- REUTERS/Brian Snyder
- Zach Silk is the President of Civic Ventures and recurring co-host on the Pitchfork Economics podcast. He is an experienced social change maker and civic entrepreneur and is a nationally recognized strategist, organizer, and campaign executive.
- In this opinion piece, he argues that Donald Trump outperformed in states like Michigan and Washington because he spoke directly to trade workers – many of whom felt that no one else was listening.
- One prominent economist said that China has taken advantage of America when it comes to international trade, and workers have “borne the brunt of those losses.” When it comes to repairing trade, workers need to be included at the table.
- For more on this topic, listen to the latest episode of Pitchfork Economics.
- Visit Business Insider’s homepage for more stories.
Trade is arguably the biggest reason why candidate Donald Trump outperformed all expectations in traditionally Democratic states like Michigan and my home state of Wisconsin in 2016. Trump argued that the American people had been getting a raw deal from decades of international trade, even while elites prospered. And to those in the heartland – especially workers in the agriculture and manufacturing industries – literally nobody else was making that argument. To them, it felt as though Trump was the only politician who was listening.
- Courtesy of Zach Silk
For 30 years, Trump argued, Democrats and Republicans alike promoted a free trade agenda that resulted in less prosperity for many Americans, while wealthy elites got richer and richer. And the thing is, he’s right. And so are all the Michiganders and the Wisconsinites who have been sounding the alarm for years. Our leaders lost their way on trade, and until we acknowledge that the whole system needs to be reconsidered, we’ll keep losing to Trump – even though the trade policies he has enacted continue to hurt the same farmers and steelworkers he talks about on the campaign trail.
But the problem is that international trade is wickedly complicated. There are no level playing fields, and the required rat’s nest of compromises and concessions means that there’s no such thing as an unalloyed win. In this week’s episode of Pitchfork Economics, my colleagues Nick Hanauer and David Goldstein interviewed a prominent economist to discuss why America’s trade policies have failed, and how to move forward.
The first step is to acknowledge what we’ve gotten wrong. Dean Baker, senior economist and co-founder of the Center for Economic and Policy Research, admits that American leaders have allowed China to take advantage of us.
“The basic story was China deliberately kept down the value of its currency against the dollar and other major currencies,” he explains. “What that does is it makes their goods more competitive in international trade, and of course our goods [are] less competitive.”
China has been able to dominate in international trade, and thanks to America’s broadening inequality, workers have borne the brunt of those losses. Corporate profits still climb and employees – after a seemingly unending series of layoffs, a deterioration of worker rights, and three decades of wage suppression – have no stake in successful trade negotiations anymore. That means, according to Baker, that “workers have no reason to care whether or not China is respecting Boeing’s intellectual property.”
When both candidates in a presidential debate argue that trade needs to benefit American business, voters feel like nobody is looking out after their best interests. “The economic orthodoxy actually says there will be winners and losers from trade,” Baker says. The system is rigged so that corporations always win and workers always lose, and “we’ve never in any serious way compensated the losers.”
We all know someone who’s been laid off in a factory closure, or who has seen their job outsourced to a nation that undervalues labor. But the answer isn’t to be isolationist, or to launch a trade war with sky-high tariffs that hurt the middle class’s purchasing power. Those regressive policies actually make economic conditions worse for everyone.
The problem is that there’s no silver bullet – no one trade policy that will fit every situation and result in positive outcomes every time. Trade is far too complex for that; every international relationship is different. Local customs, resources, and histories between nations can affect trade in a near-infinite number of ways. Only a fool could claim to possess a single unified theory that would solve all our problems across the board.
But here’s a good rule of thumb for politicians and economists looking to repair the fractured trust between workers and those businesses and politicians who advocate for strong trade relationships: Include workers at the table. If every American has a financial stake in global trade relationships, if we’re all playing on the same team again, trade will be easier to navigate and the economy won’t be as prone to upheaval as it has been over the first three years of the Trump presidency.
But how is it possible for ironworkers at a foundry in Waupaca, Wisconsin to have a stake in international trade? Every employee should enjoy the windfall from positive trade arrangements, and federal job programs should be ready and willing to step up to the plate when a community is wracked by layoffs. No American town should be forced to confront an existential crisis simply because six people in formalwear shook hands over a contract half a world away.
At home, we know that it’s important to include as many people in the economy as broadly as possible, because consumer demand is what spurs economic strength. If we’re going to include more people in the benefits of international trade, we’re going to need more inclusive trade policies.
Listen to the Podcast: In 2014, venture capitalist Nick Hanauer warned his fellow plutocrats that our growing crisis of economic inequality would lead to an uprising or a dictatorship. Two years later, angry voters elected Donald Trump. In Pitchfork Economics, Nick explores why the pitchforks are coming, who they’re coming for, and how the stories we tell about the economy can change the economy itself.