Jobs, trade, and the democrats.(on the right)

NEW YORK, AUGUST 21

Did you know--better, would you have guessed?--that the top income-tax rate in India, which is the home of breastfed socialism, is a mere 30 percent? That is down from 60 percent in 1979. How does that compare? Well, in the United Kingdom it is down from 83 percent in 1979 to 40 percent today; in the United States, from 70 to 35. In all three cases, it has been cut roughly in half.

But not all the economic news is good, and we hear, especially from upward-bound Democratic leaders, about the loss of manufacturing jobs for American workers. This is attributable, of course, to a variety of causes, some entirely bad (lax immigration laws), others good in themselves though with bad side effects (free trade, the decline in the power of the labor unions).

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In fact, in the last dozen or so years (1992-2005), U.S. manufacturing jobs have dropped by 20 percent. In Japan and Germany the drop in such jobs is comparable. Alan Reynolds, in his masterly study Income and Wealth, unpacks some of the assumptions. "Anxiety about de-industrialization or downsizing is usually linked to international trade through catch-words like 'globalization' or 'off-shoring,'" Reynolds writes. "The United States is widely imagined to have 'exported jobs' to countries that export more than they import, such as Japan and Germany, even though manufacturing employment declined even more dramatically in those countries where overall job growth has been abysmal."

How to cope with all the thunder about U.S. trade policies? Since Japan and Germany have run chronic trade surpluses for many years, Reynolds notes, statistics showing greater loss of manufacturing jobs in those countries than in the U.S. "contradict all trade-related explanations for the (unproven) belief the United States has long been suffering wage stagnation or increasing wage inequality."