North Korea: Witness to Transformation

The Political Economy of Trade: II

Does Trade Matter for the Vote?

Stephan Haggard (PIIE)

Yesterday, I reviewed speeches on economic policies by the two main candidates for the presidency. Today I look at a new study that raises the question of whether individuals’ support for Donald Trump is tied to exposure to imports or vulnerability to offshoring. Contrary to received wisdom, the answer appears to be “no,” although local economic decline does appear to play a role.  

My interest in trade does not hinge solely on policy proposals but on politics. This election season is witnessing tectonic shifts between the parties on trade. As I pointed out in an earlier post on a Pew study, the base of the Democratic party actually appears more internationalist than the base of the Republican party at this moment, reflecting a huge fissure on the issue between market-oriented Republicans and the party’s new, more populist base. But does support for Donald Trump at the individual level really rest on the adverse effects of globalization? A major new study by Jonathan Rothwell, senior economist at Gallup, suggests that the answer may be “no.”

The study is based on a Gallup Daily Tracking survey from last summer covering over 85,000 respondents; the key question was whether they held a positive view of Donald Trump over the survey period. The basic model of support for Mr. Trump includes both characteristics of large “commuting zones” in which respondents reside—about 700 geographic areas sharing common market characteristics—as well as individual level characteristics, including not only exposure to trade but other parameters such as income, health and attitudinal factors. Not surprisingly, Trump supporters are more conservative than other Republicans and more hostile to free trade. And workers in blue collar occupations (defined as production, construction, installation, maintenance, and repair, or transportation) are far more likely to support Trump, as are those with less education.

But one surprising finding of the study is the ambiguity of other individual-level demographic factors in predicting Trump support, including income and even employment. The standard view is that Trump garners support from lower-middle income voters among whom wage growth has been stagnant for two decades. In fact, Trump support is positively associated with income both overall and among whites although not among white non-Hispanic Republicans; the effect of membership in this group is not significant. Put differently, income doesn’t seem to matter or if it does, it is positively associated with Trump support, probably because of the generally higher incomes of Republicans.

So what does and doesn’t matter for predicting support for Mr. Trump? As the report summarizes, a number of features of the commuting zones in which people live are significant. First, “racial isolation and lack of exposure to Hispanic immigrants raise the likelihood of Trump support. Meanwhile, Trump support falls as exposure to trade and immigration increases, which is the opposite of the predicted relationship” (emphasis added). This finding is nothing short of stunning: it suggests that neither inter-racial contact, nor exposure to immigration nor globalization matter for Trump support. Rather some more generalized racial, ethnic and economic anxiety is likely at work.

This is confirmed by the fact that a number of sociotropic concerns matter. The study finds that social well-being measured at the commuting zone level by life expectancy and intergenerational mobility are significant; the worse-off commuting zones are on these measures, the greater the support for Trump. The share of manufacturing at the commuting zone level, by contrast, has no effect on support for Trump and even appears to result in more support for Clinton in line with the findings of the Pew study cited above.

Credit where credit is due; as Rothwell notes, these findings comport with a classic 2009 piece by Ed Mansfield and Diana Mutz at International Organization, entitled “Support for Free Trade: Self-Interest, Sociotropic Politics, and Out-Group Anxiety” (link to Cambridge UP journals here). What this study shows to me is that our thinking about the political economy of trade has been captured for too long by simple economic models that predict higher support for protection and protectionist candidates as a result of exposure to trade. There are certainly studies yielding such findings, but the results of Rothwell suggest that the foundations of support for Mr. Trump are a much more complex story than is commonly portrayed, mixing together anxiety about multiculturalism (although not exposure to it) and broader economic distress in communities rather than reflecting a narrow response to respondents’ own economic circumstances. The full implications of these findings go far beyond what can be explored here. But they are certainly consistent with the unsettling features of both Trump’s campaign and the welfare of lower income deciles; that stirring racial and ethnic anxiety and opposition to globalization has appeal among those who are doing OK, but are located in communities that have seen the incomes of neighbors fall and inter-generational mobility dry up. The anxieties of these citizens is not irrational; it reflects the legitimate fear that their well-being is fragile and vulnerable to reversal.

Donald Trump’s Seven Point Trade Plan

A Trump Administration will change our failed trade policy – quickly. Here are 7 steps I would pursue right away to bring back our jobs.

One: I am going to withdraw the United States from the Trans-Pacific Partnership, which has not yet been ratified.

Two: I'm going to appoint the toughest and smartest trade negotiators to fight on behalf of American workers.

Three: I'm going to direct the Secretary of Commerce to identify every violation of trade agreements a foreign country is currently using to harm our workers. I will then direct all appropriate agencies to use every tool under American and international law to end these abuses.

Four: I'm going tell our NAFTA partners that I intend to immediately renegotiate the terms of that agreement to get a better deal for our workers. And I don't mean just a little bit better, I mean a lot better. If they do not agree to a renegotiation, then I will submit notice under Article 2205 of the NAFTA agreement that America intends to withdraw from the deal.

Five: I am going to instruct my Treasury Secretary to label China a currency manipulator.

Any country that devalues their currency in order to take advantage of the United States will be met with sharply.

Six: I am going to instruct the U.S. Trade Representative to bring trade cases against China, both in this country and at the WTO. China's unfair subsidy behavior is prohibited by the terms of its entrance to the WTO, and I intend to enforce those rules.

Seven: If China does not stop its illegal activities, including its theft of American trade secrets, I will use every lawful presidential power to remedy trade disputes, including the application of tariffs consistent with Section 201 and 301 of the Trade Act of 1974 and Section 232 of the Trade Expansion Act of 1962.

Election Watch: Witness to Transformation posts on the contest for the presidency:

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