As the stock market continues to fall in a December that is shaping up to be the worst December for the stock market since the Great Depression, Wall Street money managers are in agreement that the blame lies squarely on Donald Trump and his idiotic trade war.
It isn’t just the stock market that is suffering from Trump’s trade war, either. Midwestern farming states are losing billions. American consumers will be paying for the tariffs as companies pass along the costs they are being forced to pay. Auto workers are losing their jobs. The American soybean industry may never recover. Total U.S. exports slid 7% in the 3rd quarter. Auto exports are down 56% from a year ago. Auto manufacturers are moving production out of the United States. Wisconsin manufacturers reported $95 million in higher costs. Meanwhile, the United States trade deficit, which Trump has stated he wanted to reduce with his trade war, keeps increasing and is now at a ten year high.
Economists have long stated that trade wars don’t have winners, only losers. Trump’s trade war is proving economists right. So far, Trump’s trade war has been a spectacular failure.
It would behoove union leaders to learn something from this: namely to stop speaking out against trade. Speaking out against trade helped Donald Trump, a completely anti-worker President who has consistently attacked unions, use trade as an issue to win enough votes from union households to become President. It is hard to blame these union households. Union leaders have been speaking out against trade for years. Donald Trump spoke out against trade. Union households put two and two together and placed their faith in him. Unfortunately, Donald Trump’s Presidency has not worked out well for workers so far, with little sign that will change any time soon. And the trade war that Donald Trump started, the trade war these union households thought would help them, has been bad for workers, too. Just ask employees of GM.
Now, this is meant as no offense to union leaders, or perhaps more accurately, unions themselves. Unions are the best way to give bargaining power to workers. This country’s workers desperately need more unions. But, instead unions have been declining. And as unions have declined, union leaders have for years blamed trade for the decline in unions. The truth is, though union jobs have been affected by trade, union jobs have been affected to a much greater extent by automation and technological innovation. Union leaders have been unfortunately myopic in their view of the decline of union jobs, and have ignored the economic reality that jobs change over time. Instead of blaming trade for the loss of union jobs, union leaders should have instead been working harder to unionize the new jobs in the economy that have been replacing the lost jobs.
Before delving a little deeper into what is causing union jobs to be lost, lets back up and look at the importance of unions for the middle class.
The middle class in America has been seeing their share of the country’s wealth decline steadily for the last 50 years.
This shrinking piece of the economic pie for the middle class corresponds almost exactly to a signature Republican policy: the decimation of unions.
Source: Who Killed American Unions?
Without unions, America’s workers have less of an ability to negotiate better wages and benefits. Without that bargaining power, America’s workers have seen their wages remain stagnant, while corporate executives and shareholders gobble up more and more of the profits generated by the companies that employ these workers.
Unions are sorely needed. Way too many Americans do not currently have a union. That is the problem that needs to be addressed, not trade.
Speaking of trade, let’s analyze what has been really happening with trade in America over the last 50 years. No matter what nonsense Donald Trump spews to defend his trade war, the truth is that America was not getting killed by trade. American companies have been doing very, very well. The S&P 500 has tripled over just the last 9 years. If trade was really hurting the country, it wouldn’t just be hurting workers, it would also be hurting companies. But that hasn’t been the case.
Now, union jobs, like those in manufacturing, have been declining. But, it is not due to trade. It is due to technology. In fact, 85% of US manufacturing job losses have been attributable to automation, not trade.
The US did indeed lose about 5.6m manufacturing jobs between 2000 and 2010. But according to a study by the Center for Business and Economic Research at Ball State University, 85 per cent of these jobs losses are actually attributable to technological change — largely automation — rather than international trade.
To further illustrate the fact that job losses are not due to trade, consider the question: if U.S manufacturing jobs were being lost due to trade, then wouldn’t this be because there is less being manufactured in the U.S.? However, that is not the case. In fact, the opposite is true: 7 million manufacturing jobs have been lost since 1979, yet in that same time frame, manufacturing output in the United States has almost doubled.
Manufacturing jobs peaked in 1979 at 19.4 million, according to the Bureau of Labor Statistics, and by 1987 had fallen to 17.6 million. What had been a slow decline in employment accelerated after the turn of the century, and especially during the Great Recession. Manufacturing payrolls bottomed out at fewer than 11.5 million in early 2010, and even though more than 900,000 manufacturing jobs have been added since, overall employment in manufacturing is still at its lowest level since before the U.S. entered World War II.
After adjusting for inflation, manufacturing output in the first quarter of this year was more than 80% above its level 30 years ago, according to BLS data.
The simultaneous increase in manufacturing output and decline in manufacturing jobs over the long term shows that American manufacturers have become far more productive than they were three decades ago – that is, they can produce more goods, or higher-value goods, with less labor.
Manufacturing output has almost doubled while manufacturing jobs have been cut almost in half. Why is that? Because of technological advances. And this has been happening everywhere. Not just in America. This is a worldwide change in the economy. It cannot be rolled back, nor should it be. When the industrial revolution occurred, we didn’t try to stop it and go back to feudalism.
The problem is not that the jobs are changing. The problem is that the new jobs do not have unions.
The thing is, trade, like immigrants, is being used as a scapegoat. Corporate executives and their politician mouthpieces want you to be angry at foreigners while the corporate executives keep taking a bigger piece of the pie. It is the same technique that pickpockets use. The Art of the Distraction.
Union leaders should stop helping the corporate executives and politicians by echoing their use of trade as a scapegoat. Union leaders should instead focus their efforts on expanding unions to all of the new jobs that have been created over the last 50 years that do not have unions.
America doesn’t need less trade. America needs more of its jobs to have unions.