Well, is our economy larger or smaller than it was in 1994?
Well, is our economy larger or smaller than it was in 1994?
The economy is larger but so is the population and there has been inflation as well. It is more instructive to compare the growth rate of the US economy for the 20 year period prior to trade liberalization to the growth rate since.
In the 20 year period from 1974 to 1994 the US economy (nominal GDP in 2013 dollars, adjusted for inflation) grew by 371.9%. The US population grew by 23% during that 20 year period. The economic growth rate of the most recent 20, when the US has been exporting its industrial infrastructure, is only 1/3 of the economic growth rate of the previous 20 years when US industry was protected with higher tariff rates and quotas on imports.
During the 20 year period from 1994 to 2014 the US economy (nominal GDP in 2013 dollars) grew by 129% or 1/3 the rate of the previous 20 years. During this period the US population grew by 20%.
Currently the average tariff applied by China (mean of tariff applied to all imports) is 4.5%. For the USA it is 1.5%. With respect to apparel specifically the average rate on clothing imports into China is 10% to 23%. The average duty rate applied by the US on imports of clothing ranges from 1.2% to 16%. In addition, the Chinese government provides an export credit (i.e. direct subsidy) to its domestic factories of on the value of exports, as well as tax incentives and other direct subsidies for capital improvements, advertising, brand development, R&D. This is the “free trade” system we are operating under. US tariffs 1/2 or less than the foreign competitor, the foreign competitor is heavily and directly subsidized by its government, and the foreign competitor’s effective tax rate is 1/2 or less that of the US competitor. This is before lower labor rates and lighter regulation is factored in.
If we continue practicing this type of “free trade”, we will continue to lose jobs, our economic growth rate will continue to slow, our economy will be unable to supply jobs for all of the immigrants we are allowing into the country, and we will become a third world nation within a generation.
Please do provide the Cato or Heritage reports you were referencing. I’d like to see their take on the hard data.