Wednesday, September 12, 2012

New Study on Import Benefits

The Heritage Foundation published a great study today further debunking the protectionist myth that imports into the United States harm the US economy and destroy American jobs.  In "Trade Freedom: How Imports Support U.S. Jobs," Heritage scholars Derek Scissors, Charlotte Espinoza and Terry Miller argue:
It is a common misperception that importing goods to America comes at the cost of American jobs. In fact, imports contribute to job creation on a large scale. The increased economic activity associated with every stage of the import process helps support millions of jobs in the U.S. This Heritage Foundation analysis shows that over half a million American jobs are supported by imports of clothes and toys from China alone. These jobs are in fields such as transportation, wholesale, retail, construction, and finance. Understanding the positive role of imports with respect to jobs, in addition to their other benefits, is critical to adopting the correct trade policy and thus to bolstering the economy.
The whole report is worth reading, but I especially like how Heritage dismantles other "studies" out there - relied on by certain, ahem, campaigning politicians - that erroneously connect the US trade deficit with job losses.  On the China version of these studies, the authors state:
Those who attack China often do not examine real economic events: They do not measure actual failed businesses and actual job losses. Instead, they assume the U.S.–China trade deficit means that both production and production jobs are moving from the U.S. to China. If this were true, many jobs would have moved back to the U.S. from China when the bilateral deficit fell by more than $30 billion in 2009. Of course, no jobs actually moved. Instead, millions of jobs were lost, due not to trade flows, but simply because of economic contraction during the financial crisis.

Even absent a crisis, the U.S.–China trade deficit does not have the impact on jobs that many protectionists believe it has. If the bilateral trade deficit were eliminated, jobs would not move to the U.S., because the U.S. does not trade with China alone. Furniture production and similar jobs would move from China, not to the U.S., but rather to other countries where furniture can be made cheaply. The idea that millions of American jobs have been lost to China relies on bad trade numbers, bad economics, and a completely fictional view of the world.
Yep.  Now, if only certain campaigns would stop parroting politically-convenient numbers based on absolute hokum in a shortsighted attempt to scare up a few votes.  Alas.

Be sure to read the whole Heritage study here.

No comments: