Damn Consumers are Changing Too Fast the Ways They Spend Their Own Money

by Don Boudreaux on September 27, 2011

in Myths and Fallacies, Scientism, Seen and Unseen, Trade

Stealing a page from Carpe Diem’s Mark Perry, let’s re-write the opening paragraphs of this Wall Street Journal report:

For years, economists have told Americans worried that cheap Chinese imports low-cost technology will kill jobs that the benefits of trade with China technological advance far outweigh its costs.

New research suggests the damage to the U.S. has been deeper than these economists have supposed. The study, conducted by a team of three economists, doesn’t challenge the traditional view that trade each labor-saving advance in technology is ultimately good for the economy. Workers who lose jobs do eventually find new work or retire, while the benefits from trade technological advances, such as lower prices, remain. The problem is the speed at which China technology has surged as an exporter creator of goods and services, overwhelming the normal process of adaptation.

The study rated every U.S. county for its manufacturers’ exposure to competition from China technology, and found that regions most exposed to China technology tended not only to lose more manufacturing jobs, but also to see overall employment decline. Areas with higher exposure also had larger increases in workers receiving unemployment insurance, food stamps and disability payments.

This WSJ report contains – and reports on – many errors other than the unmitigated mistake of singling out one incredibly narrow, particular way in which consumer sovereignty and economic change affects workers and then assumes that there is something economically special or significant about this particular way that distinguishes it from the countless other ways in which economies change.  (The incredibly narrow, particular way singled out in the report is the trade of people located in the geographical region of the earth conventionally today called “America” with people in another region of the earth conventionally today called “China.”)  Time allowing, I’ll address some of those errors in future posts (although it’s not as if readers who go to the “trade” category here at the Cafe won’t find many earlier posts that deal with these same errors that pop up like whack-a-mole).

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