Scott Lincicome and Arjun Anand put the so-called “China Shock” into proper perspective. Four slices:
However, most skeptics misunderstand or misstate what the China Shock papers say and the historical events leading up to the period, and they ignore other analyses of US‐China trade that provide essential—and more optimistic—information and context. Thus, while there is little doubt that China’s size, economy, and location make it an influential and potentially disruptive force in the global economy and that China’s state capitalist model, growing authoritarianism, and bellicose foreign policy raise challenges for the US government, a comprehensive accounting of the China Shock refutes globalization critics’ caricatures thereof.
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Furthermore, economists have found that other factors—not PNTR or China’s WTO accession—were the main drivers of the China Shock. Kyle Handley and Nuno Limão, for example, found that PNTR’s reduction in trade policy uncertainty accounted for only about one‐third of the growth in Chinese exports to the United States between 2000 and 2005. Mary Amiti and colleagues found similar results, attributing approximately two‐thirds of the effect of China’s WTO entry on US manufacturing not to PNTR but to China’s own tariff reductions. (Numerous studies have found, perhaps counterintuitively, a strong general connection between increased imports and increased exports.) Indeed, preliminary results from Chad P. Bown and other economists suggest that China reduced domestic tariffs by a greater amount than was expected for nations joining the WTO (and, again, that these tariff cuts were a big driver of Chinese exports to the United States). Autor, Dorn, and Hanson’s China Shock papers themselves emphasize that China’s internal reforms—on privatization, trading rights, and (again) import liberalization—were major contributors to China’s export competitiveness in the late 1990s and 2000s.
In short, PNTR probably accelerated Chinese exports to the United States, but China’s own market‐based reforms—policies beyond US officials’ control and ones China critics should cheer—were likely the China Shock’s biggest drivers.
Autor, Dorn, and Hanson’s China Shock papers are frequently characterized as not merely supporting but advocating US government restrictions on Chinese imports due to the China Shock’s damage to the US economy writ large and especially to American manufacturing employment. None of this, however, is accurate.
For starters, their papers strictly focus on job losses incurred by specific local labor markets due to the China Shock and the failure of those markets (workers) to adjust in the following years. On the former issue, the figure of 2.4 million lost jobs during 1999 and 2011 was the authors’ maximum estimate and came amid an economy‐wide gain of approximately 2.2 million jobs (even as the labor market effects of the Great Recession persisted beyond 2011). The China Shock’s 1 million lost manufacturing jobs, meanwhile, accounted for less than 20 percent of the total manufacturing job losses over the same time frame—and a fraction of the tens of millions of job separations that occur in the United States each year. Thus, even the China Shock papers themselves confirm that dislocations caused by Chinese import competition, while of course important to the workers and communities implicated, were at best a plausible contributor to—not the main driver of—US workforce trends during the 2000s.
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Several studies have found that Chinese import competition was directly responsible for fewer US manufacturing job losses than the totals calculated in the China Shock papers. For example, a model created by Lorenzo Caliendo and others attributed only 15 percent of job losses between 2000 and 2007 to the China Shock. Other researchers found offsetting job gains or smaller losses when considering factors such as value‐added trade flows or the US housing market, leading to estimates of net job loss as low as 0.22 percent of nonfarm employment. More recently, Clément de Chaisemartin and Ziteng Lei identified a significant methodological flaw in Autor, Dorn, and Hanson’s original 2013 paper and found that a more robust assessment of the same data would prevent one from concluding that Chinese imports caused a substantial decline in US manufacturing employment.
Economists Alan Reynolds and Philip Levy, along with former US diplomat Charles Freeman, go even further, arguing that the China Shock likely caused only a small decline in US manufacturing employment after accounting for other trends—especially non‐Chinese imports. These and other scholars note that the manufacturing sector’s share of the US workforce declined steadily before and during the shock period (see Figure 1) due to trade, technology, American workers’ increasing skill levels, and the economy’s natural transition to services.
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A crucial question left unanswered by Autor, Dorn, and Hanson’s China Shock papers is whether imports from China boosted jobs in the nation overall. Several other economists have explored this issue in depth, finding mostly positive results. Nicholas Bloom and colleagues, for example, concur with Autor, Dorn, and Hanson that the China Shock caused manufacturing job losses, especially for those without college degrees, but they add that the losses were offset by gains in service jobs in other regions. Several other studies (see this Caliendo and Fernando Parro paper for a review of the literature) have similarly found that a decline in US manufacturing jobs during the China Shock period was accompanied by increases in American service‐sector jobs. The results from Zhi Wang and colleagues were even more positive: they found that, after accounting for the effects of Chinese imports throughout the supply chain, specific jobs were indeed lost, but overall employment and wages increased, even in regions that experienced large manufacturing employment declines (contra Autor, Dorn, and Hanson).
China’s much-vaunted manufacturing sector, meanwhile, may be suffering from similar problems. Chinese governments have subsidized numerous “strategic” sectors like steel, shipbuilding, and electric vehicles, but—thanks to lagging domestic and global demand and increasing geopolitical tensions (often caused by those same subsidies!)—they may have no place to sell it. As a result, the sector has teetered this year between mild expansion and (more often) contraction.
George Will appropriately excoriates the ignorant college students who cheer Hamas. A slice:
Since Vietnam, graphic journalism has given us living room wars, but broadcast snippets of combat have drained war of its power to shock. [Peter] Englund’s more than 400 pages of words, mere words, excavated from experiences 81 Novembers ago, convey war’s “terrible earnestness.”
Hans Eicholz reviews Fred Kaplan’s new book about the writing style of Thomas Jefferson. A slice:
Jefferson’s capacity for logical philosophical thought and his ability to see the linkages in the various viewpoints informing the revolutionary moment are given their impressive due, discarding old tiresome assertions that he was merely plagiarizing or was somehow ancillary to the process of independence and the construction of America’s national narrative. As Kaplan writes, confirming the judgment of John Adams who had been on the committee charged with drafting the Declaration, “Jefferson’s discipline, eloquence, logical mind, and previous accomplishments helped make him the committee’s candidate for the assignment.” Those qualities allowed him to produce a document that was “philosophy, argument, and propaganda combined and raised to the highest level of political literature.”
GMU Econ alum Paul Mueller continues his series on ESG ‘investing.’
Here we bring back to this space an important figure in the universities’ decline: Herbert Marcuse (1896-1979). Though Marcuse isn’t a household name, any purportedly serious university intellectual—say, Ms. Magill of Penn or Harvard’s Ms. Gay—knows about his contribution to governance at their institutions.
Marcuse, a left-wing philosopher who taught at Columbia and Harvard, proposed zero tolerance for conservative ideas. “Liberating tolerance,” Marcuse wrote in 1965, “would mean intolerance against movements from the Right and toleration of movements from the Left.” No one needs a doctorate in anything to understand that. He wasn’t done: “Certain things cannot be said, certain ideas cannot be expressed, certain policies cannot be proposed.”
I can’t conceive a more concise description of cancel culture, which we got.
Brad Thompson mourns the loss of Harvard.
John Stossel talks with Bjorn Lomborg about “the media’s misleading fearmongering over climate change” – which might plausibly be said to be saving human lives: “Over the last 20 years, because of temperature rises, we have seen about 116,000 more people die from heat. But 283,000 fewer people die from cold.” [DBx: So where are the hoots’n’hollers from pundits, professors, and popes for subsidies to oil producers and refiners?!]
Don Wolt tweets: (HT Jay Bhattacharya)
The people associated with the John Snow Project, which advocates for lockdowns, public masking, school closures & coerced vaccination, are completely unhinged, neurotic germaphobes. It’s a travesty that they were ever taken seriously.
