Over at the WaPo, Greg Sargent posts a video of Donald Trump answering a question from someone who’s a college grad without a job:
“I recently graduated magna cum laude with a BS in chemistry and I’m having a lot of trouble finding a job. What’s your plan to bring jobs back to America?”
Greg focuses on the candidate’s difficulty staying on topic, and wonders if this could create a challenge for him in Sunday night’s town hall debate, where I expect we’ll hear a number of questions like this one.
I’d like to focus on what Trump said during the few moments wherein he actually addressed the question.
To Trump’s credit, he starts by acknowledging the college-debt problem, which is of course most serious when you can’t get a job (or when you fail to graduate from a real school). For the record, I’m not aware of a Trump plan to deal with student debt burdens beyond getting the government out of the lending business and “doing something with extensions and low-interest rates.” (Hillary Clinton has a plan, of course, accompanied by—you guessed it!—a fact sheet.)
But he quickly pivoted to trade: “Our really good jobs are gone and they’ve gone to other countries. And so many countries are making our products…I want to see the day when Apple will make their iPhones in this country instead of making them in China and Vietnam and all over the place.”
OK, hold up there. I’ve been a strong critic of our trade policy and the impact of our decades of trade deficits. But both in theory and practice, the costs of these problems tend not to fall on those with advanced degrees, particularly those in STEM fields. When we trade with low-wage countries like the ones Trump mentioned, the workers most likely to get hurt are those who can be replaced by factory workers abroad. The “factor price” in the rich country—in this case, the US blue-collar wage—is pushed down by such competition.
It’s one of the ways you get the pattern you see in the figure below, where real, blue collar compensation here has been flat for thirty years. The folks in that slide are not high-end chemistry grads. The other line in the figure is the trade deficit as a share of GDP, so Trump is not wrong to raise these concerns. No question: a smaller trade deficit would deliver faster growth and stronger labor demand, which would be helpful to all workers, though Trump’s vague plans to get there–35-45 percent tariffs–are far more worrisome than reassuring.
Consider also China’s role in iPhone production: they assemble them (more precisely, workers at the Foxconn plant in Shenzhen assemble them). Is that the big plan: let’s bring those assembly jobs back here? And again, how does that help the questioner? (Though to be fair, that is the way the questioner teed up the question, asking Trump how he was going to “bring jobs back to America.”)
None of this is to deny the problem of trade deficits that are today -2.7 percent of GDP at a time when slow growth is real problem for us, the Federal Reserve is thinking about raising rates (which, by further strengthening the dollar, is likely to deepen the trade deficit), and the Congress is doing nothing to help. Nor is it to deny challenges facing college graduates. As wage analysts at EPI recently wrote: “While young graduates’ economic prospects have brightened in recent years, they still face elevated unemployment rates and stagnant wages.”
But even he could do so, which he can’t, Trump’s plan to bring back consumer electronic assembly jobs from China won’t help people like the person who asked this question, anymore than it will help factory workers who’ve lost higher value-added jobs than what they’re doing at Foxconn (what will help them? Read this). Just because your only tool is a hammer doesn’t make every problem a nail.