But it also might have had an unhealthy impact on U.S. politics. A new paper by David Autor, David Dorn, Gordon Hanson, and Kaveh Majlesi shows that China trade might have increased political polarization. They write:
Has rising trade integration between the U.S. and China contributed to the polarization of U.S. politics? …We find strong evidence that congressional districts exposed to larger increases in import competition disproportionately removed moderate representatives from office in the 2000s.
So the harder a region was hit by exposure to Chinese competition, the more likely it was to vote for extreme liberals or extreme conservatives. Political polarization in turn feeds back into economic policy -- a more polarized electorate might flip rapidly back and forth between conservative and liberal policies, and will almost certainly increase gridlock. It could even put the country at risk of dangerous brinksmanship, as in the 2011 debt-ceiling crisis.
Not all economists need to take politics into account, but the ones who give policy advice definitely do. All policy is political as well as technocratic, so econ and political science aren’t really the separate fields you might think from looking at academic departments. The era of dispassionate, wise technocratic advisers is over. Like it or not, economists and their models are now in the thick of the political arena. If only more were aware of it.
Noah Smith is a Bloomberg View columnist. He was an assistant professor of finance at Stony Brook University, and he blogs at Noahpinion.
This column was provided by Bloomberg News.