Photo Credit: Bob Jagendorf
By: Jessica M. Rose
America and the world are staring down the barrel of a Trump presidency – and it’s because Democrats failed to execute a principle they are supposed to be known for.
The states that gave the election to Trump were Rust Belt states: Pennsylvania, Michigan, and Wisconsin. These states were part of what were called the Clinton firewall, that she needed – and expected – to win in order to go on to win the presidency. I am of course not making the claim that xenophobia, islamophobia, racism, and sexism among other issues played no terrifying role in the election. The crucial states in question, however, were blue for Obama and have been for decades; Pennsylvania and Michigan haven’t been red since 1988, and Wisconsin hasn’t been red since 1984.
Michigan and Wisconsin, according to the best pollsters out there at Five Thirty Eight, were not supposed to even be in play this time. Their best information had her chances for Wisconsin at 83.5%, for Michigan at 78.9%, and for Pennsylvania at 77%. To be fair, if she lost them, she lost them by a tiny margin: at the time of writing, Trump had 47.9% of the vote and Clinton 46.9% in Wisconsin with 95% of the vote in, and Michigan was still too close to call with a 0.3% difference between the candidates. But these states weren’t supposed to be margin-of-error states; Clinton was supposed to have them in the bag.
What do all these states have in common? They are home to people who lost their jobs to free trade, left out to dry by both Democrats and Republicans who did not see the political powder keg they created through their unqualified promotion of free trade – for which free trade deals like the North American Free Trade Agreement (NAFTA, implemented by President Bill Clinton) and the Trans-Pacific Partnership (the TPP) became the bogeyman.
The calculus on free trade turns out to be almost annoyingly simple. The benefits are spread out, but the harms are concentrated. On balance, free trade improves economies. Cheap imports put dollars back into consumers’ pockets. Economists Robert Lawrence and Lawrence Edwards estimated that trade with China was singlehandedly responsible for saving $250 per American per year in 2008. Trade also creates new opportunities for American firms, who gain new markets to sell to. In 1993, when America signed on to NAFTA, the US sold almost $10 billion in cars and car parts to Mexico (at today’s prices), and by 2013 it was $70 billion.
While all this good is spread over a large constituency, the harms of free trade are painful, and quite condensed – largely amongst manufacturing workers. The jobs that have been lost by the manufacturing sector in the US are not a distant memory, either: 5.5 million manufacturing jobs evaporated between 1999 and 2011. While NAFTA played a role in this decrease, it was China signing on to the World Trade Organization (the WTO) that did a lot of the damage, as Chinese imports took off and made redundant a certain type of American worker. An estimate by Daron Acemoglu, David Autor and their colleagues paints 1 million of this 5.5 manufacturing-job loss as the result of Chinese competition (other causes include technological advance). These workers do not seem to get new jobs, either.
It is this feature of free trade – the fact that its benefits are spread out while its harms are concentrated – that makes it a political powder keg. The good that free trade delivers, while a nice bump for the whole economy, is not the kind of centerpiece issue that moves voters’ hearts. The concentrated bad, on the other hand, where vast swaths of workers lose their jobs and never recover, is the kind of issue to not only move voters, but to move their friends and family.
Where were American manufacturing jobs primarily concentrated? In what was previously the industrial heartland of America and is now called the Rust Belt due to its decline. And the Rust Belt includes the voters of Michigan, Wisconsin, and Pennsylvania. Clinton was supposed to win Michigan and Wisconsin handily, and was also favored to win Pennsylvania. But she didn’t.
Which candidate is famous for his aversion to free trade and which candidate is known for her strong support of it, though recently disavowed? The email hack betrayed the fact that Clinton planned to return to being in favor of the TPP once ensconced the White House, despite her public stance.
Trump has also had repeatedly stated that he will bring manufacturing jobs back to the US. Which, although fairly impossible unless he manages to depress American wages so that the US compete with the cost of emerging-economy workers, sounds mightily appealing to people whose only memory of prosperity dates back to those jobs.
The centrality of this issue bears out in the exit polling (which survey Americans leaving the voting booth). One of the questions asked by the New York Times’ exit polls zeroed in on family life situation. 78% of Trump voters said they were “worse off today” than before, and 65% of those same voters said that the effect of trade with other countries was to take away US jobs.
The worst part of this mess is that Democrats have failed on what was supposed to be one of their strengths: protecting the weaker parties to any deal (which is why they traditionally appeal to the unions who abandoned Democrats in this election). The reliability of the free trade calculus means that it can be planned for. Safety nets and proper job retraining need to be put in place such that the American worker who mobilized against trade is properly taken care of. Such schemes do exist (like trade adjustment assistance) but are paltry and insufficient. Even worse, effective transitions are eminently possible: Germany has become a manufacturing powerhouse in part because its system of apprenticeships properly absorbs workers who lose out to trade back into the workforce.
If, in promoting free trade, Democrats hadn’t left these workers behind, we might have been preparing to swear in the first female president of the United States.
Jessica M. Rose is a 2016 LLM graduate of Berkeley Law, who completed a dissertation on international arbitration in the Brazilian context. Her focus is international business law.