Harvard Kennedy's Robert Lawrence to Moneynews: US Can Win Jobs Back by Changing Trade Tactics

Wednesday, 17 Apr 2013 01:26 PM

By Michelle Smith and David Nelson

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Manufacturing job opportunities could improve, although they will likely never be the same. But it isn't because emerging markets such as China are the threat that many believe them to be, said Robert Lawrence, professor of international trade and investment at Harvard Kennedy School.

Investors often focus on micro issues. They hone in on what directly affects a specific company. But, there are always larger issues to be considered. Lawrence has devoted his career to analyzing macro issues such as the U.S. economy.

Manufacturing jobs have faded and many question whether that segment of the economy can be revived. “Some jobs could come back if America could change its trade position,” Lawrence told Newsmax TV in an exclusive interview.

Watch our exclusive video. Story continues below.

Editor's Note: A full, unedited version of this interview is available exclusively to Financial Braintrust Alliance subscribers. Visit www.fbtalliance.com for more information and to sign up.

However, what people commonly fail to understand is that the manufacturing jobs that were lost aren't likely to be the same opportunities that return. “Many of the jobs lost, particularly due to international trade, were lost in terms of competition with low wage countries,” Lawrence said.

“Most of the jobs that might come back are likely to be much more skill intensive kinds of jobs and so the kinds of workers who were displaced aren't likely to get the kinds of jobs that could come back to the United States,” he added.

Lawrence has held roles that include being a member of President Clinton's team of economic advisors. He has often taken on the task of weighing in on pressing issues facing the nation, including the state of U.S. manufacturing and competition from China.

Editor’s Note: Put the World’s Top Financial Minds to Work for You

Another misconception that Lawrence highlights is that the loss of manufacturing jobs is a fairly recent phenomenon. But there has been a “stunningly persistent declining trend” in manufacturing jobs ever since the 1960s, he said.

“While people point a lot to international trade as an influence on what has happened to manufacturing share, there are far more powerful forces at work," Lawrence explained.

“One the one side, it's the fact that productivity growth, technological advancements have been much more rapid in manufacturing than in other parts of the economy and that means we need fewer workers in order to produce any given amount of output,” he said.

People commonly believe that the changes in manufacturing employment is one piece of evidence to support theories about the threats the U.S. face from emerging economies.

Lawrence put this into perspective, explaining that it is not just emerging market growth that matters, but the type of growth.

“When foreign countries sell us imported goods cheaply, that's good for us. Yes, it is true that some of us lose our jobs and are displaced but there are offsetting gains that more than compensate. But if foreign companies grow in a way that they become fierce competitors for our exports that's not good for us because it forces to sell exports at lower prices.”

Many consider China to be one of the top concerns right now, but Lawrence doesn't agree.

China's growth is good for us because they are providing us imports more cheaply and as yet they are not major competitors for our exports, he said.

Lawrence ranks China today as being in a position similar to Japan if compared to the U.S. in the 1950s.

The professor points out that it took Japan 20 years to become a fierce competitor for American exporters.

“So it is very likely, if the past is prolonged, that, again, looking out maybe two decades Chinese and American firms will be competing head-to-head in export markets but they are not doing that today.”

Editor’s Note: Put the World’s Top Financial Minds to Work for You

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