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Is U.S. political polarization made in China?

Rochester Business Journal
May 27, 2016

The divisiveness of the U.S. presidential election this year reflects, in many ways, the now well-known partisan divide in Congress. This divide has been increasing over time, and there are empirical metrics that clearly show the ideological gap between the two major U.S. political parties is now at an all-time high.

This political polarization is primarily due to a noteworthy rightward shift among congressional Republicans and a less noteworthy but nonetheless real leftward shift among congressional Democrats. The unenviable result of this polarization is that centrists in either party have increasingly become an endangered species, possibly on their way to extinction.

Even though the above points are now well-known, what is not well-known is that there is a connection between political polarization in the U.S. and rising trade—in manufactured goods—with China. To see this connection, it is necessary to understand the thought-provoking new research on this topic by David Autor, David Dorn, Gordon Hanson and Kaveh Majlesi.

These researchers ask whether it is possible for negative economic shocks emanating from international trade with China, mainly in manufactured goods, to cause voters or their elected legislators to take positions that lean toward political extremes on either the left or the right.

Recall that from the 1950s to the early 1980s, manufacturing jobs in this country permitted American workers without a college degree to attain a middle-class lifestyle. However, with increased trade competition from China, this state of affairs has largely vanished. In fact, U.S. manufacturing industries exposed to import competition from China have seen a number of undesirable effects including higher rates of plant exit, larger contractions in employment and lower lifetime incomes for the affected workers.

The researchers analyzed congressional elections from 2002 and 2010 and show that congressional districts subject to larger increases in import competition from China in this time period were substantially less likely to elect a moderate legislator in 2010. Put differently, the more exposed a district is to trade, the greater is the move away from the political center. It is important to comprehend that this move away from the center is not because of changes in the voting behavior of existing legislators but because of the election of more extreme lawmakers.

In terms of the two major parties, this finding means that a congressional district that was initially in Republican hands is much more likely to elect a conservative Republican. Similarly, but somewhat less commonly, a congressional district that was initially Democratic is more likely to elect a liberal Democrat.

What is particularly interesting about this polarization finding is that it holds not only when the regions being studied are separated by party but also when these same regions are separated by race. In other words, in response to an increase in import competition, a trade-affected region that has an initial population majority of non-Hispanic whites is much more likely to elect a conservative Republican. Similarly, a trade-affected region in which whites are initially a minority are much more likely to elect a liberal Democrat.

Do these sobering findings justify the extreme positions that presumptive Republican presidential nominee Donald Trump has taken on trade with China? They do not justify his pledge to impose a 45 percent tariff on U.S. imports from China because such a tariff would be untenable and would most likely lead to a trade war with China that would do little good for U.S. workers. However, he is right that U.S. exporters cannot access Chinese markets easily and that the role of the Chinese government in promoting access to Chinese markets is unclear.

Amitrajeet A. Batabyal is the Arthur J. Gosnell professor of economics at Rochester Institute of Technology. These views are his own.

5/27/2016 (c) 2016 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email service@rbj.net.


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