“If you go by the official data, U.S. workers have benefited from international trade in the past few years. The reported deficit in the trade of goods fell 25 percent from 2007 to 2011, adjusted for price changes. A shrinking trade gap is good for workers because it means more Americans are being kept busy producing things for domestic and foreign consumption.
But what if those trade numbers are wrong? After all, the U.S. lost 2 million manufacturing jobs from 2007 to 2011. A new research report from the Democratic-leaning Progressive Policy Institute says the trade deficit isworse than officially stated. It says the government is understating how much of what Americans consume is actually produced abroad, particularly in such low-cost nations as China. Report authors Michael Mandel and Diana Carew calculate that rising imports account for the loss of about 1.3 million American jobs from 2007 to 2011, or about one-third of all the job losses in the private sector outside construction over that period.
Mandel and Carew say the Department of Commerce’s Bureau of Economic Analysis underestimates the value of imports from low-wage nations because of an “import price bias.” They say when a U.S. company switches to a cheaper supplier—such as a Chinese company—and its import bill falls, the government mistakenly assumes the American company is buying fewer items, rather than getting a lower price per item. So it understates imports.
I have asked the Bureau of Economic Analysis about this issue in the past, and it has responded that, while the phenomenon is real, it is not as big as Mandel makes it out to be. Mandel, a former chief economist atBusinessweek, and Carew present case studies from apparel, furniture, autos, communications equipment, and computers to bolster their case. I asked the government for comment on the latest report today and will update this article if I hear anything.”
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Does anyone need a government agency to elucidate on that fact? Just look at the labels in WalMart. DUH.
Wally world and the people (using the term loosely)that frequent that purveyor of cheap, are keeping China in business single handedly.
indeud…
how about a new type of WMT…call it made in America
You want to work in a factory making cheap, low-priced, low value-added goods?
You could do better changing linens at your local Hampton Inn, but have at it, brosef.
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jake,
if you did not notice America has come to a point where low wages are now competitive with the rest of the world.
That’s why car manufacturers are coming over here.
cheap products or low value added goods is part of the grand scheme of planned obsolescence; perhaps that mentality should be changed for the betterment of the planet both itself and the people on it.
I prefer my local Dollar General (sorry WMT). Hard working folks there. Faster to find stuff. Low prices.
Not for a whole lot longer. China’s labor costs are beginning to rise as it steps up to First World Consumer Economy status.
You think the effects of “income inequality” is bad in an allegedly capitalist economy like ours?
Wait til you see what it does to the Red Chinese and the envy of Thomas Friedman’s heart, their wonderfully controlled “society.”
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“are bad”
A-game!
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If Americans are buying cheaper items or more items for the same money, they are money ahead and the extra cash stays in the US.
It’s a trade deficit only because they don’t count our exports of debt!
Apple products count as foreign manufactured goods even though the design, engineering and intellectual work largely was done in the US, and profits are to a US based corp. These type statistics have a lot of gray area.