Michael Stumo, CEO of CPA, wrote a letter to the editor regarding the article: Long-Simmering Anger About Trade Is Boiling Over for Voters in New York Times. His response was published.
There is an old joke about a shipwrecked economist advising his stranded colleagues how to open a can of food by saying “assume we have a can opener.” The dwindling number of economists who unquestioningly support more trade agreements assume untrue facts to support their belief.
Trade agreements produce more gains than losses under rare circumstances. First, there must be full employment so workers losing jobs gain equivalent jobs next week. Second, there must be no currency manipulation that distorts the relative price of imports to domestic goods and services. Third, trade must remain balanced so import job losses are offset by export job gains.
Because those factors usually do not exist, the losses from trade deals often exceed any gains. Thus, cheaper goods do not compensate for the lost income from job losses and depressed growth. This is standard macroeconomics. It also happens to be the reality voters live in. If we do not have a can opener, we will not believe economists when they tell us to assume we have one.
MICHAEL STUMO
