Regardless of your views of free trade versus trade
protectionism, with our changing administrations the change in trade policies
will likely be very disruptive to workers.
Tim
Worstall in Forbes (December 26, 2016) writes about the
considerable disruption any sort of trade policy change causes – whether
protectionist or free trade.
Worstall cites Nobel Prize Laureate Paul
Krugman’s latest New York Times op-ed:
“What the coming trade
war will do, however, is cause a lot of disruption. Today’s world economy is
built around “value chains” that spread across borders: your car or your
smartphone contain components manufactured in many countries, then assembled or
modified in many more. A trade war would force a drastic shortening of those
chains, and quite a few U.S. manufacturing operations would end up being big
losers, just as happened when global trade surged in the past.”
(An important
note: Krugman won his Nobel prize in
Economics for his work on world trade.)
Worstall also cites a scholarly study done on the impact
of free trade:
“China’s emergence as
a great economic power has induced an epochal shift in patterns of world trade.
Simultaneously, it has challenged much of the received empirical wisdom about
how labor markets adjust to trade shocks. Alongside the heralded consumer
benefits of expanded trade are substantial adjustment costs and distributional
consequences. These impacts are most visible in the local labor markets in
which the industries exposed to foreign competition are concentrated. Adjustment in local labor markets is
remarkably slow, with wages and labor-force participation rates remaining
depressed and unemployment rates remaining elevated for at least a full decade
after the China trade shock commences. Exposed workers experience greater
job churning and reduced lifetime income. At the national level, employment has
fallen in U.S. industries more exposed to import competition, as expected, but
offsetting employment gains in other industries have yet to materialize.” (Italics added for emphasis.)
Worstall’s (and
Krugman’s) conclusion is that free trade is a good thing, but really that’s
beside my point.
If you are educating
young people, the crucial idea here is
that every time the political/economic winds shift, there will be employment
disruption. How do we prepare our kids
for this eventuality? The winners
will be those who can adapt quickly. And
the consequences of losing are likely to be much more difficult.
I can think of two occasions
where either the Democratic (1994) or Republican (2008) party were declared dead
on arrival, and I certainly don’t buy the idea that the Democratic party is
dead today. It seems
reasonable that the political winds will shift once again.
I distinctly remember
reading an article way back in 1992 to the effect that, economically, it really
did not matter who won that election: Either
President (George H.W.) Bush or President Clinton would be forced into similar economic
policies (e.g. smaller government/deficits, free trade) or the United States
would suffer significant punishment in the world markets.
With the Trump
administration, that is clearly no longer the case. Whether you agree or
disagree with these changes, clearly significant changes are coming
economically. And these will be disruptive, period.
Thus, the long-run
question for Christian education – Can we
train up children who can readily adapt and change when the political and
economic winds shift?
Already anticipating
this rapidly-changing economic world in the late 1990s, former Labor Secretary
Robert Reich proposed a three-part recipe for career success:
(1) Work full-time with an employer who will develop skills in you that
are readily transferable to other labor domains,
(2) Simultaneously, develop a part-time entrepreneurial enterprise to “fall
back on” if needed, and
(3) Pursue your ultimate “dream job” scenario with remaining available time.
(3) Pursue your ultimate “dream job” scenario with remaining available time.
I actually followed
his advice, which is why, back in 2000, I was able to launch GraceWorks. And I continue to pursue (3) in my
not-so-spare time.
The point being, what Reich
suggests is a workable strategy, and it is hard.
BUT ... entrepreneurship is actually declining with young people in the United States, according to an important just-released economic report by the Gallup organization.
BUT ... entrepreneurship is actually declining with young people in the United States, according to an important just-released economic report by the Gallup organization.
What are we doing, as
Christian schools, to help our Jacks (and Jills) be nimble and quick in our
rapidly changing economic world? Because rest
assured, it is going to keep changing.
At a minimum, we have
to get our entrepreneurial parents and supporters in the classrooms. We must!
(C) 2016 Daniel Krause All Rights Reserved