Blog Post

The trade-backlash explanation of Trump & Sanders

What’s at stake: The success of presidential candidates Donald Trump and Bernie Sanders has had bloggers wondered whether the backlash against globalization is eventually getting political traction.

By: Date: March 21, 2016 Global Economics & Governance Tags & Topics

A working-class revolt against globalization

Jordan Weissmann writes that the near-simultaneous rise of Donald Trump and Bernie Sanders has often been described as working-class revolt against globalization and free trade—a bipartisan protest by blue-collar voters who are angry after watching factory after factory close thanks to foreign competition. Eduardo Porter writes that voters’ anger and frustration may not propel either candidate to the presidency. But it is already having a big impact on America’s future, shaking a once-solid consensus that freer trade is, necessarily, a good thing.

Paul Krugman writes that it’s true that much of the elite defense of globalization is basically dishonest: false claims of inevitability, scare tactics vastly exaggerated claims for the benefits of trade liberalization and the costs of protection, hand-waving away the large distributional effects that are what standard models actually predict.  The elite case for ever-freer trade is largely a scam, which voters probably sense even if they don’t know exactly what form it’s taking.

Jordan Weissmann writes that researchers have found that Americans who live in parts of the country where industry has been hit hardest by foreign imports tend to vote against incumbent presidents. After two decades of free-trade consensus from both parties, Sanders, who dares describe himself as a democratic socialist, and Trump, who is Donald Trump, are campaigning as the ultimate anti-incumbents.

Explaining Michigan

Paul Krugman writes that a widespread guess for the Sanders win in Michigan is that his attacks on trade agreements resonated with a broader audience than his attacks on Wall Street and this message was especially powerful in the former auto superpower. Meanwhile, Donald Trump, while directing most of his fire against immigrants, has also been bashing the supposedly unfair trading practices of China and other nations.

Eduardo Porter writes that in a recent study, three economists — David Autor, David Dorn and Gordon Hanson — argue that local economies do not quickly recover from trade shocks. In theory, a developed industrial country like the United States adjusts to import competition by moving workers into more advanced industries that can successfully compete in global markets. The authors examined the experience of American workers after China erupted onto world markets some two decades ago. The presumed adjustment, they concluded, never happened. Or at least hasn’t happened yet. Wages remain low and unemployment high in the most affected local job markets. Nationally, there is no sign of offsetting job gains elsewhere in the economy.

Evan Soltas writes that it’s certainly plausible that Trump’s and Sanders’ strong performances in the Michigan primary are manifestations of a protectionist backlash. Using David Dorn’s data on local declines in manufacturing and vote data from the Michigan Bureau of Elections, Soltas finds that the protectionist-backlash explanation of Trump and Sanders does not seem to hold up:

  • Trump performed most strongly in areas where manufacturing’s decline has been least important. Where manufacturing’s decline was most intense, Trump received about 30 percent of the Republican vote, and where it was lightest, he received about 50 percent of the Republican vote.

bebr 1

  • Sanders’ county-level vote share in the Democratic primary is not significantly correlated with that county’s change in manufacturing employment.  No matter how intense the local decline in manufacturing, Sanders won about half the Democratic vote.

Manufacturing dis-employment and southern swing to the Republican Party

Gavin Wright writes that in contrast to popular belief the South only experienced a regime change in regional politics in 1994. In that year the Republicans gained control of the House of Representatives for the first time since the 1950s. The relatively sudden shift in partisan balance is often attributed to the redistricting decisions of the early 1990s. But the decline applies for states, whose boundaries did not change.

bebr 2

Gavin Wright writes that much of the South experienced wrenching economic dislocation at precisely this time, as the manufacturing industries that had formed the core of the regional economy began their historic descent in response to import competition. The leading contributors were textiles and apparel, industries in which employment fell far more rapidly than U.S. manufacturing generally. There is ample testimony that deindustrialization and economic stagnation have been the dominant facts of life for white southerners in recent decades. The travel writer Paul Theroux spent three years traveling in the South and reported: “if there is one experience of the Deep South that stayed with me it was the sight of shutdown factories and towns with their hearts torn out of them, and few jobs. There are outsourcing stories all over America, but the effects are stark in the Deep South…I found towns in South Carolina, Mississippi, Alabama, and Arkansas that looked like towns in Zimbabwe, just as overlooked and beleaguered.”

bebr 3


Republishing and referencing

Bruegel considers itself a public good and takes no institutional standpoint. Anyone is free to republish and/or quote this post without prior consent. Please provide a full reference, clearly stating Bruegel and the relevant author as the source, and include a prominent hyperlink to the original post.

View comments
Read article More on this topic More by this author

Blog Post

Silvia Merler

Big in Japan

What’s at stake: This week saw two important Central Banks’ meetings, whose outcomes could hardly be more different. While the U.S. Federal Reserve left interest rates unchanged, the Bank of Japan introduced a big shift in its easing framework. BOJ committed itself to overshoot its inflation target of 2 percent, and introduced a targeting of the yield on ten-year Japanese government debt, initially at about zero percent. We review the economic blogosphere reaction to this latest monetary policy action.

By: Silvia Merler Topic: Global Economics & Governance Date: September 26, 2016
Read article More on this topic More by this author

Blog Post

Silvia Merler

The US infrastructure investment debate

What’s at stake: Infrastructure investment has been and will continue to be a prominent campaign theme in the run up to the US elections. Both Hillary Clinton and Donald Trump have promised significant public investment in infrastructure. For some time, the discussion has revolved around the opportunities and costs of increased government infrastructure spending.

By: Silvia Merler Topic: Global Economics & Governance Date: September 19, 2016
Read article More on this topic More by this author

Blog Post

Silvia Merler

The Apple of Discord

What’s at stake: On August 30th, following the results of an in-depth state aid investigation started in 2014, the European Commission concluded that Ireland granted undue tax benefits of up to €13 billion to Apple. The decision is based on state aid grounds: the Commission argues that two tax rulings issued by Ireland effectively granted Apple preferential treatment, which amounted to state aid. The Commission ordered Ireland to recover up to €13 billion (plus interest) from Apple, but the decision is controversial and opinion differ as to the effects it will have. We summarize reactions.

By: Silvia Merler Topic: Innovation & Competition Policy Date: September 12, 2016
Read article More on this topic More by this author

Blog Post

Silvia Merler

Post-Jackson Hole low morale

What’s at stake: this year’s edition of the Jackson Hole symposium was awaited as an occasion to discuss how to redesign monetary policy for the future. We documented the state of academic and policymaking discussion on the topic in a previous review. But it seems the meeting has left many with the impression the Fed is not yet ready to start “rethinking normality”.

By: Silvia Merler Topic: Global Economics & Governance Date: September 5, 2016
Read article More on this topic More by this author

Blog Post

Jérémie Cohen-Setton

The fiscal stance puzzle

What’s at stake: In a low r-star environment, fiscal policy should be accommodative at the global level. Instead, even in countries with current account surplus and fiscal space the IMF appears to have trouble advocating fiscal expansion. This also raises a political economy puzzle regarding the persistence of the current policy mix of tight fiscal and easy money.

By: Jérémie Cohen-Setton Topic: Global Economics & Governance Date: August 29, 2016
Read article More on this topic More by this author

Blog Post

Jérémie Cohen-Setton

The Fed’s rethinking of normality

What’s at stake: As we approach Jackson Hole, monetary policymakers are considering how to redesign monetary policy strategies to better cope with a low r-star environment.

By: Jérémie Cohen-Setton Topic: Global Economics & Governance Date: August 22, 2016
Read article More on this topic More by this author

Blog Post

Jérémie Cohen-Setton

The state of macro redux

What’s at stake: In 2008, Olivier Blanchard argued in a paper called “the state of macro” that a largely shared vision of fluctuations and of methodology had emerged. With the financial crisis and our inability to prevent the greatest recession since the 1930s, the discipline entered into a period of soul searching. The discussions on the state of macro received new echoes this week after Blanchard published a short essay on the future of DSGE models.

By: Jérémie Cohen-Setton Topic: European Macroeconomics & Governance Date: August 16, 2016
Read article More on this topic More by this author

Podcast

Podcast

What can the eurozone learn from US monetary history?

Many in the EU look to the USA as a model for monetary union in the Eurozone. But how easy was it to create such a union, and what can Europe learn from the USA’s experience?

By: Bruegel Topic: Global Economics & Governance Date: August 12, 2016
Read article More on this topic More by this author

Blog Post

Jérémie Cohen-Setton

Racial prejudice in police use of force

What’s at stake: This week was dominated by a new study by Roland Fryer exploring racial differences in police use of force. His counterintuitive result that blacks and Hispanics experience discrimination for all types of interaction involving force except for officer involved shootings provoked debate after the study was published on Monday.

By: Jérémie Cohen-Setton Topic: Global Economics & Governance Date: July 18, 2016
Read article More on this topic More by this author

Blog Post

Jérémie Cohen-Setton

The great risk shift and populism

What’s at stake: For many commentators, Brexit was the signal of a broad populist backlash and illustrated the need to articulate policies that address the grievances of those citizens who have been left behind by recent economic changes.

By: Jérémie Cohen-Setton Topic: European Macroeconomics & Governance Date: July 11, 2016
Read article More on this topic More by this author

Blog Post

Dalia Marin

Inequality in Germany – how it differs from the US

The pay gap between workers and CEOs in Germany is driven by a lack of managers. Income inequality could fall if there were more managers available for companies to hire. Firms should start hiring more CEOs who are women or from abroad.

By: Dalia Marin Topic: European Macroeconomics & Governance Date: July 5, 2016
Read article More on this topic

Blog Post

Alvaro Leandro
jaume

Spanish unemployment and the effects of the 2012 labour market reform

What’s at stake: Spain is currently the EU country with the second highest level of unemployment, after Greece. The high and persistent level of unemployment and the appropriate labour market reforms are a major topic of discussion in Spain. We review arguments made in the blogosphere and by international organisations on the reasons for Spain’s stubbornly high unemployment, and various assessments of the labour market reforms of 2012.

By: Alvaro Leandro and Jaume Martí Romero Topic: European Macroeconomics & Governance Date: July 4, 2016
Load more posts