For 40 years, the median wage has remained unchanged, adjusted for inflation. Prof. Blinder claims that our trade deals and resulting trade deficits don’t cost us many jobs. He relies chiefly on the coincidence that in the year 2000 we had a large trade deficit (as we have for every year since 1976) and only 4% unemployment.

America needs a raise but will get it only when there is a severe labor shortage. Had we had balanced trade in the year 2000, rather than a trade deficit of $372 billion, there would have been an unemployment rate well below 4%, and the headlines in the Journal would be of labor shortages, “employee stealing,” and “unsustainable” increases in wages.

Every presidential candidate has realized that they cannot dare ask for the votes of the American people without rejecting not only the Trans-Pacific Partnership, but our entire approach to trade. They know that trade deficits do matter, and that if we had a policy that created not trade surpluses, but merely balanced trade, we would have the kind of labor shortages necessary to create rapidly rising real wages.

Alan Blinder states that: “Most job losses are not due to international trade.” What? If I buy a Ford pickup that in the past would have been built in Michigan but is now made in Mexico, would Prof. Blinder say that the Mexican-built Ford has nothing to do with John Doe standing in the unemployment line in downtown Detroit? What am I missing here?

The “paper” that foreigners are “holding” is being increasingly converted into ownership of U.S. property. Forget the influences to our foreign policies. It should be apparent to any responsible person that our ballooning trade deficits will make us net losers.



http://www.wsj.com/articles/look-at-the-darker-side-of-free-trade-policy-1462218729