Gene Epstein‘s latest “Economic Beat” column for Barron’s assesses the economic literary of Republican presidential candidate Donald Trump and Democratic candidate Bernie Sanders.
Political campaigns can breed strange bedfellows, especially when it comes to China-bashing, a popular sport. Running for re-election in fall 2012, President Obama congratulated himself for having ensured that “China was not flooding our domestic market with cheap tires,” claiming that he thereby saved “1,000 jobs,” while condemning his Republican challenger as “the last person who’s going to get tough on China.”
Possibly inspired by how getting-tough-with-China talk can win elections, Democratic presidential candidate Bernie Sanders has complained that the Chinese are “stealing” American jobs. And last week, commenting on the devaluation of the yuan by China, Republican presidential candidate Donald Trump fumed that “China has gotten rich off us. China has rebuilt itself with the money it’s sucked out of the United States and the jobs it’s sucked out of the United States.”
The underlying theme of these demagogic discourses on crackpot economics: Bash an unpopular national group while claiming that it’s all done out of compassion for the jobs of ordinary folk. Conveniently forgotten is that people of limited means are not only workers, but consumers who benefit from cheap imports. Since consumer interests are dispersed, however, and labor union interests politically concentrated, stiffing the consumer is a not-my-problem for these politicians.
Obama might have been asked whether keeping out cheap tires to create more jobs in U.S. tire factories also justified such measures as outlawing used tires—which, like low-priced imports from China, were also “flooding our domestic market.” As for Trump’s idea that America’s money has been “sucked out” by purchasing the cheaper output of Chinese labor, one can only wonder how the real estate tycoon proved a sucker for this principle in his own business dealings. Did he really spurn cheaper suppliers of materials to erect his buildings, in the belief that they would be sucking his money?
China has gotten rich off us? In fact, most of China’s citizens would still regard as unimaginably rich what the U.S. officially defines as poverty. To the extent that the Chinese are living better than they used to, it has not come from exploiting the U.S. It has come from a turn toward market-oriented institutions, and away from a state of virtual socialism. The Fraser Institute’s Economic Freedom Index for China, which tracks indicators that reflect such free-market factors as degree of regulation, rule of law, and property rights, has vaulted more than 75% since 1980.
