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Buchanan, Trade, and Prosperity
A Reaction to an Op-Ed, "Buchanan for President",
written by Thomas L. Friedman on 12/24/95
Associate Professor of Economics
University of California at Berkeley
Berkeley, CA 94720
(510) 643-4027 phone
(510) 642-6615 fax
I can't stand it.
I open my New York Times on Christmas Eve, and find Thomas Friedman
writing: "Give old Pat [Buchanan] credit....[He] is painting a vivid
picture for people, explaining why they feel insecure.... Mr. Buchanan has
properly diagnosed our anxiety. Friedman--and the person he quotes extensively,
Michael Sandel--tell us many things: the global economy has disrupted the
economic foundation of people's lives; Mexicans working for 50 cents an
hour have taken their jobs; traditional Republicans and Democrats have failed
to address the troubling impact of the global economy and rapid technological
change on people's lives; that average U.S. wages last year saw the poorest
performance on record.
Mr. Friedman provides a weak-tea dissent from Buchanan's policies--which
are, for unspecified reasons, likely to "lead only to economic ruin
and a politics of resentment." But there is not even a whisper of criticism
in Friedman's claim that Buchanan has "diagnosed what's troubling Americans
these days--the impact of the global economy and rapid technological change
on their lives."
Leave technological change (which appears to be slower these days
than in the 1920s, or the 1950s, or the 1960s) for another time. And ask
just how the global economy is supposed to have done all these bad things
in the past two decades.
In 1975, the average non-oil import came from a country where the manufacturing
wage was 60% of the U.S. level. By the early 1990s the average non-oil import
came from a country where the manufacturing wage was 75% of the U.S. level.
How can this be? Consider: In 1975 Japan was a low-wage economy: its manufacturing
wage was less than half of our manufacturing wage level. Today Japan is
a high-wage economy: its manufacturing wage is higher than the U.S. In 1975
Taiwan, Singapore, and Korea were very low-wage economies with wage levels
one-twentieth that of the United States. Today their manufacturing wage
levels are about a third of the American standard. Because our trading partners
are growing richer faster than new low-wage trading partners are appearing,
the average wage in countries trading with the U.S. is increasing rapidly.
Doesn't this mean that international trade was placing more downward pressure
on American wages in 1975 than it is today? Doesn't this mean that the changing
international economy has on net exerted upward pressure on American
wages over the past two decades?
There are lots of causes of the near-stagnation in middle-class, the decline
in working-class, and the collapse in underclass American living standards
over the past two decades. An educational system that has failed to keep
up with the computer revolution and thus created a gap between what the
average student is taught and what an increasing fraction of entry-level
white-collar workers need to know; the destruction of the American union
movement as a result of the national and regional recessions of the 1980s
and changes in how labor laws were enforced; declines in the minimum wage
and in the real level of public assistance; the decline in public investment;
most important, perhaps, the increase in divorce and thus in the number
of single mothers facing a very difficult challenge (isn't it an interesting
measure of sociological change that this year both of the leading challengers
to President Clinton, Senators Dole and Gramm, have been divorced, the first
time in American history that this has been true?)--all these are plausible
candidates for major shares of the responsibility.
However, Mr. Buchanan chooses to blame "furriners": the case that
world trade has played a role in widening America's income and wealth inequality
may be extremely weak, but furriners don't vote. Besides, they talk
Mr. Friedman does us no good service when he swallows Buchanan's premises
without even a hint of complaint.
Go to Brad DeLong's Home
Associate Professor of Economics Brad De
Long, 601 Evans
University of California at Berkeley; Berkeley, CA 94720-3880
(510) 643-4027 phone (510) 642-6615 fax