The Progressive Case Against ProtectionismNovember/December 2019 111to $54,500. That’s less in relative terms—advanced economies usually
grow more slowly than poor ones—but far more in absolute terms,
and enough to signiÄcantly boost standards o living.
The problem, however, is that the gains have not been evenly
shared. Adjusted for inÁation, the average income o the bottom 50
percent o earners stayed nearly Áat between 1980 and 2014. For those
in the 50th to 90th percentiles, it grew
by about 40 percent, lagging far be-
hind expectations based on the experi-
ence o prior generations. Among the
top one percent, meanwhile, average
income has skyrocketed, ballooning by
205 percent over the same period. No
wonder so many Americans are disap-
pointed. The U.S. economy has failed
to achieve its most basic aim: generating inclusive growth.
Trade does deserve some o the blame. When the United States
buys goods from labor-abundant countries such as China and India,
the demand for domestic labor falls. This appears to be what hap-
pened after the big surge in Chinese imports to the United States in
the early years o this century. In a series o oft-cited research papers
about “the China shock,” the economists David Autor, David Dorn,
and Gordon Hanson estimated that trade with China may have dis-
placed the jobs o one million to two million Americans during this
period. But it’s important to keep those numbers in perspective. The
U.S. economy is a dynamic place, with more than six million jobs lost
and created every single quarter. Moreover, the share o Americans
working in manufacturing has been declining steadily since 1950,
even as growth in trade has waxed and waned—suggesting that fac-
tors other than trade are also at play.
Indeed, the U.S. economy has experienced other huge changes.
Workers have lost bargaining power as unionization has declined
(from 30 percent o the labor force in 1960 to less than 11 percent
today) and large companies have steadily increased their market
power (corporate proÄts as a share o ³² are 50 percent higher than
they were in prior decades). Perhaps most important, technology has
disrupted countless industries and lowered the demand for less edu-
cated labor. Most economists believe that technological change is a
far more important factor than international trade in explaining the
American workers have
indeed been left behind,
but open economic policies
remain in their best
interest.