It’s well known that economists are a liberal bunch.
Still, most economists gave Mitt Romney pretty high marks for his economic plan back in 2012. So it’s interesting to note that in a poll by the National Association of Business Economists (NABE) released last week, they seem to have overwhelmingly rejected the GOP nominee.
The NABE poll held Trump’s approval rating at dead last of the candidates at 14 percent… behind even libertarian party candidate Gary Johnson (15 percent). Just for the record, they gave Hillary 55 percent.
According to Marketwatch, the respondees were particularly tough on Trump’s immigration and trade policies:
- 80% say the federal government should remove restrictions on high-skill immigration.
- A majority of economists, 61 percent, say there should be increased immigration more generally.
- On the Trans-Pacific Partnership, 47 percent believe the U.S. should adopt the trade pact in its current form, and another 30 percent say the U.S. should seek more favorable terms. Trump called the TPP “insanity” and declared “that deal should not be supported and it should not be allowed to happen.”
Of course, always take the opinions of economists with a football-sized grain of salt. As Rupert Murdoch supposedly quipped, “economists were created to make weather forecasters look good.”
Still, it’s troubling that an aggregate of 400-odd U.S. business experts are so decisively opposed to a candidate that has tons of business experience and a unique plan to put Americans back to work… especially considering business (i.e. private sector) economists skew much more conservative than their academic counterparts.
But this statistic from the official report may shed some light on the reason business economists seem to have overwhelmingly rejected the Donald…
65 percent said the next president’s trade policy should be “more open/free” while only 9 percent indicated it should be more protectionist.
Trump of course, has made a name for himself asserting the value of massive tariffs, including a massive 20 percent tax on all imported goods.
It seems the idea that all those jobs we “sent to China” can or should be imported back to the U.S. to through a clamp down on free trade doesn’t sit well with business economists.
Probably for good reason.
For all the hand wringing about the decline of America… we’re doing better than ever by most measures.
The U.S. economy has moved on… becoming bigger, better, more productive… and creating far more good for less effort than it did 40 years ago.
If the goal of human civilization is to make all of our lives easier, cheaper, wealthier by making marginal improvements in productivity over time… then we’ve really knocked it out of the park: Food, clothing and shelter have been steadily declining in cost for more than 80 years.
That kind of productivity helps everyone. The fact that even the poorest in the U.S. have to pay a declining fraction of their income on basic commodities is a triumph of economics.
To be sure, there’s always tradeoffs: as we’ve gotten better at producing things, the value of unskilled labor has plummeted. Over the last 35 years the labor share of the workforce has declined significantly as unskilled work has moved overseas.
Can manufacturing ever make a comeback in America? Maybe. But even that may just end up automated in the long run. As China’s own productivity and standard of living improve, many of those jobs will likely to be turned over to robots as well.
Regardless… even though it’s fashionable to be cynical, perspective is still important. Growth is still solid. Technology is opening up new opportunities. America is still the largest economy in the world. And as Chelsea Follet and Christine McDaniels pointed out in Forbes, turning the clock back to the 1950’s probably won’t help the employment situation much.
The Free Market’s Messy Way of Delivering Progress
Chelsea Follet & Christine McDaniels
Stark County, Ohio, is home to more than one manufacturing plant with an empty parking lot. Over the past 15 years, a third of the county’s manufacturing jobs have vanished. Some blame trade and immigration, and now look to a potential Donald Trump presidency as their best hope to turn back the clock to when life was easier.
But was it?
Take today’s American man. Compared to his grandfather, he has a higher life expectancy and a lower chance of his children dying in infancy or his wife dying in childbirth. Not only is American life expectancy at an all-time high, but so is the global average. Many leading causes of death from earlier generations are now rare. In the United States and in other wealthy countries, cancer death rates are declining for both men and women. Heat, tornadoes, hurricanes and lightning kill fewer Americans than in the past. Traffic fatalities per person and per distance traveled are also falling, and children are less likely to be struck and killed by cars. Homicides are at a 51-year low. The data strongly suggest that Americans are safer and healthier than they have ever been.
The current U.S. unemployment rate, at 4.9%, is low by any standard and well within the long-run normal average. (AP Photo/Elise Amendola)
What might be more surprising is that Americans are also better off economically in many ways than their grandparents. The real cost of living in America has declined for most material goods. The best way to measure the cost of something is in terms of a standard that doesn’t change—time at work, or real prices.
The price of nearly every home appliance has plummeted. On an average worker’s salary, a coffeemaker cost 2.25 hours of labor in 1979, but less than a half hour in 2015. That’s an 84% price reduction, even as the variety and quality of available coffeemakers have increased. This pattern holds true for most consumer goods across the board.
Food costs have declined. After adjusting for inflation, a dozen eggs cost $8.01 in 1915 compared to $1.81 in 2015. Thanksgiving dinner costs considerably less today than in decades past. When new technologies are also taken into account, today’s average American is arguably richer than John D. Rockefeller in 1916.
In terms of time—one of our greatest assets—we are also better off. Today’s worker enjoys 70% more leisure time and spends 30% less time working than their grandfather did. And fewer people now receive and die from work injuries as conditions improve and workers move into safer career fields.
At the core of all this progress is a phenomenon called creative destruction, defined by Joseph Schumpeter in 1942 as “the incessant product and process innovation mechanism by which new production units replace outdated ones.”
Consider job flows. In 1900, sawyers, masons and miners were among the top professions. Even recently, one finds entire occupational categories that no longer exist. In 1988, 38,610 people in the country were employed as a “marking clerk.” The advent of scanners eliminated the need for marking clerks, and by 2015 there was no such occupational title.
On the flip side, categories like “occupational therapist” and “occupational safety technician,” which now employ over 243,000 people, did not exist in 1988. If history is our guide, there are emerging categories yet to be added. For instance, one wonders when growing areas like cloud computing or data analytics will have distinct occupational titles.
The make-up of jobs is constantly evolving. Over the past 16 years, the state of Ohio lost nearly 227,000 jobs, and its unemployment rate rose from 4.3 in 1999 to 4.8 in 2015. Our calculations show that roughly 416,000 jobs were created, many in business and finance, healthcare, education, computer and mathematical fields; 642,000 jobs were destroyed, many in production, management, office administration, transportation and construction. Innovation, not trade, destroyed them. At the national level, creation has far outpaced destruction: Roughly 17 million jobs were created and less than 6 million jobs destroyed.
These data points may be of little comfort to someone who has just lost their job. While the destruction can be more visible, the process of creative destruction ultimately creates far more than it destroys. The current U.S. unemployment rate, at 4.9%, is low by any standard and well within the long-run normal average.
Innovation largely drives this transformative albeit disorderly process. Limiting our ability to buy or sell goods and services with other countries could cost middle class Americans 29% of their purchasing power without reducing unemployment.
Creative destruction is the free market’s messy way of delivering progress. It is the one constant in capitalism, which has created more prosperity than any other economic system yet tried. Even in Stark County, Ohio, a man is better off than his grandfather. And his son or daughter will ultimately be better off still.
Creative destruction delivers progress. No one said it wasn’t messy though.
P.S: This artical originally appeared on Forbes