Donald Trump should shut up about China and start railing against robots
Donald Trump really likes to talk about China.
But here's the thing: Trump has a point. An important new study at least partially supports his claim that America's trading relationship with China in the 2000s has been a "bad deal" for some U.S. workers. In their paper, "The China Shock," economists David Autor, David Dorn, and Gordon Hanson find that some American communities where manufacturing jobs moved to Asia never really recovered. Economic models predicted labor markets would eventually adjust, but they didn't. Unemployment rates remained elevated, worker incomes depressed. And in that sense, the GOP presidential frontrunner is right to blame China for some of America's economic woes.
But here's the part of the story that Trump — and other trade-skeptical politicians like Bernie Sanders — miss: The China trade shock is pretty much yesterday's news. As the researchers conclude, "The great China trade experiment may soon be over, if it is not already. The country is moving beyond the period of catch-up associated with its market transition and becoming a middle-income nation. Rapidly rising real wages indicate that the end of cheap labor is at hand."
Not only is employing Chinese factory workers getting more expensive, but there are fewer of them available, which in turn feeds wage growth. China's working age population is in steep decline, falling by nearly five million last year. Overall, manufacturing employment seems to have peaked more than a decade ago.
In response, China is making a huge automation push. Beijing planners view advanced robotics as key to raising productivity and keeping economic growth strong as the country transitions to a more service-based economy. It's already happening, actually. The nation is on pace to soon have more industrial robots than any other advanced economy. Foxconn, a Taiwan-based company that employs over a million workers to assemble iPhones and other Apple products in mainland China, wants robots to take over 70 percent of its assembly work within three years.
So when Trump says he wants to force Apple to make its products in America, what he's really unintentionally saying is that he wants American robots to do the work of Chinese robots. President Trump can raise all the tariff walls he wants — manufacturing jobs lost to Asia aren't coming back in any sense that Trump means. Going forward, it's automation, not globalization, that poses the bigger risk to the economic security of the American labor force. And unlike off-shoring, robots and super-smart software will affect both manufacturing and service jobs.
Oxford University researchers Carl Benedikt Frey and Michael Osborne reckon that 47 percent of U.S jobs are at "high risk" of automation in the next two decades. Particularly threatened are jobs in transportation and logistics, as well as office and administrative support. Who thinks three million Americans will still be driving trucks 15 or 20 years from now? Looking at automation slightly differently, McKinsey finds that 45 percent of the activities that workers do "can be automated by adapting currently demonstrated technologies." And the World Economic Forum predicts robots and artificial intelligence will result in a net loss of 5.1 million jobs over the next five years in advanced economies.
Some presidential candidates, most notably Marco Rubio, have talked about automation risk. But not Trump. One can only speculate why.
Perhaps he's unaware of the technological changes sweeping our industries. Real estate development, self promotion, and reality-show hosting aren't exactly bleeding-edge sectors. Or maybe Trump's mental clock stopped decades ago. His trade complaints against China today are the same as his tirades against Japan in the 1980s. Indeed, he is still kvetching about Japan even though that country's economy has been stagnant for a generation.
Then again, dealing with the rise of the robots doesn't really play to Trump's supposed skill set. With technological change, there's no one with whom to negotiate or cut a savvy deal. It's not a matter of smart foreigners exploiting our stupid or corrupt (or both) leaders. Instead what's required is sophisticated policymaking, such as modernizing the safety net and reforming education so workers can fill new economy jobs and make automation work to their gain.
Automation also makes for weak demagogue material. "Smash the machines" hasn't been a successful rallying cry in about 200 years, though some anti-Uber taxicab companies are giving it a try.
And sadly for Trump, no matter how big or beautiful a wall you build, you just can't keep out everything — whether it's immigrants, imports, or the future.