A few days ago I read an interview with Sherrod Brown about why he lost his reelection race in Ohio this year. My answer would have been that Ohio has been getting redder for years and it finally caught up with him. A gazillion dollars of crypto money opposing him didn't help either. But Brown himself kept saying that people were still pissed off about NAFTA.
Brown knows Ohio better than me, but I'm skeptical. NAFTA passed 30 years ago and had virtually no effect on jobs. We lost a few and gained a few. In particular, if you look at manufacturing jobs they're dead flat for the entire decade of the '90s—including in Ohio.
But you know what did cost us lots of jobs? In May 2000 Congress approved permanent normal trade relations with China, which gave manufacturers the confidence to move factories offshore without fear that every little trade spat would ruin their production. Within only a few months manufacturing employment began to plummet:
Relative to overall employment, manufacturing crashed by 31% in just nine years. That's a little more than five million jobs—about 400,000 of them in Ohio. This didn't end until 2010, which is still a while back but not nearly as far back as NAFTA. What's more, the impact of the China shock is still evident today in midsize towns that a lost a single big factory and have never entirely recovered.
I supported PNTR for China and I probably still would today. But there's no question that it hurt a lot of blue-collar workers and didn't accomplish its goal of liberalizing China and turning it into a normal trading partner. It's hardly any wonder that lots of blue-collar workers still resent people like me over this.
It’s a good thing nobody in Ohio blamed George W Bush for almost all of this happening while he was president from 2001-08. Just like almost nobody blames him for 9/11 or the Great Recession either. Republicans always manage to make all the bad shit stick to Democrats only. (Yes I know Dems had their fingerprints on it too, but somehow all the bipartisan stuff also is Dem’s fault when it goes bad.)
Welp, that's just how the cookie crumbles when one side isn't interested in governing in good faith.
PNTR was passed in 2000 so Bush had no responsibility. From Wikipedia: "President Bill Clinton in 2000 pushed Congress to approve the U.S.-China trade agreement and China's accession to the WTO"
The housing bubble and subsequent crash can't be blamed on Bush either - it was mainly the Clinton administration which, together with Alan Greenspan, did away with or prevented regulation which might have avoided the bubble.
Bad policy leads to bad results, whoever passes it.
As for the Great Recession....remember the phrase "irrational exuberance"?
The Bush administration decided is didn't have to regulate the deals between big financial institutions--they were big boys and the market will correct itself. They also didn't want to do any bailouts because that would create a "moral hazard". Only after everything blue up did Bush basically hung it up and let Obama deal with it (even before the elections???).
The deregulation did not mean no regulations.
The normalization of trade with China legislation was introduced in the House by Archer (R-TX), but about one-third of the Democrats voted for it. In the Senate, many notable Dems voted for it, including Biden, Boxer, Byrd, etc.
Apparently, it just wasn't seen as likely to create the huge problems that Kevin is telling us. Clearly, the public didn't see it as bad (like many of Dubya's faults), as they punished Clinton for that other thing -- NAFTA.
As for Clinton and Greenspan, Greenspan was a Republican hack, and Clinton had to be as far to the Right as he went in order to give Dems any chance at the presidency. One could say, Reagan-Bush-Gingrich gave us the (very often) Conservative Clinton. As for Bush and 9/11, most people in America weren't affected so directly as New Yorkers, and they just didn't feel it or need to respond by punishing W.
Anyway, we now know the road to Hell is paved with good intentions, so it's all water under the bridge.
We lefties don't like to admit it, but Clinton was D version of Reagan - widely popular but ultimately massively destructive to long term health of the country.
That's right. George W Bush, unlike Clinton a few years earlier, was in no position to influence policy or expand regulation. Clinton had a whole eight years to do his damage and Bush only had a mere eight years to undo it.
in what alternate reality is Bush not blamed for the Iraq War and even, somewhat unfairly, for the Great Recession?
Wasn’t Walmart responsible for a lot of this? As I recall they kept making demands of lower prices from domestic suppliers forcing them to move manufacturing overseas to meet Walmart’s demands.
Yes, and Rubbermaid was really the poster child for that particular Walmart effect. There's a seminal article about that offshoring-and-demise that I'm too lazy to unearth and link to now.
Around that time, 90s and early 2000s, was also Walmart's most aggressive expansion phase, at least in this part of the world-- aiming to have at least one of their stores every 40 miles in any direction, and closer in urban areas-- and they were notorious for bringing in Spanish-speaking construction gangs to build their new stores.
I’m also guessing automation had something to with this. Every time I watch “How do they make (this)” or some similar title, I see vast plants with very few employees and all require computer knowledge which usually learned in the field.
All the stuff you buy in Walmart or from Amazon is made in China, not in the US (or Mexico) with robots.
I’m also guessing automation had something to with this.
Zero doubt of that.
https://www.brookings.edu/articles/understanding-the-impact-of-automation-on-workers-jobs-and-wages/
For the classic. US Steel is making as much steel as it ever did, but it has 3600 employees instead of 30,000. Gary, Indiana, is a wreck.
For some reason, automation rarely comes up economic discussions. I think I've read 1.0+/-0.0 articles on the way automation and process improvement led to the Great Depression. Electric motors, thermostats, Taylorism and so on seem to have vanished into charming period artifacts like Cheaper By The Dozen rather than as major drivers. We had this again in the 1960s and 1970s and then again in the early 2000s. The big difference was that China outbid the robots for the work in that latter era. Of course, now China has its own automation problem, but it also has a powerful secret police to keep the losers under better control.
I wish we could see the pre 2000 trend. Just based on this graph, it seems possible the post 2000 numbers could be a continuation of a trend. Was manufacturing employment not declining in the 80s and 90s?
This suggests we had a pretty big plunge in the early 90s (starting in 1989) and then we have another big plunge starting in 1997—three years before the China deal was inked:
https://www.statista.com/statistics/664993/private-sector-manufacturing-employment-in-the-us/
Of course, left undiscussed is the larger question of what the economy would looks like had we somehow bucked the trend of all other rich countries and kept more manufacturing jobs. It's hard to see how we'd do that save by crunching manufacturing productivity*. In other words, while the US has about 30% fewer factory jobs than it did in 1989 (and our population has increased by about 30% since then), the output of our factories today is a lot higher. So we're producing more with fewer workers. That's the very definition of increased productivity, and it is is utterly essential to rising living standards.
*And accepting more pollution. As a resident of Northern China, believe me when I tell you you don't want that.
By the late 1990s, there was a new round of automation and redesign. That's when they started putting a computer into everything. Look at washers and driers. A small processor in each dramatically simplified the wiring and design. By 2000, most of the manufacturers had collapsed or consolidated. The brands were there, but there were maybe three to five US white goods manufacturers left. Naturally, this was invisible to economists who are by nature incurious. So much for the good life in Amana, IA.
IIRC employment in the domestic car industry peaked in 1979. I think in steel it peaked in 1980, and aluminum in 1982/3. The oil and gas industry in the late 70's. Coal mining was sometime in the 80's.
The labor content in a car plummeted from may 40-50 hours down to maybe 20-25 hours. It's ongoing. Most cars operate off an automotive grade LAN. Instead of wires to some central coordinating point or individual controls, they just need to run a bus. They'd go wireless if they could get it secure and reliable enough. Ars Technica had an interesting article on a potential exploit, but it required internal access and a fair bit of luck. (It was a malformed packed exploit. Well timed network interference could get the header discarded and the remainder of the packet would be interpreted as an otherwise impossible but dangerous header.)
I’m as willing to say “Thanks Bill…” as anyone, but that chart really must start before 1980 to properly support the assertion.
I'm as dedicated to understanding the finer distinctions as anyone, but in this case I think NAFTA is shorthand in the public mind for offshoring in general. And that was a long process. Production had been moving to Mexico for years before NAFTA, and I can easily recall that car factories were being built right on the border so parts and sub-assemblies could be moved back and forth easily, I think in the 80s. That was part of a concerted push before NAFTA to set up what we can call Schrodinger zones, areas that for trade purposes were in both the US and Mexico but at the same time in neither.
What happened in the early 2000s was, as Kevin says, devastating in a lot of places. The surplus stores were just overflowing with tools and household products being dumped as makers shut their domestic operations down, and if you have a high tolerance for heartbreak you can read stories from that period about the experienced people whose last work for their companies was training visitors how to use their machinery that was to be shipped overseas.
I know NAFTA wasn't about China. But NAFTA was a term people in affected zones could easily attach to the process once the fight over the treaty, and Perot's harping on it by name, made it distinctive. And if you were in the places that were most affected by that process, what mattered most was that it was an accelerating trend that peaked in the early 2000s. If it was you, would you care where the jobs went to?
That's right, the maquiladeras. (Apologies, that's probably misspelled.)
Very close. Maquiladoras.
I’ve worked in manufacturing's since the 1980s. During that time I’ve worked for something like 10 different companies and moved repeatedly around the Midwest. Some places I worked are closed or changed ownership. It was a constant battle in the late 90s and 00s to stay one step ahead. It’s about the same today. If you were unwilling or unable to pick up and move to a new city, you were screwed. This was particularly true if the plant was in a more rural area.
I’m not particularly angry myself about this, but it was annoying and stressful to have to be constantly looking at business conditions and move every few years. Bill Clinton famously said in 2000 that letting China into the WTO would be great for American workers. He was wrong. It was great for investors and finance.
If this is the source of working class anger then democrats who enabled the WTO are as guilty as republicans. There was probably no way to prevent globalization and offshoring, but it was very disruptive and no one really cared to mitigate the damage. Throw in mergers, private equity looting, and generally corrupt finance and you end up where we are today.
https://chinashock.info/
Here you go Mr. Drum… Dayton, Ohio. VP Vance’s home. It’s got everything you need to understand about the catastrophe of the Midwest. Union busting, racism, white flight, NAFTA, globalization, and finally drugs. If you could get out, you did. If you stayed, it’s because you were a low life criminal and, well, just not very smart.
https://www.pbs.org/wgbh/frontline/documentary/left-behind-america/transcript/?
What did democrats do to help? Nothing. They enabled it. I’m a reliable democratic voter, but I’m not working class. Democrats help me, they don’t help workers. Not one bit.
A number of other countries have laws which specify that if a job is offshore the workers in that job must be offered a new job at the same wage. No reason we couldn't have done that too.
“I supported PNTR for China and I probably still would today. But there's no question that it hurt a lot of blue-collar workers and didn't accomplish its goal of liberalizing China and turning it into a normal trading partner.”
So it was bad for Americans, wrecked Democrats’ electoral chances for going-on two generations, didn’t accomplish its goal, and STILL you’d support it? Neoliberalism!
It wasn't NAFTA specifically, but it was all the FTAs, the creation of the WTO, the creation of the G7 (fuck Russia) and G20, and the inclusion of China into the WTO, that had rapidly expanded global trade without building the safety net for people caught up in disappearing industries.
What's stopping Democrats from supporting policies of free public education for adults 50+ years old? Alternatively, what's stopping the push for a federal living wage? There was so much flowery talk in the 90s about free trade safety nets but nothing's come out of it.
Once you fall off the employment wagon, your employment value drops. The longer you remain off the employment wagon, your skills wither away without building up new skills.
We can fix this.
"flowery talk in the 90s about free trade safety nets"
And that was one of the heaviest of the invisible weighted packs on Hillary's back in 2016, because people associated her even more than Bill with the preachiness of those throwaway lines about "retraining" that were always afterthoughts, as it turned out. That approach was especially cruel because of the way it put the onus and initiative on the people whose livelihoods were disappearing.
Well, we aren't alone in what offshoring to China and other cheap-labor reservoirs has done to domestic manufacturing. Germany has been very focused on keeping as much of it going domestically as possible, but the pressure is catching up with the small shops at the heart of manufacturing there, and even with VW-- they're seriously talking about closing down facilities in Germany now, which has been the biggest taboo of all for that company since it was cobbled together after the war.
Agreed, I thought about free education for adults over 50 was funny. It's not as if the Democrats opposed job retraining funding but that wasn't the problem. The problem was telling someone who worked all their lives at making something, even if was just rote assembly line work, that now they have to learn how to code, especially if they're beyond 50, to them is just insulting and doesn't make sense. Why not keep the jobs they would ask? Ever see how some old or middle aged people sometimes react to technology? It's not pretty.
I also agree with Brown that it was NAFTA, because of the debate around it from 1992-1996 and with Ross Perot against it colored peoples' view towards free trade if they were against it even though it split both parties. But, those Republicans who did vote for it, their wing of the party is gone now.
I also agree that China joining the WTO was the main culprit for the decline of much of U.S. manufacturing because of the Wal-Mart pressure on supply chains because they basically sold out after Sam died and got all their goods from China and were expanding everywhere in the early aughts and companies went to China because of it.
But I will also point out Clinton carried Ohio twice and Obama carried it twice and Kerry nearly (probably should have) did so. So why didn't Ohio's economic problems affect them? The economy in Ohio was booming in the 1990s just like everywhere else. Whether you like it or not Trump is a sui generis when it comes to focusing voters on that issue, probably (and this is where people don't understand his appeal) he's not a politician. Otherwise we would have had President Gephardt or President Buchanan because they were just as passionate anti-free traders as Trump. Why him and not them? Hmm? Were we in a depression in 2016? Hardly, even in Ohio. Think about it!
Maybe because trump, in complicated ways, isn't just about the narrow issue of free trade/China/off-shoring all branded under NAFTA, but is about undifferentiated grievance?
Grievance about whatever a person might glom onto out of the disconnected, discombobulated jumble of semi-coherent speech he churns out. His speeches are generally a stream of things to be aggrieved or even just annoyed about, no coherent theme or argument except "these are things that should bother the hell out of you, and they all happen because of those people who are supposed to be in charge but who don't think you exist or if they do, they hate you ."
In this kind of pitchman's spiel almost everybody can find at least one or two grievances to hook onto and identify with. It's designed to trail those hooks. It isn't a *politician's* skill, I agree.
But I also think it took a long time for the reality of those job losses to sink in. Plus Ohio was one of the states worst hit by the financial crisis and home losses beginning in 2008, and Obama left office having saved banks and GM but not homes, and without investigating or prosecuting any of the obviously guilty people and institutions.
I've always thought the country needed one or two of them made examples of-- there was plenty of outright criminality to go after once things more-or-less stabilized after the immediate emergency. And narrowly, I also think it would have helped Hillary and the whole party going forward.
If you are asking what's stopping the push for free public education, a federal living wage, more rights for workers and unions and so on, then your answer has to include the Republican party. They've been remarkable at convincing voters to vote against their own economic interests. Look at the angry union workers in the 1970s. They were angry at the hippies who opposed the Vietnam War. They voted in Nixon and then Reagan who then crushed the unions. Even now, pissing off the liberals is worth a lot more to some than a higher wage, health insurance, overtime and other goodies. The Democrats kept running on those policies and losing, at least until Clinton.
It's hard to imagine what America would look like without offshoring. If you watch old episodes of The Price is Right from the early 80s, it's pretty shocking how expensive furniture and appliances are.
What would the political effects have been of missing out on the consumer revolution? Especially if Europe went along with it.
Appliances got cheaper due to new technology. Offshoring came later.
Kevin hilariously thinks that voters' judgments about the economy - and the politicians responsible for it - are based on facts and informed by charts and graphs like Kevin's. Too funny!
Brown was right. Voters blamed NAFTA for the gutting of Ohio manufacturing. Not because they looked at the stats, but because the GOP and its propaganda network laid the blame on NAFTA and Clinton Democrats, since most people associate trade relations with China with Nixon and Republicans.
And this is the problem in a nutshell. Democrats message based on the assumption that they're dealing with an informed public, in the academic sense; while Republicans know the public is informed by the media they consume, true or false. With that in mind, they lie promiscuously and repeatedly to shape opinion their way while Democrats try to argue the facts, as if they carry more weight in the minds of voter. They don't.
+10. The media is the message ... and at the heart of the problem.
Democrats treat their voters like adults, Republicans treat them like children, and we can all see who has turned out to have the more accurate take.
NAFTA is simply an easy thing for the corrupt and stupid to demonize because it has an easy name to remember, and it's an acronym for 'fuck Democrats'.
"NAFTA"? It's USMCA now, thanks to the First Felon.
I think looking at it from the other direction provides helpful context. This chart: https://fred.stlouisfed.org/graph/?g=WhmK shows CPI for durable and non-durable goods as well as services. Effectively the price of durable goods (a surrogate for manufacturing) has not changed since 1980. The same cannot be said for services and non-durable goods.
Free trade has its downsides for sure but it really does make sense for states and countries to specialize in some things and import other things. Denmark should not try to have a banana industry and Cuba should not have a salted fish industry.
Also although one can claim that China ruined the working class there are plenty of other countries that are undercutting China now.
The idea of comparative advantage, which is commonly used to justify global "free trade", basically assumes that wages are comparable in the different nations. Of course the actual shift in manufacturing was a result of vastly different wages in the developing vs developed countries, as well as subsidies and other deliberate non-free-market practices in places like Japan and China.
The US doesn't practice free trade either. Some industries such as automobiles and aircraft are protected. The US is not going to completely outsource military production, and this is not just for security reasons. Although outsourcing chip manufacturing did lead to problems during the pandemic.
"This terrible policy did not accomplish its goal and hurt a LOT of people, but by god, do I support it!"
Given the description you gave, why would you support PNTR now?
It was Congress and manufacturers that ruined the working class. Their goal. Now their goal is to ruin China.
Half the internet seems to be a crowd of people who gather in the emergency room to laugh at people who come in with injuries because they don't have a broken arm.
As others have noted, many voters are not affected by facts, but here goes. The US imported about $3.1 trillion in 2023, roughly equal to 11% of GDP. Even if all those imports were replacements for goods that used to be manufactured in the US, that's still not a huge chunk of the American manufacturing base. Offshoring has simply not had that big an effect.
"I supported PNTR for China and I probably still would today. But there's no question that it hurt a lot of blue-collar workers and didn't accomplish its goal of liberalizing China and turning it into a normal trading partner."
So why exactly, with this 20/20 hindsight, would a person still support this?
It wasn’t automation:
Interesting timing on this article - published in the lead up to the last trump victory in 2016
https://www.washingtonpost.com/posteverything/wp/2016/10/18/dont-blame-the-robots-an-interview-on-manufacturing-automation-and-globalization-with-susan-houseman/
Besides, didn't Trump fix NAFTA?