now we have MBAs that don't know their ABCs.
20
It is the Tragedy of the Commons again. They killed demand, each of them profiting in small ways, until they'd all destroyed the whole.
1
It is unfortunate that neither the Republicans or Democrats with their vast array of University experts did not figure that out on their own about China and act on it for the benefit of American citizens. Thomas friedman does not tell how such a thing could be possible, that our politicians, from both parties, could be so much more ignorant about trade problems and their social consequences in the USA , than President Trump. Unfortunately the answers has to do with the answer to all our Political questions. Just follow the money and you will understand almost any Policy our governments come up with. The supreme court has now made unlimited MONEY legal in American Politics, by pointing out that "he who pays the piper calls the tune" Mr. Friedman is correct that coming up with solutions is not as easy or simple to our trade problems. But if you do not see or ignore the problem, you will never come up with a good solution.
8
Education is the key to Friedman's last point. You could argue that except for Obama's first 2 years the 17 years since China joined the WTO have been overlaid with GOP's anti-intellectualism policies.
7
Lake Wobegon is the key to his last point. All would be fixed if everybody was above average, if everybody could be the leader and have the best education to innovate.
Nightly Business Report (NBR) seems to have been the only media to have aired China's response to Trump's tariffs (3/12/18): CHINA SAID it will STOP IMPORTS OF U.S. COAL, and impose tariffs on other U.S. imports to fight back.
If China stops importing U.S. coal then American coal miners will lose jobs (not gain jobs as Trump promised).
Friedman's right: we have a trade problem with China but Trump's solutions are not the right ones.
4
These trade deficit is almost totally caused by American firms who hire Chinese contract manufacturers to reduce labor costs. There are very few Chinese branded products that have penetrated into our marketplace, and most of those are selling products designed by American, or European forms who started their CM businesses in the 1990s or even earlier.
This is a self inflicted wound, caused by trying to reduce labor costs and increase profits.
26
That's true as far as it goes, but you are ignoring that China was supposed/expected to open up their market so that we could sell high end stuff manufactured in the US to them and they never did. Of course, that rest solely on Bill Clinton for agreeing to such a horrible deal with no such guarantees.
2
I just read an article by Marco Rubio in the NYT about the same subject. Rubio once in a while has his heart in the right place but stops his thinking at 2 inches of depth so did not get to the TPP part. He does not have my vote.
Is not only what a smart president would do but a smart president, smart party leaders and/or smart ad-hoc Secretaries of State (or any of the 4). I know you pointed out "no need for anyone to lose face" because is so important for the Chinese culture but a not smart president will think he lost face if he goes back and signs the TPP and if he did, he would never do the secret trade talks with China. It would be in tweeter.
Unfortunately, we do not have the smart president to solve these issues or to stand strong by the American people's job training in order to avoid future China or AI shocks.
4
The primary cause of our industrial decline and the trade deficit with China is the purchasing of products made in China by us American consumers. However, just try to find "Made in America". It takes a real effort. Where is there a "Made in America" store, whether brick and mortar or online? Some entrepreneur needs to open a new chain of "Made in America" retail outlets, so that patriotic Americans can choose to shop for home-made products and support American manufacturing. How difficult a concept is this? Trump was right when he congratulated the Chinese on being smarter than Americans. But, then, he's a globalist businessman, no matter what his political statements might be. "MAGA" is laughable, if anyone were actually paying attention to Trump's money. Follow the money!
4
U.S Manufacturers took their jobs and moved them to China. China didn't steal them, we gave them those jobs, willingly. Don't blame China, blame Wall Street with their unrealistic demands for profits and the imposed consequences if those demands are not met. China was the beneficiary, not the instigator. Tariffs are used to protect your home markets. U.S. Companies demanded that our tariffs be low, not the government.
23
We structured our corporate world to encourage this, such as the tax and accounting rules that made it so profitable. We did this on purpose. We might be able to use tariffs to offset our other mistakes, but we could just stop doing them too.
1
Excellent article. "Intelligent" is the word. Not "impulsive". Not "snap judgments". Not "politically motivated". China is doing damage to our economy. In real, and lasting ways, and hugely destructive ways, that harm workers, families, and our entire economic well being. But the issue needs intelligent, thoughtful strategies.
2
To put it in simple words:
Trade Deficits occur if one Trading Partner has better AND cheaper
Products to offer to the World (Germany has Cars and more; China has Electronic and Household Products and much more to come.....)
One can try to balance such situation this by imposing Tariffs, but may have to face consequences......
However the World has decided on free trading and in general has not fared
too bad. "Deficiteers" should search their own Backyard and ask
themselves why their Exports are weak and their Imports are strong -
instead of blaming the other side.
Why is the US grumbling anyhow? Unemployment is close to zero, GDP is
strong. The overdrawn national debt, for years on the rise, could be
controlled by perhaps exercising some self-restrain on the expense
side (for instance Military) or on the income side (for instance Tax Gifts
for the Affluent)
5
"a smart American president’d sign the Trans-Pacific Partnership trade accord."
But it was totally secret till, apparently, now. Friedman told me more about it in this column than I could find elsewhere. It does sound good. And 45 should sign us up. He could tweet it out.
American capitalists behaved as capitalists will: They sought profit, the more, the better. So they relocated to exploit cheap Chinese labor, and the rest is economic miraculous history. Now the government -- capitalism's nemesis -- must step in and try to save the day.
Capitalism fails at all levels. Most, including me, don't understand or fully appreciate the fact that the socialism of China and the U.S.S.R. was state capitalism, not socialism, where workers, not the government, own the production facilities and product. State capitalism is fascism.
If we had worker co-ops, these problems would not even arise: A stateside co-op is not going to relocate its manufactures to a foreign land. But hindsight is always 20/20. Therefore, the economic floggings will continue till we wise up.
5
"One of the hardest things to accept for all of us who want Donald Trump to be a one-term president is the fact that some things are true even if Donald Trump believes them!"
Absolutely true. I find myself in agreement with Donald Trump on several issues, including the status of Jerusalem and the danger to freedom of speech posed by the far left. But I wonder if that's his way of camouflaging the insidious, self-enriching back-actions that will gain him his real ends: celebrity, power, money, and more real estate (including, I fear, our National Parks). Now he has the force of the United States government behind him.
He's aiming on staying President for a very, very long time.
4
Whoa! Let's stop and think about this a bit. Yes, US manufacturing went abroad to China and other low wage countries. But, it is because American CEO's sent their companies there for lower manufacturing costs. Let's look for the enemy of American manufacturing job loss in the mirror. I don't think we will see a Chinese face there.
17
A move towards parity with China on trade policies makes good sense. TPP should be edited so that many of the trade advantages currently conferred on China are transferred to other countries in the region, to secure their commitment to continued US leadership.
2
The fundamental problem is not tariffs, it's manufacturing goods that people want to buy.
If American automobiles were as great as they used to be, everyone would want one. But they aren't. Most cars sold in the US are manufactured by foreign companies.
If even Americans don't buy American cars, why would the Chinese buy them?
5
Disagree with you on autos. Many American cars are the equal of similar autos made around the world. Buick and Cadillac are popular in Japan. Jeeps can be found in many different countries. s
Thomas, there was one country, that on advice of US consulting companies, jumped from the "opening communist economy" to open free trade world, Poland.
The immediate result was a mass bankruptcy of small farmers, they could not produce at prices of the huge well optimized international companies, a wave of suicides of farmers followed.
Most of young, small dynamic companies in manufacturing and services followed.
The social cost was horrible, 2 millions of Poles emigrated to UK, Ireland and Germany; Poland was turned into a pool of low qualified manpower, some factories from EU relocated the assembly lines to Poland.
The Chinese avoided to be plundered and pauperized by new form of colonialism (old form of colonialism had the same effects, the already poor colonies, got even poorer...).
BUT as you say, at a certain point in development, reciprocity must be established.
Requesting that Chinese client's data stays in China is not outrages, this is what is required in EU for lots of industries and types of data. In US as well.
And frankly why should Chinese trust that their confidential business and scientific data is safe on US servers... we know that NSA's spying, legal and illegal, on communication and communication centers is a fact.
I would not trust any really confidential business and scientific data to any cloud service...especially now that we know that there are some almost un-fixable security issues with base Intel processor architecture.
7
Absolutely ZERO discussion of the environmental implications and next to no discussion on the labor rights implications...
But then that's normal for the proponents of global free capital movement (it's not really about free "trade").
8
"China hasn’t been playing fair..." Please name a single country in the world that "plays fair" when it comes to trade. Trade has always been a cat and mouse game, and depending on one's resources and one's needs, trade deficits and trade surpluses happen. It's only when many countries sink into a depression at the same time or war interrupts the normal flow of goods that serious trade issues exist. China has a competitive advantage because they didn't start building modern factories until the last few decades so their manufacturing machinery and equipment is more modernized than that in the US. Why? Because US manufacturers have been loathe to invest in their employees or equipment as long as the CEOs make their money.
10
International trade is complicated and I don't see any evidence that Trump or his supporters do complicated well.
I always say beware the person who demands simple answers to complex questions. Kind of like a doctor saying "sir you have a blood infection I think the best course of treatment is to bleed that bad blood out".
All of this discussion while good neglects the fact that US consumers have benefited by the low priced Asian imports. Raise prices by 30 percent in your local Walmart on those imports and be prepared for a backlash, and demands for higher wages. I have lived in a higher cost and higher wage country and how I describe it is a tax on everyone for a more equal society. I don't think that is the plan Republicans have in mind when they talk about trade protectionism.
4
I agree with your assessment, but there is one point I don't. The idea of threatening to copy their trade rules and sticking it back to China is not a good approach. Carry on the secret talks, and negotiate opening their markets to us with threat to reduce their imports by seeking other markets, with policy and trade deals around the world, leaving China out in the cold. Government policy to shift US business away from China. China has learned well American business, cheapest product, branding, and protecting their own markets reserved for their consumer. If we impose a 25% tariff on China, that hurts American consumer, shift the business to a more wider world and that will reduce China's import deficit, and get China's attention, to negotiate. China would not like to lose business to a competitor, thats why we have sales, get it!
2
Excellent column from Tom.
I'd only add that "if you want to get rid of walls and ceilings — and I do — you have to strengthen the floors under every American", you've got to start with progressive taxation to pay for it. That includes a true corporate tax rate with nonexistent loopholes and an individual tax rate on high earning individuals more in lime with those of Europe. And, while we're at it, an elimination of the Social Security earnings cap.
Of course, this would take a diminishing of the power of political lobbyists through public funding of elections so that our politicians wouldn't be dependent on oligarchs for their campaign funds, which bends them almost completely to those oligarchs' wills. But that's an argument for another column.
10
You are so right about ending the Social Security earnings cap. It's a no brainer and would solve the SS so-called shortfall.
Did Trump bribe retiring Republicans to support the tax bill by incorporating even more tax breaks for the wealthy, including retiring Republicans? I'd love to know.
I am no believer in the benefits of free trade because it only works among economies that are equally advanced or to the advantage of the most advanced economies. The Chinese use protectionism to develope their economy just as this country did for centuries. Otherwise I agree with Friedman and even with Trump on the inequity of Chinese-American trade. Unfortunately Trump appears to be intellectually incapable of putting his main insight about economics to work.
2
Too much focused on the 1% vs the 99%?
Autor didn't even get that right - it's more like the .01% who own not only the most billions but the most power to continue to rake in more and More and MORE. At the expense of most Americans -and America.
So long as American politics, progress, and position in the world, revolve around the corporate ownership of our government, bought and paid for - and so long as that .01% control America's fortunes, directing their government for the sake of corporate fortunes - opportunities to rise from poverty to middle class and beyond are mere dreams of America's past.
4
For years, the dogs in the street knew America had a China trade problem. All they had to do was sniff around Walmart, Old Navy, a few other chain stores--and Ivanka's shoemakers. It was no marvel of detection that allowed Trump to see the matter. What was also obvious was that American industrialists, American financiers, and American beancounters were in large part responsible for the shift in trade. And now that Mitt Romney has been rehabilitated in our perception, is it gauche to remind ourselves that he spoke at length about his experience of the horrors of Chinese workers' conditions? Don't we actually recall that Romney's Bain Capital bought a factory in China? The wounds of American workers were inflicted by their own masters in industry and finance. Trump was one of those, and now tries to make political capital by showing clean hands...
4
One of the puzzles of our political ideology is that the almost religious belief in free trade, which co-exists with the sure knowledge that we are competing the Chinese government, not with Chinese companies. They are one and the same.
So how can each of us privately fund innovation if it can be co-opted by resources funded by the entire Chinese economy? And how can we consider the Chinese market as anything *other* than the Chinese government?
Yet time and again, when faced with the loss of jobs and opportunities, we both talk of free trade, and pretend that a small US company or investor is a match for all of China. Here government is bad; there it is the economy.
So yeah, we do need to wise up. But the answers is not going to be more hands-off free trade capitalism. And since that is all we will look at, we will fail.
2
My impression of the TPP is that it allows other countries to take over all but the most sophisticated manufacturing in return for US banks and insurance companies having a clear field throughout Asia. The result would be almost no US manufacturing and a huge loss of US jobs over than in finance.
1
I agree with the points raised by this article. What I would suggest is that when we state that we are competing with Chinese state sponsored industries, we look at removing the burden of health care on workers and their employees. China, like most if not all our international trading partners, have universal healthcare.
One of the respondents to the article also referred to “looking at labels” when we shop. If all Americans put back or stopped buying items that are labeled “Made in China”, wouldn’t that have an impact on the Chinese economy?
1
Has any media compared Chinese health care plans to US plans? Maybe their plans would suggest ways to handle the healthcare crisis in the US.
In addition to attempts to pry open Chinese markets with quid pro quo restrictions let’s reduce their comparative advantage by requiring them to offer comparable wages, workplace safety and collective bargaining.
8
Good luck to that
TPP was a secret agreement that could only be voted up or down. Pundits seem to forget that Bernie Sanders was very popular because he opposed it. So did Clinton when she realized that her support for TPP was costing her votes, but it was too late. Trump won votes from communities destroyed by the Chinese surge that Friedman describes. Perhaps the only thing Trump has accomplished in his disastrous career is that he has gotten people's attention. His approach to trade and NATO is just that. It is too bad that it has come to this, but things have to change, hopefully in an orderly fashion.
The educational system cannot be changed and broken communities put together until those who now control Congress and the White House are removed from office. To do that Democrats must focus on people and communities, not interest groups.
12
Your last point about the DEMS focussing on people and communities, not identity politics and interest groups is true. Conor Lamb wouldn't be the right candidate for NYC, but he was right for that part of PA.
The DEM party should wake up and support candidates who can win, not candidates who adhere to their polarizing agenda.
I've often thought that opposing trade deals is like shooting fish in a barrel. That is, when you make a "deal" to buy a car, you inevitably feel...mixed about it. All a politician has to do, be it Bernie or The Donald, is declare it to be "unfair" and people will say, "Yeah! That's how I feel." Hillary's problem has always been that she is too honest. Remember when she thought people would HAVE to pay to make U Health Care work? Turns out she was right. Even when she turned against TPP, it was only reluctantly. Let's just elect Tom Friedman and get o the right track!
Friedman, you are right. Some things are true even if Donald Trump believes them. But so what? The issue, as you make clear, is that it is not so much what Trump believes, it's how Trump acts on his beliefs that matters Steel tariffs aren't directed at China's abuse of free trade. A pattern of steel tariff exceptions for allies, aka most favored nations, is not a commitment to free trade.
It is also true that broken watch gives the correct time twice a day. You can't trust the broken watch because you can't predict when it will give the correct time unless you have a working clock. There is no working clock on trade. Both the Republicans and the Democrats choose to regulate trade in the interests of wealthy donors rather in the interests of ordinary Americans.
18
Many writers argue from studies of the past without looking forward to the future's red letter trends. How can the future be prepared for, if it is overlooked? Without forward thinking, US policy will always be a half-beat behind, fixing yesterday's problems. Why not use new strategies and new conditions—the trends of the future--to make up lost ground by innovation and vision?
What's coming is this: a huge groundswell of middle class growth! The global middle class, led by both sides of the Indo-Pacific region, will double by 2026, to 6 billion people, with incomes between $14,500 and $145,000, the highest increase in demand and purchasing power ever witnessed in history!
How have we prepared? Largely by looking backward, thinking short-term, and being blind to opportunity. Symbolic is the predication that in this unprecedented growth, the US share is expected to shrink, from 18% to 9%!
Four areas of progress where this fix on old fights can be reversed include infrastructure planning and rigorously applying the four proven pillars of development (witness NC's Research Triangle and WVA's 5 county Chemical Alliance zone (exporting a billion annually in manufactured products), partnerships that dovetail with national and global products (rail infrastructure in Africa, Brasil, Spain, Central Asia), capital funding for projects using American expertise, and creating a demand for premium priced American goods (Apple, Harleys, Coke). Forget yesterday! Focus on tomorrow!
6
After reading this it seems that the real enemy is us. When we shop don’t go by price alone but look at the label and don’t buy what is made in China because it is cheaper. The cost is really so much more than the price. If we stop buying imported goods that can be made here we will soon see jobs and factories returning. And even if trump takes credit it’s ok as long as the jobs return and our GNP increases and our deficit decrease.
12
China doesn't have sufficient natural resources to sustain its population and economy.
The necessities of life are food, shelter and clothing. We have an overabundance of fertile land that is wasting that should be put to use.
Isn’t China doing more or less what the United States did in the nineteenth century? I mean developing the domestic economy behind tariff walls till it was ready to compete in the world economy.
8
"First, he’d sign the Trans-Pacific Partnership trade accord."
The TPP was negotiated in secret from our public and our political leadership, but with full participation and leadership from the very small private interests who would have benefited most from the terms they wrote in secret.
These are the same narrow interests who have benefited to such an extreme from the trade problems more generally. The TPP was to have been more of the same, but more so.
The idea of an agreement may be good, but this particular agreement was poisoned by the way it was made in secret for the benefit of those making it in secret.
46
Sorry, Mark, but you can't negotiate treaties in full public view. International diplomacy doesn't work that way. Once the omelet is in the pan, you can talk about a treaty. But watching the eggs being broken simply prevents sovereign governments from developing positions which will work for their constituents, without raising a public furor over a position which may never come to be.
TPP was intended by the US to limit chinese dominance over asian markets. Full stop. Trump, as usual, had no idea what he was doing when he blew up 11 years of negotiations!
1
I agreed fully with you in my comment, four hours after yours. Great minds ...
1
You mean like the Republican tax cuts?
“International trade creates diffuse benefits and concentrated costs,”
It also creates some extremely concentrated benefits, making a small number of wealthy very much more wealthy. We have seen a staggering increase in this, and apart from "social justice" ideas, it creates a powerful well-connected donor interest that pays politicians very well to protect that golden goose.
The extremely concentrated wealth part has played a major role in the US trade policy going on and on moaning about the problems but doing nothing about them.
24
No mention here of the tremendous benefit to the consumer of free trade. Televisions and appliances for example are essentially the same price as they were in the late 1950s. On an inflation adjusted basis they are significantly less.
8
They have to be cheaper because people can’t afford to pay for them with their Walmart jobs. It’s not free trade. And the American worker pays for it. Why China’s behavior hasn’t been the focus of democratic candidates the last 30 years is beyond me.
1
Perhaps cheap discretionary goods like TVs, appliances, etc are considered a 'diffuse benefit.' Not sure.
With wage stagnation and the loss of jobs the price of a TV or t-shirts is mute.
You do realize that certain papers - and their economists - had said for going on a decade now, that the loss of all of these jobs were of little economic or social consequence...
While China would lead the world in making things...
We would continue to lead in making things up...
Works well inside Hollywood - not so, inside the Beltway...
33
Another Times contributor, Paul Krugman, would fault Friedman for missing the key cause of the US trade deficit which is the lack of savings. Krugman, Autor and I all share the same institutional background. We all have degrees in economics from MIT.
One of the first lessons we learn is that a nation’s trade deficit is determined by the difference between savings and investment. The sad fact is that the United States is a third world country when it comes to savings. Our citizens do not save. Our government clearly does not save as can be seen from the recent tax cut and budget bills. Our corporations like to borrow. Hence we rely on other countries to lend to us – and to sell to us.
The citizens of China, in contrast, save. Using the World Bank definition the Chinese save 50 percent of GDP. The US saves even less than Italy.
The trade problem will not be resolved until we change our habits.
127
What interest, both literally and figuratively can be found in savings? My CDs pay less or barely more than inflation. Bank savings account interest rates force everyone to withdraw their money. Why save if saving is a losing proposition?
5
One of the principal reasons for lack of savings is our level of taxation. Believe it or not, if you compare the US personal tax to personal tax in the UK, France, Germany or Sweden, we don't look so good. Yes, on paper our marginal rate is lower. But you also have to consider what those countries provide from their taxes. If you consider college tuition a form of tax, for example, or health care, and consider a mid-career manager with two kids in college, what you'll find is that we pay more than many other countries for what we're getting.... because of the services their government provides out of their tax money.
Why is that? Could it be because the US spends almost half again as much on "defense" as it does on running the rest of government? (around 450Bn, vs. 650Bn for defense). (excluding SS and Medicare).
Incidentally, if China is the enemy in world trade, isn't Walmart culpable for leading the pack on imports?
16
Am unclear on the relative merits of gov't savings vs citizen savings vs corporate savings. Japanese citizens, I've read, are extreme savers (as are Chinese citizens). Yet Japan hasn't been doing well (the 'lost decades.') Yet it does have a lot of government debt. German citizens used to be (still are?) savers. Not sure about German gov't & corporate debt levels. Maybe not so high (as ours), hence Germany's good economy? But, regardless-> if we're not going to change our bad habits - and insist on carrying a trade deficit - might be better to have a trade deficit with countries who play more fair than China (and who don't aspire to world hegemony under autocracy).
Giving tax reduction of 1.5 trillion dollars with money the government does not have means more loans from China. It also means China will own more of the US. This is Republican "conservative" politics. Trump makes decisions based on weather they benefit his private economy.
90
Higher education has become such a bloated overpriced racket in America that it is hardly a good return on investment. What would, along with fair trade and tax simplicity, drive a spiral of growth in America would be to just jettison this model altogether for app driven skill specific education models originating in silicon valley.
14
Higher Education certainly has seen price increases paralleling Health Care. A good return on investment is subjective though. Without higher education, realized and wage earning skills become limited as the total skill set competency of a high school senior has not changed much in 50 years. Seniors today truly are more tech savvy, but at the expense of other important skill sets like critical thinking. Skill sets are National Treasures, and these need upkeep, maintenance and development as the world changes and new skills are needed. “App driven skill specific education models” demonstrate you realize there is a crisis in education, as it is in disconnect with the real world skills the world demands today. Until either the US Department of Education, the individual State Departments of Education, or American families create a movement like Arab Spring to redirect and fundamentally demand a change in Education on the scale of what Amazon did to commerce, our institutions of higher learning will become more expensive. After all, the median learning ability of students has declined, requiring more remedial learning services that drive up tuition. Blue collar labor will always be necessary in our economy, and these skill sets for the trades need to be taught or when our country finally invests in upgrading our infrastructure, who will have the skills to get it done? I hope it is done by Americans!
1
Yeah, all of the foreign kids flocking to US universities are here because US universities are so bad. I have an advisee who chose to forgo Oxford for a US university because she understands that the exposure to our research culture will advance her much farther more quickly than the stodgy British system. There’s a reason that German universities now look more like ours than ours once looked like theirs.
I understand and support the need for new skill sets for a new economy, but we are currently looking at three generations of poorly educated Americans and that comes at a terrible price. You can both read Shakespeare and be a tech-bot.
As with many "policies", the devil is in the details. One extremely insidious one, apparently included in the scrapped TPP and now part of the minus-America version just agreed on, is the ability of a corporation to sue a "sovereign" nation, if they think their profits are being affected.
"Free trade" is largely a slogan, much like the "invisible hand of the free market." It may be very hard work, but to understand the implications and then advocate for specific policies, it is necessary to get past the bumperstickers, the individuals and groups advocating one way or another, and deconstruct the details, always allowing the wiggle-room needed to ameliorate possible negative effects from unintended consequences.
37
"... One extremely insidious [policy], apparently included in the scrapped TPP and now part of the minus-America version just agreed on, is the ability of a corporation to sue a "sovereign" nation, if they think their profits are being affected..."
Totally agreed. Yet OTOH if we withdraw from arrangements like TPP, arguably we concede leadership to other nations without our voice being included.
These are complex issues, and their resolution demands real expertise. But all we get are decisions based on short-term political considerations and explained in soundbytes designed punch people's emotional buttons. I have almost no confidence in either of the major American political parties to tell us the truth about these issues or to approach them with a shred of intellectual integrity.
1
"For those of us who believe in free trade-and that China and America can both thrive at the same time-"
Do the Chinese believe that?
If they do then the experts provide good advice. If not, then it is a one-sided "dialogue " and that a dialogue of the deaf.
17
It's salient to discuss the US economy and China, but it's also unclear how to control Trump, the GOP, and trade policies such as US-initiated tariffs, and the TPP in general, until we have new elections.
But you are so right that education holds the key, and China does not fool around with education, at home and elsewhere (e.g., tiger moms). Students in China will sit in sweltering classrooms, taking copious notes and paying strict attention. What would US students do under such conditions? In most cases, they would whine and be excused for the day. School shootings in China? Nonexistent. National exams for entrance into Chinese universities are taken as seriously as serious can get.
HRC did not talk effectively, or often at all, to displaced workers in 2016, and she lost. Democrats should be pushing education reform, highlighting the glaring weaknesses with the current Trump/DeVos "paradigm" of sacrificing US public education to the arrogance and greed of religious zealots and the economic elite.
We need to financially support displaced workers (still voters!) while simultaneously steering them toward continuing education and continuing self-sufficiency. That is a long-term goal requiring constant toil and vigilance, and we are abdicating our responsibility – giving up the fight.
China will not stop; its people are used to playing the long game. If we don't get our act together soon, the most important subject for your kids to study will be learning Mandarin.
61
The Democrats cannot have ANY educational reforms whatsoever, because they are owned -- lock stock and barrel -- by the Big Teacher Unions.
2
It's unlikely we will ever "get our act together". There are too many flaws to our system to permit it to remedy itself. Rather, our decline is inexorable. When the time is right, China will demand to be the reserve currency of the world and will force the interest we pay to be commensurate with risk. In other words, we are economically broken but, for the moment, still maintain the illusion of supremacy.
The election of Trump has accelerated the process of our demise. Thrusting an arrogant man who prides himself on his ignorance (his gut) into the decision making process, has to be a dream come true for China. Whereas US demise might have taken 20 years to accomplish, an idiot in the right place at the right time will expedite the process.
The midterms are pivotal to US survival.
2
It's unlikely we will ever "get our act together."
While we endeavor to improve our government, we can encourage our kids to study and work hard -- with roots at the family level. To teach our children well is something we all can do today. And as adults they will then be more adaptable with continuing education and job retraining programs. As Frederick Douglass said: "It is easier to build strong children than to repair broken men."
Also, whatever subsumes humans, AI of some sort, will likely have no use for our DNA or material possessions, as AI will progress exponentially, both intellectually and physically. Who will instill it with ethics and morals? At this point, my bet is on China. If that is not what we want, then the race is on to our ultimate destiny: the post-human future.
"The Democrats cannot have ANY educational reforms whatsoever, because they are owned -- lock stock and barrel -- by the Big Teacher Unions."
Better than being owned by the NRA. Clearly there is work to be done, on both sides. But I would side with the Democrats. I would also encourage many of them to grow some spines, as they frequently come in handy.
2
Get. Rid. Of. Trump. Or get rid of as many Republicans as possible this November.
On college education, make sure that "skill set" is actually a set, and not one thing. The more specific the skills you pick up in college, the more at risk they're likely to become as markets evolve into something different. Learn all you can about the world and its people, what those people believe and cherish, and why. Learn those perspectives, and take 'em with you when you graduate, so you can keep them evolving. Get educated in history, so you have some idea of how to put actions and policies in perspective. Don't forget, you're on your own after college, and if you don't want to be duped or hypnotized by some demagogues (or Russians!) on the web, radio or TV, you need to be able to think on your feet--your own! Give your learning some real breadth, and you will be equipping yourself to imagine more possibilities.
65
Look at the market. The stocks that are sizzling are the tech stocks that do a lot of outsourcing. It is time to distinguish between policy and symbolism. Obama did green symbolic things and goes down in history who pushed through the biggest expansion of carbon fuels in any country in history. Trump is similar. He is not about the steel industry.
3
What Trump clearly seeks is, if our markets remain open to all comers, not just to China, that their markets must be open to us. Given cultural realities and the clash of naked nation-specific interests such a novel idea represents, Trump and his advisors must understand that achieving the objective will be a feat more intimidating than that of Hercules, shovel in hand, facing the Augean stables.
To have any hope of succeeding, Trump almost certainly has concluded that the only way to get traction is brinkmanship, leveraging assets we have in the attempt. He’s also comfortable with this approach, and by most accounts good at it. It certainly seems to have borne fruit with Kim Jong-un, despite attempts to credit South Korea’s President Moon with current opportunities – to seek to deny Trump his legitimate victory.
Some of the protective/retaliatory advice Tom gives may turn out to be what Trump’s team agrees on with China, privately or publicly, as incremental steps towards truly open bilateral markets. But that’s not brinkmanship, and if they were proposed in a first round they would represent what China simply would take as starting offer, seeking an end-game more beneficial to them. Trump likely will shock and awe with initial demands, then be willing to negotiate more rational bilateral understandings. And I see that model being used with ALL trading partners, not just China.
We’re at the beginning of the adventure, folks, not at its conclusion. Festina lente.
3
@Richard: As Tom suggests it's the Chinese- not our Western allies- who are the primary contributors towards our trade deficit, so why are we embarking on a policy that punishes the latter far more aggressively than the former? Oh, right: Xi is The Donald's imaginary best friend (after Vlad the Enabler) and we need him to keep Li'l Kim in line.
Speaking of which: if Trump's "victory" lies in getting the PDRK's leader to extend an invitation to a face-to-face meeting I suppose it can be said that Nixon scored a triumph when he got the North Vietnamese to the table way back when. Never mind which side actually ended up winning the war. Call it a victory when something good (and eminently verifiable) is actually negotiated. At which point I'll join you in "celebrating" even while Kim's subjects continue to live in a state of government-imposed ignorance in which a bad word directed at the dear leader will send you and your family off to a 30-year sentence at a "reeducation" camp complete with torture and forced labor. Otto Warmbier RIP.
21
The US was all for free trade without an intelligent labor policy and without paying any attention to the impact of free trade on labor. Good trade agreements should require that all participants play by the same rules, and whenever that is not the case some way of compensating for the imbalance is necessary. Competitive advantage from cheaper labor is ok but that labor should work under similar safety rules as the more expensive ones. What matters is labor productivity, a worker that produces ten times more than another by relying on automation is worth ten times more minus the cost of automating. Automation frees workers for other tasks, an intelligent labor policy would create the conditions for those other tasks to exist and retrain the labor force.
7
Tom, you wrote:
"In short, if you want to get rid of walls and ceilings — and I do — you have to strengthen the floors under every American."
Or, in other words, you need a robust safety net, or what I call a trampoline.
The problem with the TPP, aside from the obvious fact that President Obama did not give organized labor the same access to the negotiations as he gave organized capital, thus generating enormous suspicions of it, is that he couldn't simultaneously deliver that trampoline, as a guarantee that every displaced worker would be able to rebound sooner rather than later.
Tom, if we want something like a trampoline perpetually revitalizing the animal spirits within Americans, it's going to require a significant upfront financial investment - and this investment seems improbable given the "government is the enemy" ideology promoted by the contemporary GOP.
Hence, before a smart President could take on China, we would need to get our own house in order, and then our allies lined up behind us.
In contrast, Trump is proposing a suicide mission - like all his other star-crossed business ventures.
Tom, nothing good can happen for us on the trade front, or on any other front for that matter, until 2021, at the earliest. Sad.
69
Surely this is casting blame.
The hard truth is that American elite and economists bought into the free trade mantra. That the world economy will grow with free trade. But never revealing that this includes a worse then Antoinette solution. No cake but if you cannot survive the economic upheaval too bad.
Clearly the elite benefitted from immense profits and dividends. The middle class disappeared and populist movements profilerated.
But one admits that the Chinese owe a debt of gratitude to the Americans. Without WTO membership and most favored nation status where would China be??
As to protectionist practices, they must have read development economic theory by American and other economists. Hothousing industry to let it strengthen to compete against giants was a common strategy.
The TPP was a political move to isolate China - Obama admitted this. Trump followed through, but with little understanding.
Having sailed so far on a course of globalisation, a U turn is simply an added stress to the world. U Turning a supertanker by someone who has never sailed.
God help us.
14
Maybe there should be trade policies between Red and Blue states. We could very quickly determine who are the " makers " and the " takers ".
Right ????? And before I get nasty comments, NO, I am NOT from Kansas. I am here involuntarily, big time. The Husbands' Job.
12
Well, why are states like California so rich? They produce technology and entertainment that is consumed by customers in the other 49 states. Without those customers, they would be in a lot of trouble.
So when we tax the rich in California, and give the money out to Social Security recipients in Kansas, we're just giving them back what they spend on movie tickets and smartphones.
6
"If you get educated in America today, and have a good work ethic, you are going to be rewarded."
Only partially true and with a large number of caveats. Only an academic who has never worked in the real world and sees things through studies and data could make such a sententious statement with a straight face.
159
"If your parents [can pay for you to] get educated in America today [...] you are going to be rewarded [roughly equivalent to what your parents made]. What does education do? It gives you a [ticket to your inherited social class rank] and enables you to adapt to change better [within the boundaries of your class rank].
2
Especially when there are plenty of academics who are egregiously underpaid.
2
Americans constitute 5% of the world's population but consume 24% of the world's energy. So how could we possibly not have a trade imbalance - it just happens to be with the Chinese. The trade balance is not bad, we just happen to consume much more than we produce.
We give China money and they give us everything. Sounds like a fair trade to me.
12
The USA has 25% of global GDP. So.....
2
It's hardly unusual for a nation to practice a bit of protectionism to get their economy moving on the world market. The U.S. employed the same measures in previous periods of its history.
What Friedmann fails to mention because of his corporatist leanings is that much of the manufacturing moved off shore because our financial minders on Wall Street wanted more return on the dollar for their investments so 'encouraged' many multi-national corporations headquartered in the U.S. to move to off-shore because of cheap labor and lax environmental laws.
So, much of this DOES fall at the feet of the 1%. A club that Friedmann and his family are card carrying members of.
141
James,
But what are the choices for a nation with only 5% of world market? Are you suggesting we would be better off just by selling to the 5% of the market? China and India alone are 1/3 of entire world market. We absolutely cannot prosper without bringing them into the WTO or without having access to their markets.
America is the single biggest beneficiary of Globalization. We get access to 95% of the world. Americans are focusing on the wrong issue. It is not globalization that’s an issue. It is income distribution that’s the issue.
Japanese companies have profit sharing with its employees and that’s why you don’t find so many billionaires in Japan. The gap between avg employee pay and CEO pay is less than 1/10 of that in USA. Germany has extensive training and apprenticeship programs for the employees. The US keeps giving tax cuts for the rich while cutting services to the poor and middle class. THAT IS THE ISSUE not globalization.
50
it's all of it. intertwined. people are continuously looking for a neat explanation, but there isn't one. it's all of the things both of you have raised and then some.
the real problem is that this subject is so complex, the average (let alone the less than average) person has little chance of grasping all of this, leading them to be manipulated by sound bites given to them by people/groups who stand to enrich themselves in the (very short term) process. trade is a long game, getting rich? people want that now!
1
You're right but we have to explain the contrast in attitude. Why didn't mfg move offshore in past generations? Why didn't Wall St demand higher profits at the expense of US workers? Were they satisfied with lower profits? But business was still profitable.
And why did our lawmakers not allow American jobs to go offshore, vs later they colluded with corporations, resulting in millions in profit, millions less in corporate taxes, millions fewer jobs for Americans. Then they took a cut of profits with higher campaign donations. Then they put out rationalizations like the experts in this column.
Why was it once different? Why do columnists avoid this contrast?
1
Sorry, Tom, it really is about the 99% versus the 1%. The real problem is differential access to capital. A scion of the 1% has all the money they need to go to college and beyond. A scion of the 1% has all the money they need for the first round of venture capital, also known as the "friends and family" round. Can't say that about the rest of us.
Nor do I buy the "skills" mantra. I have a PhD in applied math and several years of experience in various kinds of programming, not to mention over 20 publications in refereed journals and a patent in data compression. Nevertheless, I'm looking at jobs that pay 70% of what I was making 4 years ago. I'm competing against all those guys with the H1B visas that you are so fond of.
381
Thanks for injecting some realism regarding this article. I commented on the associated problem of an older person getting hired even if they acquire new skill in any kind of program such as a community college.
5
Sorry to hear that. That sounds so discouraging! Basically, US has become a feudal state.
4
This reminds me of something my friend's dad (a professor) told me once when I was considering getting a PhD:
"The higher the degree you get, the fewer options you'll have for work."
His advice was to drive the point home that if you're going to get a doctorate, you better really love what you do, but I believe it has a practical value as a warning against becoming over-qualified.
There seems to be a sweet spot in terms of education in our economy, that's different for every field, and changes rapidly with advancements in technology.
6
For years I displayed a bumper sticker that said " If we continue to buy imports where will our children work?" I still peruse labels and buy American when possible but it gets harder and harder as fewer things are made here (even fewer made well) - just try to purchase a pair of US produced socks.
I'm all for affordable education, healthcare, retraining, and a living level of unemployment insurance but if we don't produce goods here and purchase what we make, we will continue our downward spiral.
In addition if we permit American corporations to produce in low-wage countries and sell their goods here while booking their profits in low tax jurisdictions and extend them military and tariff protections and the use of infrastructure for which they have not paid, we will continue to decline. I'll save the issue of the curse of the "leveraged" buyout plague for another post.
28
Yes, a meritocracy would be a good thing, but America's young people (and their parents) demand poor schools and crushing costs for college. They make this suicidal demand simply by refusing to vote.
15
Iris DeMent wrote "Our Town" after visiting entire communities, not just jobs, destroyed by the shift to China.
And you know the sun's settin' fast
And just like they say nothing good ever lasts
Well, go on now and kiss it goodbye but hold on to your lover
'Cause your heart's bound to die
Go on now and say goodbye to our town, to our town
Can't you see the sun's settin' down on our town, on our town
Goodnight
Up the street beside that red neon light
That's where I met my baby on one hot summer night
He was the tender and I ordered a beer
It's been forty years and I'm still sitting here
CHORUS
It's here I had my babies and I had my first kiss
I've walked down Main Street in the cold morning mist
Over there is where I bought my first car
It turned over once but then it never went far
CHORUS
I buried my Mama and I buried my Pa
They sleep up the street beside that pretty brick wall
I bring them flowers about every day
But I just gotta cry when I think what they'd say
CHORUS
Now I sit on the porch and watch the lightning-bugs fly
But I can't see too good, I got tears in my eyes
I'm leaving tomorrow but I don't want to go
I love you my town, you'll always live in my soul
But I can see the sun's settin' fast
And just like they say nothing good ever lasts
Well, go on I gotta kiss you goodbye but I'll hold to my lover
'Cause my heart's 'bout to die
Go on now and say goodbye to my town, to my town
Can't you see the sun's settin' down on my town, on my town
Goodnight, goodnight.
15
It's amazing how, as a country and a society, we Americans are doing exactly the opposite of what we should be doing to advance ourselves - we are being deliberately ignorant and foolhardy.
29
As Mr Friedman said in an earlier article, trump is a Chinese agent, not Russian.
5
Can't he be both? The perhaps necessary fallacy underlying Friedman's piece is that Trump and his regime are trying to do what is in the interest of the United States and its people when all evidence points to that premise being either irrelevant to Trump's decision (being interested solely in what makes him look good in the short term or what makes money for him) or contrary to their intent (i.e. he is deliberately acting to harm the country because that will help Putin and his associates, hurt Europe (and thus help Putin). Is he trying to help China? I don't think so. China is fully capable of taking advantage of his stupidity without him intending anything. But the unthinking withdrawal from TPP was a spectacular act of unnecessary destruction!
2
Mr. Friedman has gotten it exactly right- our feckless leader is a moron (no, he didn't exactly say that but that's what he's implied). The Donald had initially said that he was going to give China hell for being a currency manipulator and so on before deciding that President Xi was his best buddy east of Vlad the Enabler and north of the Philippines' Duterte. Besides, the Chinese mass-produce his "Make America Great Again" headgear and his daughter's branded wristwatches, so what's not to like? As Tom explains, his tariffs are mostly directed at the E.U. and Canada, so who is he punishing here and why? Jeez, my cat could have come up with a better foreign trade policy than this simply by choosing which side of the litter box he wanted to use for his daily excretions.
23
American companies discovered, that instead of using the capital the business produced to make their American plants more productive and allowing them to pay their American workers increasing wages, they could take that same capital and invest it in China and elsewhere to build that new equally productive plants while paying those workers much less. Its supposed to be a surprise that is what happened, since there was nothing to stop them?
Its not like China grew its economy on their own. they used American capital and American markets to do that. And the American finance industry got very rich and become one of our largest industries in the process. Not everyone was loser by a long shot. The folks from Harvard and Yale did alright by themselves.
221
When will someone explain to non economists how generations ago Americans could afford to buy American made products. Jobs stayed here, wages were rising, business still made profits, corporate taxes were high. How did that work then but can't work now?
Maybe Friedman can tackle that some time....or maybe not.
1
David Halberstam wrote a classic book about two automakers called "The Reckoning" describing long term disinvestment and hubris by Ford Motor Company and the opposite by Nissan, which was occurring across the entire Japanese and American auto industries. The result was lower cost, higher quality Japanese cars that rapidly took a huge share of US sales.
The point of the book is that rapid shifts are often decades in the making, combining adversarial labor relations, a failure to modernize, disregard for quality and lack of product planning to respond to changing market demand.
The steel industry is another example of slow US response to more efficient technologies like basic oxygen and electric arc methods.
The rise of China was inevitable, with its huge population, education system, privatized state enterprises, industrial and export incentives, entrepreneurial spirit, low labor costs and lots of help from Japanese, Taiwanese, US and European companies like Foxconn.
Protective tariffs, which are typical of all developing countries, were less important in the long run than all of the other factors above. And without NAFTA, the harm to US workers would have been far worse.
Faced with low labor costs for well educated workers worldwide, the US must compete with the most efficient technology in emerging industries, integrated supply chains, infrastructure and higher education that spins off new research based businesses.
Try explaining that to Trump.
20
"The lack of real meritocracy in our country today, he added, “is not about the returns to realized skills. It is about the inequality in the ability to acquire those skills. Too many people live in areas where they cannot get them. If you get educated in America today, and have a good work ethic, you are going to be rewarded. What does education do? "
Anyone, anywhere in the US can get an education if he is determined to learn. The problem is not a lack of graduates in STEM from Ivy-League universities, our problem is a lack of reasonably literate people who can show up sober every day, and work to advance themselves.
People who grew up in small villages in India and China, sitting in one-room schools with a few tattered books, are now ensconced in offices in Palo Alto and Boston. They wanted to learn, and their families pushed them to learn. That is all it really takes.
22
Jonathan, You hit the nail on its head. Americans have become lazy, entitled, pretentious and content to rest on past glory. If not for these Asian immigrants we won’t even be leaders in innovation and entrepreneurship anymore. That is the reality that no one wants to talk about.
America is no more exceptional than China or India. These two Asian giants were the two largest economies of the world throughout human history until about 1800s for a reason. They are big, they are great civilizations with 5000 years of history. They want to get back to where they belonged during most of human history. Nothing is gonna stop them from getting what is theirs and what they totally deserve.
America with 5% of humanity has been taking 25% of world wealth pie. So now with the rise of Asia the size of the pie is gonna grow big BUT our share of the pie will shrink. So it is a relative loss NOT absolute loss.
So we need to be smart, play the game right and not take this personally or irrationally as fall of America. This is just a case of America recognizing the reality of their relatively small market compared to Asia.
It is not a shame to suffer a relative loss to more than worthy competitors. We may no longer be the largest economy but we are still a wealthy country. We may no longer be the sole super power but we just joined the historical big two as the third great power. And that is no small matter.
4
I’m shocked ! Shocked !
Who’s have thought that Friedman’s “free market” global trade theories would have resulted in:
- exporting American jobs to countries exploiting their workers and environment, maintain slave wages, and uncontrolled pollution;
- huge trade deficits;
- continued exploding corporate profits;
- continued destruction of the American working class.
It’s Shocking ! Shocking !
One question - does Friedman think all of us are so astoundingly stupid we don’t see the overflowing hypocrisy his newly-found concerns demonstrate.
57
If I were able to recommend 'Informed Citizen's comment 10 times, I would. Spot on!!!
Agree regarding TPP. Agree with the Professor from MIT, and the commentators that have remarked economists, experts and politicians failed us.
Economic history since the days of Smith and Ricardo have tried to convince populations that competitive/comparative advantage in global trade adds benefits. But, throughout history, many developing countries have argued they need to protect certain industries and workers. Immigration policies as well have noted the impacts on existing workers. Over time, many have overvalued consumer benefits of cheaper products vs supposedly temporarily displaced workers. It is a very difficult to solve problem with all sorts of unintended side effects.
Everybody now knows that bringing so many new societies into global economy was bound to be a big issue. We have been fighting disinflationary forces since China has entered the WTO, and in the early 2000’s, there was a savings glut as China not only pegged their currency to protect exporters, they recycled their $’s into US securities, helping to spur over investment here in Real Estate and the GFC. The answer to that has been $10T of added debt with mediocre GDP, stagnant wages, and widening inequality. So this mistake is a whopper.
China has its objectives - and while they are not expansionist, they are historic and have hegemonic ramifications. So, we need to wake up and play what is left in our hand hard before we are all asking again “what happened?”
14
"If you get educated in America today, and have a good work ethic, you are going to be rewarded. "
Is that true? I don't think so. There are plenty of educated people with who are working hard at jobs that don't pay very well. and don't use their education.
"it is not sufficient to maintain the U.S. public’s support for free trade"
If you define the problem as a PR problem, then this is likely true. But the real problem is that "free trade" or more accurately the world economy our ruling elite created to give substance to that abstract concept , now serves only a decreasingly small minority of Americans. Its going to get worse as people discover that its a false promise that an education will provide you with a traditional American middle class lifestyle.
The reality is that American workers have lost their bargaining power and until we fix that, they are not going to recover financially.
233
Ross,
How do you fix the loss of bargaining power? Do you know what happened to China and India when’s NEW power rise up in America which had zero cost slave labor and huge resources taken away from Native Americans to boot? The economy Of the Asian giants collapsed. Suddenly they are no longer the largest two economies of the world as they have been throughout human history until that point.
Can America force China to play by its rules? How do you do that when we are dependent on China for sales and profit growth? This is just basic economics. Large internal market IS the reason why China and India have been the two greatest human civilizations for over 5000 years. The west just had a lucky break because Americas were closer to them and they exploited the Native American resources on the back of slave labor to beat the Asian giants.
But we don’t have any more land to discover and slave labor is no more passé. But we still behave like a super power and spend enormously on military without much return to show for it in a world with nuclear parity. Our debt is 106% of GDP. China’s debt is only 45% of its GDP. We are borrowing to pay for our military goodies and to pay for the tax cuts for the rich. So China is essentially doing to us what we did to USSR.
Our mistake is to try to preserve our super power status. We can’ do that and it is a typical mistake that every over extended sprawling empire always makes. History always repeats itself.
6
Ross...yes, loss of American worker bargaining power---how come NYT columnists, especially Friedman, avoid how and why that was allowed to happen?
And why did our elected officials allow "the sudden loss of about one million factory jobs in Ohio, Michigan, Wisconsin and Pennsylvania. Trump won all of those states."
I've read more than 3 million jobs have been offshored. Then there's the many supporting businesses that had to close after factories closed.
The slogan "Free Trade" has to be defined now. What does Free mean? Our news media and pundits avoid it.
If people know jobs are available to them at decent pay, they will have 'a good work ethic."
2
Perhaps the disinclination on the part of the President to modify the U.S.' relationship with China stems from the fact that he is far more interested in regime change in Russia, for the purpose of colonization and natural resource extraction. It is for this reason that his intimidatory tariff gambit on NATO countries was instituted; that is to say, this type of posturing is designed to prod those countries to contribute more to NATO' military build-up of their own accord, as they too set their sights on not only the Ukraine, but also the Russian interior. This seems, perhaps, far-fetched, but when one is constantly confronted with psychological evaluations of the president, one garners the opinion that indeed, he is a pathological liar.
1
It’s good to see Friedman FINALLY talking about are our horrible problem with trade with China. Where have you been all these years???!!!
27
But Trump believes we have a “real trade problem” with every country, so it’s the old stopped clock being right twice a day. Worthless.
6
Tom, you are spot on...we need to be focusing on value-added manufacturing and IP to effectively compete with China and countries like China -- and we need to ensure that we impose the same rules on Chinese imports and IP that China does on ours. That China can get away with requiring a 50% joint venture on manufacturing items like electric cars and Apple servers is beyond egregious, yet Trump doesn't even raise an eyebrow.
Trump of course if focused on the commodities and raw materials -- areas where it all comes down to the lowest bidder. One really hopes we can get past Trump sooner than later; we have quite a bit of catch up to be doing.
16
Superb column. If anything, it downplays China's devious and evil relationship with the US: rampant industrial espionage, outright theft of technology, fraudulent listings of fake Chinese companies on US exchanges--all with the explicit blessing of the Communist party.
62
And the Republican Party and centrist Democrats.
2
"playing by a set of rules that others would be naïve to ignore."
The violations have been egregious, and they've been occurring for decades. Literally, decades, while the people who sold us "free trade" and "globalization" ignored them. They sat and watched America spiral downward. And they did nothing.
Oddly, "wage insurance" for people who get "displaced" by globalization and are lucky to make half of what they used to make wasn't part of the globalization sales pitch.
And now, not just America, but the entire developed world is at the edge of an abyss, with political unrest on a trajectory towards massive social unrest.
If this analysis had been done ten years ago, and corrective measures taken to address the problems, rather than bailing out the banksters and studiously ignoring the collapse of the middle classes across the developed world, there would have been no Brexit. No Trump. No National Front.
The opportunity cost to humanity of waiting this long to even acknowledge the problem is staggering.
Economists failed us. Politicians failed us. "Longtime China trade experts" failed us. Geopolitical experts failed us. And Silicon Valley failed us.
Spectacularly.
And we've just begun the reckoning, and societies are already destabilized.
People like Jack Ma and Jeff Bezos need to figure a way for "China and America to thrive at the same time" if capitalism is to be saved and conflict of unimaginable scale is to be avoided.
It is the challenge of our times.
343
No, the challenge of our times is that the American ruling class doesn't really see American workers any differently than they see their Chinese workers. So while China's rulers may be looking out for Chinese workers, the United States is just looking to make a quick buck. Like Elon Musk, they see the challenge is to break into that growing Chinese market.
85
Capitalism can't be saved, and shouldn't be.
2
Certainly not in the greed focused way it has been practiced for the last seven decades. The humanity of the New Deal era needs to return.
1
Good article. Get rid of all the big words, make it into a cartoon and play it on Fox. Maybe we'll make some headway.
188
“… roughly 40 percent of the decline in U.S. manufacturing between 2000 and 2007 was due to a surge in imports from China primarily after it joined the W.T.O. And it led to the sudden loss of about one million factory jobs ...”
Although the article makes no mention of it, it was Bill Clinton’s top priority in the last days of his presidency to award China permanent normal trade relations in the WTO. He hoped that it would cement his legacy as a champion of free trade and corporations could hardly contain themselves at the prospect of having 1.3 billion new Chinese paying customers. The concerns of unions about competing against foreign workers who were paid in cents for their daily work were swiftly swept aside.
Today we’re living with the legacy of the “China Shock”: “mass unemployment but also social disintegration, less marriage, more opioid abuse and more people dropping out of the labor market and requiring government aid.” While he might be trying, Trump still has plenty of ground to cover to even begin to catch up with the damage that Clinton did to the working class.
54
You did read the part about "we brexited Asia"???
6
Well put. And among the top beneficiaries of cheap Chinese imports? A little Arkansas outfit named Wal-Mart, of which Hilary Clinton was once a director.
The real problem relative to Chinese imports is the fact that there's a huge portion of American business that makes money off of it--including those who shut American factories to move production to China (although many did it of necessity to stay competitive).
In hindsight, Clinton cut a horrible deal in letting China into the WTO. But, the sad reality of all trade negotiations is that they are an opportunity for politicians to favor business allies and hurt enemies--and we can certainly count on Trump doing exactly that in any renegotiation.
21
James,
How can you leave out 1/3 of the market( China and India joined WTO about the same time) and call it world trade? How can you prosper without getting access to these huge markets? US is only 5% of world market. So where will the growth come from? Europe is stagnating. That leaves Asia and Africa as the major markets with growth. What do you do?
Asia says you want to get access to our huge market you make your products here. Are you gonna write them off and stick to US market alone? Those companies will soon be extinct because companies that go to Asia will soon have size and scalability and will eat the companies that decided to stay local.
The choices are not easy. Why do you think throughout much of human history China and India have been the two largest economies in the world? Why do you think these two civilizations have been around for 5000 years preserving their unique culture? Take them out and the rest of the world including Europe is conquered by Christianity or Islam.
I would say we should focus on better income distribution and not go against globalization because we are the biggest beneficiary.
8
Here's a solution to the trade problem with China & any other nation:
Instead of 'free trade', demand 'Fair Trade'
Apply this to all imports:
All workers get at least a comfortable living wage, no exploitative sweatshops.
All manufacturers must heed strict environmental standards
All resources used adhere to strict supply standards for all raw materials & components.
All use of newly-logged old-growth lumber banned like ivory.
No compliance, no trade!
Of course then nations which import our goods get to demand that we comply with global standards for pollution & carbon emissions. If Americans can't behave, their goods should be embargoed as well.
126
A terrific substantive column. I just wish our President and Congress had 1% of the brains needed to comprehend and act on it.
199
Sorry, but I think that wish was already granted.
6
Best piece Friedman has written in a while. Dead-on.
41
Thank you for the clarifications. This helps me think about the problem and less about the politics of the problem.
But we need politicians to articulate these ideas in policy development. ''
I think Friedman has convinced me that we need to thing of higher ed as life long learning..... as scholars and professionals always have professed.
15
I lived and worked 10+ years in Japan, South Korea China/Taipei and the PRC. As a judge in the 2008 World High School debating championships in Seoul, and in numerous Northeast Asia collegiate debating championships before and since (and, for that matter, as a joiner in numerous Rotary Club dinners) I can attest this column is 100% correct.
31
Could we please start having a serious discussion about the idea of splitting our country into essentially one made up of red states and one of blue states? That way people like Trump and those who support him can do their thing and the rest of us can move forward.
204
Oh, what a lovely idea.
Except, then the dimwit in chief would be exposed to his acolytes for exactly the charlatan that he is. He'll just have two, or three, more (north-mid Atlantic and Pacific coast and , maybe, a few in the mid-west that used to be sensible) growing, functioning economies to add to his hate list (EU, Japan, Australia, South Korea, etc., etc., etc.)
Yes, the Red states will finally need to realize that they made a bad, bad choice.
10
Could we please start having a serious discussion about the idea of splitting our country into essentially one made up of red states and one of blue states?
That's a great idea; it's been far too long since the last civil war. Maybe we could start numbering them: Civil War II? Which side will Putin support? The good news is that Trump will go charging into the withering crossfire, as always, to save us. It would make for great reality TV. But the rest of us need to be a lot smarter, a lot more resourceful, and a lot more compassionate to our neighbors. That's the only true path in moving the country forward.
7
"Could we please start having a serious discussion about the idea of splitting our country into essentially one made up of red states and one of blue states?"
Splitting the United States into two countries has been tried. A split country is no country.
You want a few more Antietams?
I know, you're being facetious. But I imagine that when the battle against the NRA starts heating up, things will get interesting.
3