The Free-Trade Paradox

Large blocks of voters, including unions and some professions, often choose a president based on a clear-cut stance on one issue like trade. The positions of unions and blue-collar workers “reflect a widespread belief that free trade with developing countries, and with China in particular, is a kind of scam perpetrated by the wealthy, who reap the benefits while ordinary Americans bear the cost.” The cost of living is high in the US and many workers fear competing with equally skilled workers in Asia who are willing to work for less than $1 per hour. Yet the very workers who make such complaints forget how much their spending power has increased as a result of cheap goods produced in Asia, explains James Surowiecki for The New Yorker. Lower- and middle-income workers tend to devote a greater portion their paychecks to manufactured goods, which come from abroad, rather than services and also tend to buy more products from Asia. Surowiecki points out that the cheap stuff may not be worth the loss of jobs, but manufacturing jobs won’t quickly return to the US. Policies proposed by the Obama and Clinton campaigns, to reduce trade with China, would raise prices and hurt the very people who question the value of free trade. – YaleGlobal