Published March 11, 2018
President Trump’s proposed tariffs on steel and aluminum are bad economics. Free trade benefits America and its trading partners. But Mr. Trump is right that it doesn’t benefit everyone. Supporters of global trade ought to think about other measures governments can take to reduce the pain many individuals and communities experience.
Economists have documented the negative effect increased trade, especially with China, has had on American employment. Gordon Hanson, David Autor and David Dorn have found that Chinese accession to the World Trade Organization caused the U.S. to lose more than a million manufacturing jobs. Their work was corroborated by researchers at the University of Maryland, who estimated the total job loss at 1.75 million since 1999 because of increased trade with China.
This has political salience. The Pew Research Center found last year that only 36% of Republicans thought free-trade agreements were good for America. Among Trump primary voters, the proportion was only 27%. Republicans who oppose tariffs must face the reality that their supporters want action to mitigate trade’s downside.
Fortunately, there are alternatives to protectionism. Expanding vocational education is one. Many employers say they can’t find workers with job-specific skills. Trade-friendly Republicans could sponsor an expansion of such training, in high schools and for workers who need retraining. One model is the Swiss system, which combines subsidies with local control and strong business input to design curricula that meet regional skill demands.
Redesigning the haphazard social safety net is also crucial. Unemployed people in low-growth areas do not get information about good jobs elsewhere. If we can track packages instantly throughout the world, why shouldn’t an out-of-work coal miner in West Virginia learn about similar jobs open in Wyoming?
Entitlements like Medicaid, food stamps and housing vouchers should also be made portable across state lines for short periods of time to encourage people to move for work. Currently, a person who receives one of these benefits has to reapply and go without for a time when he moves to a different state. That in turn encourages employers to turn a blind eye to illegal aliens, often the only readily available workers.
Congress might also consider wage subsidies or location-specific tax breaks for employers. Given the choice between tariffs and either topping off an $8-an-hour wage in rural Maine or subsidizing Carrier to stay in Indiana, both forms of subsidy look attractive.
Free trade is the cornerstone of a market economy. But just as employers learned last century that they had to offer workers’ compensation and unemployment insurance to take the rough edges off an industrial economy, free-trade advocates must recognize the need to ensure that as many people as possible don’t get left behind.
Mr. Olsen is a senior fellow at the Ethics and Public Policy Center, editor at UnHerd.com and author of “The Working Class Republican: Ronald Reagan and the Return of Blue-Collar Conservatism.”
