Tuesday, September 8, 2009

Finding Value in Bad Trade Journalism

One of the primary reasons that Americans are skeptical of free trade is junk journalism that lazily repeats tired lines about manufacturing "crises" and the "victims" of import competition, when the bulk of historical and economic evidence demonstrates that trade's less-visible benefits largely outweigh its highly-visible costs. As Dan Ikenson and I recently explained:
Congress and the media have indeed been central to the perpetuation of three myths. Both have spoken for years about the decline of U.S. manufacturing as though it were fact, when the overwhelming evidence points to a sector that, until the onset of the current recession, was robust and setting performance records. Both ascribe bloated significance to the U.S. trade deficit without attempting to convey or even understand its causes, meaning, or implications. And both contend that this alleged decline of manufacturing and the rising trade deficit attest to the Bush administration’s failure to enforce existing trade agreements.

The media’s motive is straightforward: it is giving its customers what they seem to want. Frankly—and regrettably—Americans seem to be more captivated by stories of gloom and doom than by factual, logical arguments that are devoid of sensational imagery. For that reason,the media seem to favor the anti-trade narrative.


If Americans break away from the oppressive political rhetoric about trade and the economy and make their own observations, they are likely to conclude that the country has strengths and competitive advantages unmatched anywhere else in the world. The continuing flow of foreign investment into the U.S. economy is testament to that fact.

Beyond these strengths and competitive advantages enjoyed by U.S. residents, there is the fact that 95 percent of the world’s consumers live outside of the United States. Yet when politicians and the media speak about trade, they usually focus exclusively on the Malthusian fiction of six billion people competing for 100 million U.S. jobs. From the perspective of the American worker, under this slanted premise, trade and globalization can only upset the apple cart. There are only ramifications—and negative ones at that—on the supply side of the equation. All that trade has to offer under this portrayal is increasing competition for my job, and downward pressure on my wages.
Today's Washington Post brings a fantastic example of lazy trade journalism in a syrupy story on the President's much-anticipated decision on whether to impose restrictions on Chinese tire imports under "section 421" of US trade law. I've written a few times on the economic and policy reasons why the President should resist the political temptation to impose the restrictions, so I won't rehash them here. Instead, the Post's article is valuable for two other reasons: first, it's a fine example of how not to write about trade, and second, it unintentionally provides excellent commentary on how American workers uniquely can, do and should adjust in a dynamic, globalized US economy.

But before I get to the article's pros, let's talk about its more evident cons, shall we?

The section 421 case is a complicated issue involving an obscure provision of US trade law that could have significant ramifications for US trade. But if you were to read the Post's take alone, you'd be certain that the issue was just another case of evil Chinese imports flooding the US market in order to line the pockets of greedy US corporations and simultaneously destroy the jobs and livelihoods of hapless, unsuspecting American workers. Here's a (very quick) breakdown of the article's 39 paragraphs:

- Background on section 421: 5 paragraphs (but no mention that a section 421 decision involves only fairly-traded products from China).
- Political ramifications of Obama's decision: 3 paragraphs (including his campaign promises to "crack down" on China).
- Economic ramifications Obama's decision: 0 paragraphs.
- Legal ramifications of Obama's decision: 0 paragraphs.
- Foreign policy ramifications of Obama's decision: 0 paragraphs.
- Union support for protection: 1 paragraph.
- US tire maker opposition to protection: 7 paragraphs.
- Chinese government opposition: 2 paragraphs (including a general economic discussion that precedes a Chinese government statement).
- Consumer support/opposition or impacts: 0 paragraphs.
- Tire merchant support/opposition or impacts: 0 paragraphs.
- Surge in Chinese tire imports and concomitant drop in US tire jobs: 1 paragraph. (Obvious, necessary distinction between causation and correlation: 0 paragraphs.)
- Outsourcing American tire production to China: 1 paragraph.
- Implications that the Chinese imports are unfairly traded: 1 paragraph. ("The ballooning trade imbalance with China has provoked complaints that the relationship is crushing U.S. manufacturers. Critics of the relationship say China manipulates its currency and employs other protectionist policies that make it difficult for U.S. factories to compete.")
- Random sneer at Walmart: 2 paragraphs.
- Anecdotes re: unemployed American tire plant workers and/or their "great" former jobs: 17 paragraphs.

So in an article entitled "As Cheaper Chinese Tires Roll In, Obama Faces an Early Trade Test," only 3 of 39 paragraphs address the impact of Obama's decision (i.e., why it's a "test"), and all of those focus only on the political dynamics. Not a single paragraph discusses the adverse effects of the decision on consumers, particularly poorer Americans who freely choose to buy cheaper Chinese tires, or on tire merchants and their numerous employees who sell the Chinese tires here in the States. Not one mention of the broad legal, economic or foreign policy ramifications that an Obama decision in favor of 421 protection - a dramatic shift in US trade policy - would have on the future of US policy. Zilch.

And yet the author devotes 17 of the article's 39 paragraphs - a little less than half of of the whole thing! - to anecdotal schmaltz about displaced American workers and the great jobs (in tire plants, mind you) that they once held. Thus, the uninformed Washington Post reader has no choice but to take away only one lesson from this piece: evil Chinese imports have destroyed the lives of these poor Americans.

Of course, this is a simplistic and counterfactual approach that ignores both trade's immense benefits for American families (particularly poorer ones), as well as the complexities of a dynamic global economy and its multinational supply chains. (Plenty of discussion here on that stuff.)

But amazingly, the Post article's not completely worthless. Instead, its sappy anecdotes unintentionally provide great insights into how the American worker adapts to changing market conditions in the dynamic US labor market. Consider these examples from the story:
Larry Cannon, 37 and the father of three children, ages 13, 10 and 4, used to specialize in molds at the plant. Now, as he starts classes to become a biomedical technician, his wife has taken a job in the photo department at Wal-Mart.
Byron Botdorf, 59, is taking up welding at Albany Technical College. He'll be 61 when he's retrained for a new job.
"My son got into welding -- it's a good trade," he said. ...
Mark Burns, 43, who used to drive a forklift at the plant, has been through layoffs before. Fifteen years ago, he was briefly laid off from the local cotton mill, Flint River Textiles. That company eventually shut down, citing the cost pressures of Asian imports. He then took the job at Cooper Tire. Laid off again, he now plans to become a welder.
"Welding is not something they could import very easily," he said.
It seems pretty clear to me that the author intends for these anecdotes to push the reader to yearn for the halcyon days when Larry, his wife, Byron and Mark all happily worked at the tire plant (you know, back before those evil Chinese imports ruined all that). But, as much as I can sympathize for the immense difficulties that these people face because they lost their jobs, I see a pretty significant silver lining in the dark clouds: each person has lost his/her job in an increasingly nonviable sector of the US economy (i.e., cheap tire or textile manufacturing), but instead of lobbying the US government for a bailout or for his/her old job, and instead of simply giving up (and turning to crime or going on welfare), each has rationally decided to move to well-paid jobs in traditional growth sectors that face no import competition - health services, construction (welding) or retail services. Each of the men also has decided to get job retraining in order to be more successful in these fields (through better pay or job security).

The American labor market is quite unique in its dynamism. It's a place that, while scary at times, provides the American worker with an unrivaled ability to adapt to changing economic environments in order to grow and prosper, instead of stagnate or become dependent on government assistance. (Great analysis of that dynamism here.) Thus, the reactions of Larry and his former co-workers in the face of the changing US tire market are refreshingly "American," particularly in this increasingly disturbing time of bailouts, protectionism and government lobbying.

For their resilience and hard work, I applaud these folks. (Even though they'd probably be annoyed that I'm doing so.) It's a great lesson for the whiners, protectionists, apologists and scapegoaters out there, and even for some of the "journalists" who can only bring themselves to write about trade in terms of its hapless "victims."

Too bad they'll probably never listen.

UPDATE: Looks like smartypants Stossel and Griswold posted similar things on this issue shortly after I did. I'd be foolish to say "great minds..." and instead will say "even a blind squirrel...."

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