Is China an Economic Threat?
It seems that more and more Americans, pro-Trump or not, are concluding that trade with China is a threat to the United States. The objections are typically one of three: (1) freer trade with China after it was admitted to the World Trade Organization (WTO) in 2001 has cost U.S. manufacturing jobs; (2) the Chinese have thrived by stealing our intellectual property (IP) and that has made Americans worse off; and (3) the Chinese will use some of their progress in cybertechnology to engage in surveillance of Americans.
Each of these objections contains a kernel of truth. But the objections together are not nearly enough to offset the huge gains that Americans reap from freer trade with China.
These are the opening two paragraphs of my latest Hoover article, “Is China an Economic Threat?” Defining Ideas, August 27, 2020.
Interestingly, in a 2019 article in Foreign Policy, deputy news editor Michael Hirsh quoted Autor: “One could say that there was something of a guild orthodoxy [among economists]: The key dictum was that policymakers should be told that trade was good for everyone in all places and times.”
Since 1976, when I earned my Ph.D., I’ve thought of myself as a member of the “guild,” that is, the economics profession. But somehow I missed that memo. More important, every other economist I know or read who talks about trade missed that message also. Indeed, I have yet to meet the economist who denies that trade is bad, especially in the short run, for those who must compete with cheaper imports. But, as noted above, the benefits of trade with China greatly outweigh the costs and go disproportionately to lower-income households.
I owe that one to Donald Boudreaux, who first made me aware of MIT economist David Autor’s statement. It’s possible, of course, that Hirsh misquoted him.
On TikTok, I also take my Hoover colleague John Cochrane’s side against our Hoover colleagues Niall Ferguson and H.R. McMaster, and I point out a serious breach by the Chinese of my privacy that our federal government, with its apparently low-quality security, helped create:
I clearly recall that the hacked form I filled out the year before asked me if I had engaged in adultery in the last seven years. That was important, you see, because the U.S. government needed to know if I could be blackmailed. Fortunately, my answer was no, but notice that the U.S. government had made it easier for the Chinese government to blackmail federal employees who answered yes.
And on draining the swamp:
President Trump, who came to power with the goal of “draining the swamp” is, with his order that TikTok be sold to an American company, reducing economic freedom and deepening the swamp. In this way, the TikTok controversy highlights, in plain sight, a real threat to our freedom: the threat from our own government.