Monday, July 7, 2008

Public Opinion Continues to Shift on Trade summarizes the results of a recent CNN poll on trade. The question was: "What do you think foreign trade means for America? Do you see foreign trade more as an opportunity for economic growth through increased U.S. exports or a threat to the economy from foreign imports?" CNN first asked this question in November 2007, and then again in June 2008.

In November 2007, 46 percent of the public thought trade was an "opportunity" but by June 2008 only 41 percent held this opinion.

In November 2007, 45 percent saw trade as a "threat" but by June 2008 51 percent held this view.

CNN/Opinion Research Corporation Poll. June 26-29, 2008. N=1,026 adults nationwide. MoE ± 3.

Incidentally, this poll question has been asked by Gallup and CNN since 1992. The most recent poll is the first time a majority of the public believed that the US is threatened by trade. In May 2000, 56 percent believed that trade was an opportunity.

Trade can be both a threat and an opportunity for the economy. And the threat and opportunity can come through both imports and exports. However, given the disasterous mismanagement of US trade policy, the people are right about the threat.

The poisonous consequences of that mismanagement for the U.S. economy, our competitiveness, and the U.S. dollar are now being felt. The trade deficit and the irresponsible borrowing that supported it created a situation in which the dollar had nowhere to go but down. All the while, the trade deficit and borrowing helped reduce investment in U.S. manufacturing and other exportable capacity: exacerbating present challenges.

Economists rightly emphasize that with balanced trade there are efficiency gains from trade that are "pareto improvements". Potentially, the winners could compensate the losers and have resources left over. However, given imbalanced trade those losing their jobs to foreign competition have had millions fewer jobs to move to. There have been fewer winners and more losers.

No comments: