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The shock of free trade

Free trade has brought great benefits, but its advocates have failed to acknowledge how long the impact on local jobs and communities can last

Many governments and economists have long argued in favour of free trade and globalisation. They are not wrong— global trade has brought prosperity to millions, including those in the world’s poorest countries. But traditional economics says that any damage to local industries caused by foreign competition will be short-lived as workers retrain and acquire new skills. However,The China Shock, a paper published earlier this year, has provoked new debate by arguing that the impact is much longer lasting, causing loss of industries and jobs—and that governments must grasp this point if the unemployed and their communities are not to rot.

We can’t continue to allow China to rape our country, and that’s what they’re doing. It’s the greatest theft in the history of the world.” The words were Donald Trump’s at a rally in Indiana; the subject was the United States’s trade deficit with China.

An abandoned car plant in Detroit: “by the end of 2008, one-third of all the jobs in US manufacturing at the peak had gone, the bulk of them in less than a decade”

The language in which Trump chooses to frame America’s challenges is a large part of why Prospect-reading types recoil from him: again, Trump has gone beyond the pale. But it is arguably also a large part of what attracts his supporters. For there is a perspective from which the “rape” analogy, offensive as it is, captures their experience.

Listen to Trump’s rhetoric, and it cannily expresses a mix of feelings that are probably widespread within his core electoral fishing grounds: the white working class.

He tells them they are being exploited by strangers (by foreign nations, through trade or immigration) and betrayed by those that should have protected them (their own nation’s elites, Republican or Democratic), with a devastating impact on their lives. Associating himself with this feeling of degradation and promising to fight those seen as responsible for it is, no matter how spontaneous it may seem, the carefully cultivated essence of Trump’s campaign.

The political as well as economic establishment shouldn’t have been blindsided by populists like Donald Trump: if many voters have turned anti-establishment, it was the establishment that abandoned them first. For too long, policymakers and economists ignored the high price paid by some for economic changes that were beneficial to most. Developments in global trade have harmed certain sections of western society, whose members were reassured that liberal free trade could only bring economic gains. In fact, with the broad gains came costs concentrated on some communities, and the damage done to local jobs has been more long-lasting than anticipated by traditional economics. Compounding the injury have been technological and political changes harming precisely the same communities.

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About Prospect Magazine

In Prospect’s July issue: In her final issue as Editor Bronwen Maddox explores the legacy of former Prime Minister Tony Blair having spoken with him at a Prospect event on 24th May. She examines his domestic policy, the lessons from Iraq and Afghanistan and what the future holds for the Labour Party. The Chancellor George Osborne lays down his view on why the public should to “Remain” in the EU, and Ian Hargreaves takes a close look at what is happening at the BBC. Also in this issue: Former Conservative leader David Davis suggests he can see a very narrow set of circumstances that might push him towards running for the party leadership again, William Skidelsky writes about why tennis is the best sport and Vanora Bennett looks at Svetlana Alexievich’s extraordinary work recording Russia’s lost voices.