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We’re Losing More Tech Jobs Than Socks Jobs to China

Some of the more amazing stories about China’s domination of manufacturing these days pertain to the cities in China that make most of just one of the world’s consumer goods, like socks.

But a new study from the Economic Policy Institute makes it clear we haven’t just lost textile jobs to China, we’ve lost high tech manufacturing jobs too. The study finds, for example, that since China joined the WTO, the outsourcing of tech manufacturing to China has been the biggest driver of our trade deficit with China.

Within manufacturing, rapidly growing imports of computer and electronic parts (including computers, parts, semiconductors, and audio-video equipment) accounted for more than 44% of the $194 billion increase in the U.S. trade deficit with China between 2001 and 2010. The growth of this deficit contributed to the elimination of 909,400 U.S. jobs in computer and electronic products in this period. Indeed, in 2010, the total U.S. trade deficit with China was $278.3 billion—$124.3 billion of which was in computer and electronic parts.

Global trade in advanced technology products—often discussed as a source of comparative advantage for the United States—is instead dominated by China. This broad category of high-end technology products includes the more advanced elements of the computer and electronic parts industry as well as other sectors such as biotechnology, life sciences, aerospace, and nuclear technology. In 2010, the United States had a $94.2 billion deficit in advanced technology products with China, which was responsible for 34% of the total U.S.-China trade deficit. In contrast, the United States had a $13.3 billion surplus in ATP with the
rest of the world in 2010.

As a result, those parts of the country where such tech jobs had been concentrated have been inordinately affected.

The trade deficit in the computer and electronic parts industry grew the most, displacing 909,400 jobs—32.6% of all jobs displaced between 2001 and 2010. As a result, the hardest-hit congressional districts were in California, Texas, Oregon, and Massachusetts, where remaining jobs in those industries are concentrated.

[snip]

The three hardest-hit Congressional districts were all located in Silicon Valley in California, including the 15th (Santa Clara County, 39,669 jobs, 12.23% of all jobs in the district), the 14th (Palo Alto and nearby cities, 28,866 jobs, 9.0%), and the 16th (San Jose and other parts of Santa Clara County, 26,478 jobs, 8.72%).

Now, to a great degree, we already knew this. IBM sold its PC division to China in 2004. And whereas stories of abusive conditions for those who make branded goods used to focus on sneakers, they now focus on Apple’s products.

But it also ought to be a wake-up call. It took some time for the upheaval caused by NAFTA to thoroughly devastate the Rust Belt and parts of the south. And while CA may be large and diverse enough to recover from the loss of these jobs, in other places (surprisingly, perhaps, NH, which lost the highest percentage of its jobs to China), they’re not.

Plus, there’s the whole problem of lost capabilities. As this manufacturing goes to China, we lose the symbiotic effect of having people manufacture–say–iPhones down the road from the folks losing designing the new ones. Thus, while in the short term it may be easy for Steve Jobs to churn out new products sending this stuff to China, in the post-Steve Jobs era, particularly with this lost symbiosis, it may be harder to continue to innovate.

But don’t worry. I’m sure working class Californians will be just as happy in their service jobs as Michiganders are. Which is to say, not that much.

The Global Crisis of SOME Institutional Legitimacy

Felix Salmon has a worthwhile (but, IMO, partly mistaken) post on what he deems “the global crisis of institutional legitimacy.” I think he’s right to see this as a significant challenge to our current political economy.

While watching another Arab government get toppled on Sunday evening — this time that of Muammar Gaddafi, in Libya — I was also reading George Magnus’s excellent note for UBS, entitled “The Convulsions of Political Economy”; you can find it chez Zero Hedge.

Convulsions is right — not only in the Arab world, of course, but also in Europe and the US. And the result is arguably the most uncertain outlook, in terms of the global political economy, since World War II ended and the era of the welfare state began.

As Magnus says:

It seems that we are having sometimes esoteric tiffs between Keynesians and Austrians about if and how governments should sustain jobs and growth. But, deep down, we are having a much more significant debate as we are being forced to redefine what we think about the rights and obligations of citizens and the State.

Most fundamentally, what I’m seeing as I look around the world is a massive decrease of trust in the institutions of government.

But I think Salmon makes two mistakes. First, he maintains an unwarranted distinction between the Arab Spring and the UK riots.

Where those institutions are oppressive and totalitarian, the ability of popular uprisings to bring them down is a joyous and welcome sight. But on the other side of the coin, when I look at rioters in England, I see a huge middle finger being waved at basic norms of lawfulness and civilized society, and an enthusiastic embrace of “going on the rob” as some kind of hugely enjoyable participation sport. The glue holding society together is dissolving, whether it’s made of fear or whether it’s made of enlightened self-interest.

From the perspective of the underclass in our society, it has been some time since “enlightened self-interest” counseled compliance. And from most perspectives, it’s clear that the elites, not the underclass, were the first to wave a huge middle finger at basic norms of lawfulness.

A more problematic error, though, is Salmon’s claim that corporations have retained their legitimacy.

Looked at against this backdrop, the recent volatility in the stock market, not to mention the downgrade of the US from triple-A status, makes perfect sense. Global corporations are actually weirdly absent from the list of institutions in which the public has lost its trust, but the way in which they’ve quietly grown their earnings back above pre-crisis levels has definitely not been ratified by broad-based economic recovery, and therefore feels rather unsustainable.

As a recent Pew poll shows, Americans are just as disgusted with banks and other large corporations as they are with their government.

While anti-government sentiment has its own ideological and partisan basis, the public also expresses discontent with many of the country’s other major institutions. Just 25% say the federal government has a positive effect on the way things are going in the country and about as many (24%) say the same about Congress. Yet the ratings are just as low for the impact of large corporations (25% positive) and banks and other financial institutions (22%). And the marks are only slightly more positive for the national news media (31%) labor unions (32%) and the entertainment industry (33%).

Notably, those who say they are frustrated or angry with the federal government are highly critical of a number of other institutions as well. For example, fewer than one-in-five of those who say they are frustrated (18%) or angry (16%) with the federal government say that banks and other financial institutions have a positive effect on the way things are going in the country.

But there are institutions that Americans still trust: colleges, churches, small businesses, and tech companies.

Distinguishing between those institutions (government and big corporations) people distrust and those (churches, small businesses, and tech companies) they do is important for several reasons. First, because it prevents us from assuming (as big corporations might like us to) that Americans will be content with corporatist solutions. People may or may not like the the post office, but there’s no reason to believe they like FedEx, Comcast, AT&T, or Verizon any more, particularly the latter three, which all score very badly in customer satisfaction. (Update: as joberly points out, Pew found that the postal service was by one measure the most popular government agency, with 83% of respondents saying they had a favorable view of the postal service.)

Such polling also suggests where Americans might turn during this convulsion. Barring Apple buying out the federal government, it seems likely Americans, at least, will turn to local institutions: to their church, their neighborhood, their local businesses.

That’s got some inherent dangers–particularly if people decide they want to change my governance with their church. But it also provides a nugget of possible stability amid the convulsion, one that might have salutary benefits for our environment and economy.

Apple aside, it’s the big institutions that have lost their institutional legitimacy. But we’re not entirely without institutions with which to rebuild.

Clapper: We Need to Pass PATRIOT to Make Sure Apple Continues to Track Your Location

I’m very sympathetic to what Glenn and bmaz and Spencer and Julian have to say about the stupid fear-mongering around today’s PATRIOT extension. Julian’s explanation of how the grandfather clause would work is particularly important:

. A lapse of these provisions for a few days—or a few weeks—would have no significant effect. First, they’re all covered by a grandfather clause.  And contrary to what the New York Times implies, that doesn’t just mean that orders or warrants already issued under these authorities remain in effect.  Rather, as the Congressional Research Service explains (using the sunset deadline from prior to a short-term extension):

The grandfather clauses authorize the continued effect of the amendments with respect to investigations that began, or potential offenses that took place, before the provision’s sunset date.108 Thus, for example, if an individual were engaged in international terrorism on the sunset date of February 28, 2011, he would still be considered a “lone wolf” for FISA court orders sought after the provision has

expired. Similarly, if an individual is engaged in international terrorism on that date, he may be the target of a roving wiretap under FISA even after authority for new roving wiretaps has expired.

Got that? Every investigation already in progress at the time of sunset gets to keep using the old powers. Every new investigation where the illegal conduct in question began before the sunset date gets to keep using the old powers. Over the span of a few days or weeks, that’s going to cover almost every actual investigation. For the tiny number that don’t fall into those categories, if there are any at all in the space of a short lapse, investigators will be “limited” to relying on every other incredibly broad tool in the Foreign Intelligence Surveillance Act arsenal—with, of course, the option to use plain old criminal investigative authorities as well.

And James Clapper’s fearmongering letter–which was liberated by Sam Stein–is particularly absurd on most counts.

I mean, are we supposed to worry that the government can’t “conduct timely surveillance on a non-U.S. person ‘lone wolf’ terrorist such as an individual who has self radicalized and responds to international terrorist calls to attack the United States,” when the government has never had a need to use this authority, not even with Khalid Ali-M Aldawsari, who was a “a non-U.S. person ‘lone wolf’ terrorist such as an individual who has self radicalized and responds to international terrorist calls to attack the United States”?

I mean, if Clapper wants to make bullshit claims, he just encourages us to treat everything he says as bullshit.

That said, I wonder whether the underlying issue here isn’t the explicit powers–the ability to find out about “terrorist [and non-terrorist] purchases of bomb-making chemicals” with Section 215, for example, but instead the secret collection programs. Clapper says,

Important classified collection programs might be forced to shut down, causing us to lose valuable intelligence information that could be used to identify terrorists and disrupt their plots.

After all, we presume the government is collecting geolocation data not through an actual investigation related to an individual suspect and therefore grandfathered in under the terms Julian laid out. We presume the government is playing fast and lose with the word “related to” in Section 215.

And so it’s not so much that we’ll lose track of Muslims who buy hydrogen peroxide. It’s that the corporations being forced (we presume) to turn over geolocation data are going to respond to the very public lapse of PATRIOT and refuse to keep turning that data over.

(In this way, this fearmongering is precisely like the fearmongering used in February 2008 after the Protect America Act expired; the real issue was the complaints of the telecoms who were legally on the line.)

Of course, none of this means anyone ought to cave to the fearmongering. After all, if the legal basis for this collection is so sketchy that it wouldn’t qualify for the grandfathering that the real authorities do, the government probably ought not be relying on it, right?

Or maybe Reid is just channeling Dick Cheney because he’s anxious to start his long holiday weekend.