A country’s wage level depends fundamentally on the productivity of its labor force, not on its trade policy. As long as American workers remain more skilled and better educated, work with more capital, and use superior technology, they will continue to earn higher wages than their Chinese counterparts. If and when these advantages end, the wage gap will disappear. Trade is a mere detail that helps ensure that American labor is employed where, in Adam Smith’s phrase, it has some advantage.
DBx: Anyone who worries that Americans (whose wages are generally much higher than are those of the Chinese) will be economically harmed by trading with the Chinese should also – if that person were consistent – worry that Jeff Bezos will be economically harmed by trading not only with his housekeeper, his chauffeur, and his personal chef, but also with Amazon’s workers and other suppliers.