Politics

Created 2/21/1996
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Buchanan, Trade, and Prosperity

A Reaction to an Op-Ed, "Buchanan for President", written by Thomas L. Friedman on 12/24/95


Brad DeLong


Associate Professor of Economics University of California at Berkeley
Berkeley, CA 94720
(510) 643-4027 phone
(510) 642-6615 fax
delong@econ.berkeley.edu
http://www.j-bradford-delong.net/


I can't stand it.

I open my New York Times on Christmas Eve, and find Thomas Friedman writing: "Give old Pat [Buchanan] credit....[He] is painting a vivid picture for people, explaining why they feel insecure.... Mr. Buchanan has properly diagnosed our anxiety. Friedman--and the person he quotes extensively, Michael Sandel--tell us many things: the global economy has disrupted the economic foundation of people's lives; Mexicans working for 50 cents an hour have taken their jobs; traditional Republicans and Democrats have failed to address the troubling impact of the global economy and rapid technological change on people's lives; that average U.S. wages last year saw the poorest performance on record.

Mr. Friedman provides a weak-tea dissent from Buchanan's policies--which are, for unspecified reasons, likely to "lead only to economic ruin and a politics of resentment." But there is not even a whisper of criticism in Friedman's claim that Buchanan has "diagnosed what's troubling Americans these days--the impact of the global economy and rapid technological change on their lives."

Leave technological change (which appears to be slower these days than in the 1920s, or the 1950s, or the 1960s) for another time. And ask just how the global economy is supposed to have done all these bad things in the past two decades.

In 1975, the average non-oil import came from a country where the manufacturing wage was 60% of the U.S. level. By the early 1990s the average non-oil import came from a country where the manufacturing wage was 75% of the U.S. level. How can this be? Consider: In 1975 Japan was a low-wage economy: its manufacturing wage was less than half of our manufacturing wage level. Today Japan is a high-wage economy: its manufacturing wage is higher than the U.S. In 1975 Taiwan, Singapore, and Korea were very low-wage economies with wage levels one-twentieth that of the United States. Today their manufacturing wage levels are about a third of the American standard. Because our trading partners are growing richer faster than new low-wage trading partners are appearing, the average wage in countries trading with the U.S. is increasing rapidly.

Doesn't this mean that international trade was placing more downward pressure on American wages in 1975 than it is today? Doesn't this mean that the changing international economy has on net exerted upward pressure on American wages over the past two decades?

There are lots of causes of the near-stagnation in middle-class, the decline in working-class, and the collapse in underclass American living standards over the past two decades. An educational system that has failed to keep up with the computer revolution and thus created a gap between what the average student is taught and what an increasing fraction of entry-level white-collar workers need to know; the destruction of the American union movement as a result of the national and regional recessions of the 1980s and changes in how labor laws were enforced; declines in the minimum wage and in the real level of public assistance; the decline in public investment; most important, perhaps, the increase in divorce and thus in the number of single mothers facing a very difficult challenge (isn't it an interesting measure of sociological change that this year both of the leading challengers to President Clinton, Senators Dole and Gramm, have been divorced, the first time in American history that this has been true?)--all these are plausible candidates for major shares of the responsibility.

However, Mr. Buchanan chooses to blame "furriners": the case that world trade has played a role in widening America's income and wealth inequality may be extremely weak, but furriners don't vote. Besides, they talk funny.

Mr. Friedman does us no good service when he swallows Buchanan's premises without even a hint of complaint.






Politics

Created 2/21/1996
Go to
Brad DeLong's Home Page


Associate Professor of Economics Brad De Long, 601 Evans
University of California at Berkeley; Berkeley, CA 94720-3880
(510) 643-4027 phone (510) 642-6615 fax
delong@econ.berkeley.edu
http://www.j-bradford-delong.net/