US Elections 2016: Simmering for decades, anger on trade boils over

US Election 2016 : The US is in the midst of one of the longest economic expansions in its history. Even American factories have lately added hundreds of thousands of jobs.

Meanwhile, the rest of the world is stumbling. Even China. Yet, at perhaps the least likely moment in the last several decades, misgivings about globalisation are playing a starring role in the presidential election. Why now?

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Anger about unbalanced trade has helped to fuel the rise of Donald J Trump, the Republican front-runner, and the success of senator Bernie Sanders of Vermont in his bid for the Democratic nomination. The manifest anger also has pushed their principal rivals, Republican senator Ted Cruz and the Democratic front-runner, Hillary Clinton, to toughen their own trade rhetoric. It is a situation that has surprised many experts because polls show voters’ concern about the overall health of the American economy has declined significantly in recent years.

Yet, many Americans are just taking stock of the transformations wrought by global trade. In two dozen conversations with voters across the country, only two said they had heard of the proposed new trade deal, the Trans-Pacific Partnership (TPP), involving the United States and a host of Pacific Rim nations.

Instead, the concerns they expressed were about changes in their own lives and communities over the last couple of decades. “When we first did that big trade agreement, I thought it was a good idea, but now I’m getting a little more conservative about it,” said Phyllis Arthur, a 74-year-old Republican from Walnut Creek, California “I think we’re being overwhelmed by the goods coming in. That’s practically all that’s available in the stores.”

Kevin White, a 47-year-old Democrat from Dayton, Ohio, said it was hard to find a job. He used to work at a hospital; now he gets federal disability payments.

“The jobs went overseas,” lamented White. “Then people couldn’t afford their mortgages and we had a crash and nobody was able to buy anything.”

Douglas Irwin, an economist at Dartmouth College, who studies trade, said the impact of China’s economic rise had become more visible in recent years, even though the worst effects of its rise may already be in the past.

Between 2000 and 2011, imports from China grew to equal 2.6 per cent of American economic output, up from around one per cent. That “unprecedented shock” was much larger than that from the increase in Japanese imports in the 1980s or Mexican imports in the 1990s, Irwin said. China’s rise, fuelled in part by currency manipulation to make its exports cheaper, played a key role in the loss of roughly five million American manufacturing jobs.

Those losses, however, were offset and obscured during the housing boom by a rise in construction jobs. Now, both the factory jobs and the construction jobs have gone away.

Rationally, said Irwin, “It’s too late to get upset about China.” The United States is no longer losing factory jobs. It has added 600,000 over the last five years. Beijing is no longer suppressing its currency; it’s now trying to prop up the value.

Politically, however, it appears that the moment is perfectly ripe.

Ahead of another Rust Belt primary next Tuesday in Wisconsin, Trump is pressing for “fair trade” with foreign countries, while Cruz has adopted similar language. “We’re going to see millions and millions of new high paying jobs,” Cruz told a crowd at an Oshkosh plastics factory on Monday, “coming back to America, coming back from China, coming back from Mexico.”

Personalities also appear to be playing a role. Trump has proved an unusually effective spokesman for concerns among Republican voters. “You look at those empty factories all over the place, and nobody hits that message better than me,” he said after winning the Republican primary in Michigan this month.

Sanders has connected with a Democratic base whose support for President Obama may have damped longstanding concerns about trade. Trump and Sanders have also succeeded in focusing anger on trade as an explanation for broader economic problems afflicting many Americans. Trade flows make up a small part of America’s economic activity. The primary explanations for the stagnation of middle-class incomes are necessarily domestic.

“They are following in the footsteps of politicians of all stripes who have found it convenient to blame the boogeyman of unfair trade for domestic economic problems,” said Eswar Prasad, a Cornell economist. “Tough talk on trade is an easy way to distract attention from taking on difficult domestic challenges.”

Mainstream economists regard the evidence as unequivocal that trade has produced significant benefits for the American economy and the average household.

Yet, much of the American public has long been sceptical. A recent New York Times/CBS News poll found that 61 per cent of respondents favoured more trade restrictions to protect domestic industry, just as a majority of respondents has favoured increased restrictions in every such poll since 1988.

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US Elections 2016: Simmering for decades, anger on trade boils over

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