Scott Lincicome for the Cato Institute: Despite the immense benefits that Americans have derived from free trade and globalization, as well as the far-reaching costs of protectionism, a “reciprocity” argument — that foreign protectionism against U.S. exports justifies current or even new U.S. protectionism against foreign imports — persists.
Indeed, one of the primary justifications for President Trump’s tariffs on steel and aluminum, as well as many other Trump administration trade policy proposals, rests on the notion that it is only “fair” that foreign trade barriers — low or high — be matched by America’s trade barriers…
The president’s reciprocity demands suffer from many flaws:
Reciprocity illogically demands the United States injure its own citizens because other countries injure theirs. There is overwhelming evidence that protectionism distorts markets and reduces economic welfare. For example, last year I documented “a vast repository of academic analyses and contemporaneous reporting that show that American trade protectionism — even in the periods most often cited as ‘successes’ — not only has imposed immense economic costs on American consumers and the broader economy, but also has failed to achieve its primary policy aims and fostered political dysfunction along the way.” …
Reciprocity cedes control of U.S. economic policy to other counties. The reciprocity argument maintains that the United States should not unilaterally dismantle protectionist programs while other countries maintain similar (bad) policies, but this approach cedes U.S. control over its own economic decisions to countries like China or the European Union. …
Reciprocity undermines reform, including through reciprocal trade agreements. The reciprocity approach also would likely prohibit trade reform in the United States — contrary to popular belief, the United States still maintains numerous tariff and non-tariff barriers to trade — or elsewhere.
Economic factors, credit lowering homeownership
Laurie Goodman, Christopher Mayer, and Christopher R. Hayes for the Urban Institute: The national homeownership rate, as measured by the American Housing Survey, rose from 63.5 percent in 1985, to 65 percent in 1995, and to 68.8 percent in 2005. By 2015, the rate had declined to 62.7 percent, below the 1985 level. …
Four major demographic trends occurred in the U.S. between 1985 and 2015:
• The nonwhite share of the population increased. The share of white households fell from 81 to 67 percent.
• The population aged. The share of the population ages 44 and younger declined from 49 to 36 percent.
• Education levels increased. The share of household heads that are college educated rose from 22 to 40 percent.
• Family structures changed. The share of households that are married with a child under 18 declined from 29 to 20 percent. …
We investigated whether these demographic trends could explain the rise and decline in the homeownership rate …. Our analysis suggests that the Great Recession and the subsequent pullback in credit has had a significant impact on the homeownership rate, with a 7 percent swing from 2005 to 2015 that cannot be explained by demographic factors.
These findings make clear that access to credit and other economic factors make a big difference in expanding homeownership. Homeownership is not for everyone, but it is financially beneficial to most households and remains financially better than renting.
Fifty years on, mixed progress for black Americans
Valerie Wilson for the Economic Policy Institute: Anniversaries of major events are nearly irresistible opportunities to reflect on the past, often with the hope that there has been some progress. So it is this year, 50 years after the Kerner Commission Report on Civil Disorders found systemic inequality and racial discrimination to be at the root of riots across America.
In a new report, Janelle Jones, John Schmitt, and I present statistics showing what life was like for African Americans in this country 50 years ago compared to now. That document is a straightforward, unfiltered presentation of the facts, covering a wide range of economic, social, and health outcomes. In the spirit of reflection, I want to focus on racial economic inequality in the labor market, which directly affects approximately 20 million African Americans who get up every day and either go to work or go to find work.
The bottom line is simple. Despite decades of policies, programs, protests, and outstanding achievements by African-American men and women in many aspects of American life, race far too often remains a deciding factor in the economic status of African Americans relative to whites. …
Although the wage gap between black and white workers narrowed during the latter part of the 1960s through the 1970s due to the passage of important civil rights legislation, it has grown since 1979. This is true even among those with the same levels of education and experience and living in the same region of the country. In fact, despite the educational gains of African Americans, black workers were further from parity with white workers in 2017 than in 1979 at every level of education except the small group of workers who did not complete high school.
The expansion of the black-white wage gap can be attributed to three trends: limited wage growth among middle- and low-wage workers (where African Americans are overrepresented); above-average growth among the highest wage workers (where African Americans are underrepresented); and growing racial inequality in hiring, pay, and opportunities for promotion.
