Economist Art Laffer:
“China is a huge plus to the U.S. because without China there is no Walmart, and without Walmart there is no middle class or lower class prosperity in America.”
Actually, the US was known for broad-based prosperity long before either Walmart or China was a significant factor. It was really only in the 1980s that Walmart’s expansion really took off…and it was then by no means as China-dependent as it has more recently become. Indeed, starting in 1984 and extending at least through the early 1990s, Walmart was a strong supporter of the Crafted with Pride in the USA campaign, which was launched by textile entrepreneur Roger Milliken, among others.
China’s presence in the global marketplace was greatly expanded by the Permanent Normal Trade Relations bill, which was signed by President Clinton in October 2000, as well as by China’s own economic-liberalization policies. (Some data on the growth of Chinese exports over time, here)
Real mean US household income, which is effectively a measure of price levels as well as wages/salaries, grew from $71773 in 1985 to $93887 in 2000. Fifteen years later, in 2015, it had risen to only $95887. (2017 dollars)
Real median household income grew from $51455 in 1985 to $59938 in fifteen years later, in 2000. In 2015, this indicator had actually declined to $58476. (It grew to $61372 by 2017)
There are a lot of factors that affect an economy, of course, and it would be unfair to conclude that the slowdown in American household income growth was caused by the vast expansion of trade with China. Maybe it would have been even worse without Chinese imports and exports?
National Review writer Robet VerBruggen cites “research” suggesting that “consumers save hundreds of billions of dollars per year thanks to expanded trade with China, and six-figure sums for every manufacturing job lost. (Tucker) Carlson may be right that cheap junk from China doesn’t make us happy in any fundamental way, but it would put serious strains on family budgets if all that junk got expensive again.”
Maybe. But I doubt if the strains would really be all that serious over time. If manufacturers did not have vast reservoirs of low-wage labor available for production of a particular product, then the incentives to improve productivity when making that product with high-wage labor would be greatly increased. Capital investment that makes no sense when you are paying workers $1.50/hour may make great sense when you have to pay $15/hour. Furthermore, product designs themselves can often be changed in minor ways to make them more manufacturable; again, this would help reduce the cost impact of domestic or other high-wage-country manufacturing.
I doubt if the strains on family budgets resulting from such changes in production-labor costs would have anywhere near the impact that has resulted from dysfunctional public schools (resulting in a need to pay for private schooling or move to a pricier neighborhood), unreasonable constraints on home-building, and out-of-control administrative and facilities spending by universities, coupled with irresponsible marketing of degree programs and student loans by same.
One thing that has definitely been beneficial about China’s export trade is the drastic reduction in poverty in that country; this reduction is indeed something that we should all celebrate. I suspect, however, that given economic liberalization, China could probably be doing just as well or almost as well with an economic approach that is not so extreme in its trade orientation but more focused on satisfying domestic demand…and this would probably be much more sustainable for them in the long run.
Also, here are some additional links on US wage trends for anyone who’s interested:
Average hourly earnings of production/nonsupervisory employees shows a somewhat different pattern from the household date: rapid increase in the mid/late 1960, up to a peak of about $22 in the 1970s, then decline to a low in 1995, with some recovery by 2000 and reaching $21.51…ie, back up to the 1970 level…by 2015.
This chart shows a longer history of mean real hourly wages, from 1948 to 2013, and also some productivity data. It jumps out that the period of great increase was from the late 1940s to the early 1970s; the changes since then are minor fluctuations by comparison, although pattern is again somewhat different from the household data.
More wage history data and analysis here