One American Job Is Worth More Than Ten Chinese Jobs

Asad Dossani
I'm sitting in my living room in California writing this article. Once complete, I'll send it to our editor, who I think is in Sri Lanka (he moves around). Finally, it will go to our team in Mumbai for production and release.

In recent history, the US has been a pioneer of free trade. The logic is simple. Free trade benefits both countries, as each can specialise in producing what they do best. Poor countries produce goods that require cheap labour. Rich countries produce goods that require high expertise.

The poor country benefits from increased employment and lower poverty. The rich country benefits from cheaper consumer goods. Nowhere is this more apparent than in China and the US.

Since the 1980s, there's been a steady shift of manufacturing jobs from the US to China. Over this period, around five million American manufacturing jobs have been lost.

At the same time, over 50 million Chinese manufacturing jobs have taken their place. In the process, over 800 million Chinese have been lifted out of poverty.

The American presidential election has witnessed the rise of two unlikely candidates. Bernie Sanders and Donald Trump. The far left and the far right. At first glance, the two candidates couldn't be further apart.

But they do both agree on one important issue: free trade. More specifically, opposition to free trade. Opposition to trade agreements, and opposition to importing goods from lower wage countries.

The last point is the important one. The loss of American manufacturing jobs is the underlying driver of these views.

They have a point. Free trade creates winners and losers, even if there's a net benefit. But surely, there's a better way to compensate the losers.

India has greatly benefited from free trade. The information technology boom is largely export driven. The IT sector indirectly employs around nine million Indians today. And these are well paid middle class jobs.

Until 1991, India was a closed economy. And its average annual growth rate was around 3.5%. Since the economy liberalised and opened for trade, growth rates have doubled. Millions lifted out of poverty in the process.

Does it make sense for the US to revive five million jobs at the expense of China's 50 million? How about a million software jobs at the expense of India's nine million? This doesn't even take into account benefits US consumers receive.

We may not think the US election has a big impact on India. But if the next president is determined to restrict trade, the impact could be huge. The export related industries could suffer big losses.

I'm optimistic that this scenario won't play out. The likelihood of either of these two candidates winning the election is low. But low isn't zero. Time will tell if the US remains the pioneer of free trade.

Do you support free trade? Let us know in the Club or share your comments here.

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6 Responses to "One American Job Is Worth More Than Ten Chinese Jobs"
KD
18 Apr, 2016
Well, lets talk about IT. Why most of the big companies in software were born in USA? India has so many engineers. Why can't they create a single big IT companies. Even companies like TCS is found ripping of software of other company. Indian culture suppress creativity. I know many Indians including CEOs in American company who did everything under the sun to suppress creativity. In fact, that was the only core competence they had to compete with India and China. Like 
Damyanty
17 Apr, 2016
Hi mr Dossani, At times we need to see if the question being asked makes semse. Instead of asking if free trade is rquired why do we not ask why does any individual need to consume so much? This applies not only to americans but also middleclass and well to do indians, chinese etc. I wonder if there is any quantification of wasted resources based on waste, excessive consumption and its effect on health and then spending on medicines..... this is also a vicious circle. Let us change the parameters of discourse for us and future generations . Like 
p ganesh ram
16 Apr, 2016
Some two or three peoples, irrespective of their capacity(like american president post) can't change the policies overnight. India,china and others got the benefits only by their merit. So the potential changes would be only cosmetic.Like 
Sudhir Mathur
15 Apr, 2016
Your explanation is too simple.. if all the players play level.But the USA corporations have huge profits,which they have not shared with the workers.The Chinese have subsidised their exports by huge debts. So it is UNFAIR! ..and this reality is being exploited by these candidates.Like (1)
MANISH KUMAR
15 Apr, 2016
Dear Assad, I am GREAT FAN from SAUDI ARABIA of your letter as well as your admiring educational back ground. currently I am looking your e-mail or SKYPE address to get some personal advice on particular issue related to study of my son. I will be grateful for the same as it will be your support on social cause. Waiting for your positive reply. Regards Manish KumarLike 
Muthuswamy N
15 Apr, 2016
There are benefits of free trade to USA too. we hope the USA - even if any of these two become presidents - cannot totally scrap free trade because of the benefits to itself. Moreover, The Chinese have earned a very bad name for quality- barring exceptions. This gives a scope for India like no other. Americans feel that you can get American quality goods at 40% of the American cost. From Chinese you can get them at 10% of the quality but largely junk This gives India a window that at least the present Govt. would not fail to use.Like 
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