 for this seminar. I'd like to thank all of the panelists for participating and you for coming out on this 90 degree plus afternoon. So thank you for joining us. And I'm gonna, we're gonna start with Harold Meyerson from the American Prospect who will introduce the other panelists. He'll be our moderator today. Thank you. Well, it's great to be at EPI which is an indispensable institution for people who wanna know about the economy and for progressives. It's at the intersection of really the most useful kind of academic work and the most useful kind of social knowledge. And so it's a pleasure to be here as I have been here many times before. Today we're going to hear about a very important and interesting paper that looks at the effect of China trade, Chinese imports on the American economy and comes up with some pretty surprising conclusions. Some of them maybe not be so surprising. Some of them I found distinctly surprising. It's a very important paper and the kind of issues that this paper deals with are the kind of issues that are becoming in some ways increasingly central to our political discourse as the presidential campaign, as David Brooks notes today, actually gets into questions of the kind of capitalism that America has and how it functions in the context of globalization. The paper that our lead speaker today, our main presenter, David Autor, has written with his fellow economist David Dorn and Gordon Hansen. It deals with a lot of these issues and we're very fortunate to have David here today. What I'm gonna do, I'm gonna introduce David and then as I call on the various commentators, I will briefly introduce them as well. Then there'll be questions and I believe cards have been passed out and will be passed out for you to write down your questions and then we'll read them at the end of the session. David Autor is a professor of economics at MIT and he is editor in chief of the Journal of Economic Perspectives which is published by the American Economic Association. He's written numerous studies, received numerous awards, the John T. Donlap Outstanding Scholar Award given by Labor and Employment Relations Association and the MIT Undergraduate Associates Teaching Award which is always good to hear, particularly at the moment when he's about to make a presentation to us all. So with that, David Autor. Thank you very much, it's an honor to be here. I'm gonna be describing in a non-technical way, hopefully communicating successfully the work that I've done jointly with David Dorn of the Center for Monetary and Fiscal Studies in Madrid and Gordon Hansen of the University of California at San Diego and this paper attempts to study how rising import competition, particularly from China, affects the operational local labor markets, both manufacturing employment and also non-manufacturing employment in terms of spill overs to employment outside of the sector, non-employment, unemployment, non-participation and even usage of federal transfer benefits. And I'll say that we came into this project with absolutely no acts to grind. I don't have a, and you'll see the paper is there's really not normative component we're trying to find out cause and effect here, not trying to make a statement about what is, should be done or shouldn't be done. And, but we found the results very striking and so I'll try to give you a thorough description of them. So the starting point of the discussion, this shows you the ratio of Chinese imports to U.S. domestic consumption between 1987 and 2007. This is this blue line here and that goes from basically less than a quarter of a percentage point to almost five percentage points in that 20 year period. Now that's a remarkable change. Now what's amazing about this actually is not this point here that Chinese imports comprise 5% of U.S. domestic consumption because China is an enormous country, it's labor and resource abundant, it's very natural that a country that large would be an incredibly important part of the world trading system at this point in history. What's amazing is that it went from nothing in 1987 to this in 2007 and that reflects changes within China. China was 30 or 40 or 50 years behind the production possibility of the technology frontier of most advanced economies and relatively closed and it marched from 50 years behind the frontier to the frontier in a 20 year period because of changes within China primarily. And that has been a hugely important change to the competitive environment of the world trading system. And so this point is what you should be amazed by. How fast we got here and as you'll see that's been very disruptive for competitors as you would expect it to be. The second line of this figure shows you the ratio of manufacturing employment in the United States to the working age population, age 16 to 64 which falls in this time period from roughly 13 percentage points to a little bit more than 8% of points. And this is by the way, I stopped you 2007 prior to the recession. I don't wanna confound the impacts of the Great Recession with what's going on here and you can see this takes a sharp down turn over time and also this inflection point here where the blue line gets steeper that reflects China's accession to the WTO in 2001. And that does coincide with the decline in US manufacturing employment. However, you should not look at this picture and draw a cause and effects relationships. The question of this paper is to ask whether any of this decline is explained by this rise. But you do not presuppose the answer please based only on that figure. So the starting point of discussion really is internal events in China. So this as you all know is Deng Xiaoping and he is the individual who basically opened China to the rest of the world, did so in the early 1990s, late 80s in his famous Southern China tour. And basically one of the crucial instruments of this was the establishment of the special economic zones mostly along the southern coast of China that began trading intensively with the rest of the world with Hong Kong first and then with other nations. And did so in a way that actually used prices, that used private enterprise, that allowed them to use modern imported production technologies and in addition allowed relatively free mobility of labor. All of this was quite alien to China at that time and it was extremely controversial. Deng was extremely controversial and there was a period where it looked like he was not gonna succeed in doing this. And so this opened China and allowed it to realize what it latently was capable of which was being an incredibly important economy in the world trading system. And this opening, this reform, gave rise to a surge in Chinese manufacturing. So he opened China to trade in foreign direct investment. You had marketization, privatization, easing of controls on labor mobility. So roughly 150 million people have migrated from the Chinese countryside into these urban areas to work. Previously there were extreme restrictions on migration that made it difficult for people to do that. And productivity rose very rapidly. The median Chinese manufacturing plan, according to work by Chiang Tai Shea and Pete Klingow, had 15% annual productivity growth between 1992 and 2007. So it's just remarkably rapid development which is a good thing by the way and the China's rise has moved more human beings out of poverty at a more rapid rate than at any point in human history. So this is a remarkable accomplishment. Accompanying that, of course, has been enormous increases in trade flows. So this shows you on the left-hand side, US imports from China in current dollars in 1991, 2000, 2007. These are when we have harmonized data available. So it goes from 26.3 billion to 330 billion in that period. So it's roughly a 1,200% growth. This is US exports to China. And you can see they've also grown a lot but they're really quite modest. So US exports are only 15% of net trade flows between US and China. If we do the same for eight other high-income countries, these countries are chosen because of consistent data availability. Australia, Denmark, Finland, Germany, Japan, New Zealand, Spain, and Switzerland, this is the sum of all those countries. Their trade has also risen 10-fold with China. The sum of their imports from China is slightly less than US imports. And their exports to China have also risen. You can see they have a much, much smaller trade deficit. But what I want to emphasize with this figure is the rise of US imports from China is being driven by the same thing, which is driving the rise of all these other countries' imports from China, which is China is becoming more productive, its goods are becoming cheap and competitive, and it's opening to world market. So all these countries are responding to this supply shock, the availability of a new competitive source of supply for many labor-intensive, relatively low-value added goods. So just to emphasize, what are those goods? When people say Chinese goods, the first thing they think about is computers. But in fact, that's not the bulk of trade with China. A lot of it is things like textiles, apparel, footwear, rubber products, stuffed dolls, luggage, and assembled electronics. Most of, not all, but most of the high-tech manufacturing in your assembled electronics is not going on in China, although some of it is. So the question I want to ask, or this paper wants to ask is, what are the economic consequences for U.S. labor markets that house competing manufacturing establishments? That's the question we're trying to answer. In the 1990s, there was a literature studying the effect of international trade in the U.S. on rising wage inequality in that time. And the consensus of that literature was that actually trade with low-income countries was too small to have had a big effect. So there was a big rise in inequality, but it really had very little to do with trade. It had much more to do with technology. And I was very much a part of that literature, and I think that consensus was correct. I think Larry and Michelle might disagree with me, but I'll stick by that conclusion of that time period. However, dramatic changes have followed since people reached that set of conclusions. So between 1990 and 2007, China accounted for 75% of the growth of least developed country manufacturing value added. So in terms of the total sort of value created in less developed countries, 75% of that growth was due to China. As I've already mentioned, U.S. imports from China rose 11 1⁄2 fold, and economics is just beginning to assess the consequences this has had for the domestic economy. Okay, so here's what I'm going to lay out what I'm going to talk about in the rest of the talk. First, I'm going to tell you how we attempt to measure the impact of trade on local labor markets, which is not immediately obvious thing to do. I'm going to tell you how we identify the supply push side of this and how we try to tie it to potentially affected local labor markets. Then I'll tell you our main results for impacts on manufacturing employment, and just to say upfront, we will find that there's a decline in employment in the import competing manufacturers. That's not surprising. Any trade theory would tell you that when your competitors become more productive, you're going to tend to shrink. So the interesting questions are, A, how large is that effect? And B, what do those workers do? Do they find re-employment elsewhere? Or are there other adjustment costs associated? So we're going to look at the effects, not just on manufacturing, but in the same local labor markets. We're going to look at the effect this has on non-manufacturing employment, unemployment, and labor force non-participation. So you would like to see if people leave manufacturing, they either move into other manufacturing sectors or into non-manufacturing. You don't want to see them becoming unemployed or leaving labor force. You don't want to see their earnings fall. We're also going to look at the take up of public transfer benefits. So unemployment insurance, trade adjustment assistance as you would expect, but also disability, early retirement, medical benefits. That turns out to be another important margin of adjustment. And then I'm going to, my policy discussion is really just a frame discussion. I'm not going to draw any normative conclusions, but I'm going to point out that recognizing the cost of trade adjustment is important and pointing out some of our policies being adaptive and some being maladaptive. Okay. So I keep saying the supply push. Why do I want to focus on the quote supply push? What I mean by this is the component of rising Chinese imports that are due to China's improving competitive conditions. It's low falling prices, rising productivity. Why is that? Well, we could have surged in imports because we just decided we wanted to buy more stuff, right? And if everyone starts to buy more tennis shoes, we'll make more here, we'll buy more from China, we'll buy more from Vietnam. And that's just consumer demand. Consumer demand has a positive flex on employment. We know that. We're trying to ask what it happens when one of your competitors, for reasons internal to its own economy, becomes a great deal more competitive. So that's what I mean by supply push. And just to say, as I've already emphasized, that supply push is really determined by decisions taken by the Chinese leadership and all the associated changes that went on. Okay. So we're gonna use that fact. I don't understand, this is a regression picture, not the kind of thing I should be showing to cameras, but what all I want to show here is each of these points on this plot is an industry. On the X axis is the change and absorption of Chinese goods in that industry in those eight other high income countries I mentioned. On the Y axis is the change and absorption of those goods in the US in the same time period. And you see there's a very close statistical relationship. What that says is we start import, when Europe starts importing Chinese tennis sneakers, the US starts importing Chinese tennis sneakers. When Europe starts importing Chinese luggage, the US starts importing Chinese luggage. I can give you a long list of that type. Why that is important is because if we all start importing tennis sneakers from China simultaneously, as opposed to from Vietnam or somewhere else, that must mean that China's getting good at it. It's getting cheaper, more productive, quality's improving. And so we're not gonna use, in our analysis, we're gonna use the predicted piece of this, the piece that comes from watching what happens in other countries and saying, well, if it happens in all these countries simultaneously and in the US, we're gonna do that as the piece coming from China's rising productivity and falling costs. That's the supply push component. We're not gonna use all the changes. Technically, there's a technical word for it, but I just want you to understand that we're not simply looking naively at the changes in the US. We're trying to isolate variation that we think is coming specifically from China's improving competitive condition. Okay. The second thing is I wanna emphasize is that you should think in a precise way about what Chinese imports look like. So although we import lots of stuff from China, most things that we buy and consume, most manufactured goods are not made in China. And so what this figure does is it shows you each one of these different colored dots corresponds to a sector. So for example, green diamonds are textiles, apparel, and leather. These black stars are machines and electrical equipment. On the x-axis here is the growth of import penetration. That's basically the amount of Chinese goods consumed over total consumption in production in the United States. So if this is 100%, means all of this particular product that we consume in the US is made in China. And on the y-axis is the share of production workers. And so that's kind of a measure of the labor intensity of a sector. So what this figure shows you, let's take the example of this green one, textiles, apparel, and leather. You can see that it's all over the map. There are some parts of textiles, apparel, and leather where this number is in the negative territory and we export that product to China more than we import it. There are others where it's at 100%, meaning we import all of it that we consume. But what I want you to see is these sectors, even though they're all labor-intensive, textile, apparel, leather, all labor-intensive, it's all over the map. So it's not simply we're not comparing textiles to computers to machine tools, but we're gonna be comparing items within textiles, items within electronics, items within furniture. And as my co-author, Gordon Hansel, pointed out, trade at this point has this very hyper-specialization type of characteristic where certain products are just all made in one country or another. So for example, if you're buying a rubberized raincoat, a Barbie doll, and some high heels, that's all gonna be made in China. Now, I bought those for my wife. I'm not saying I bought them for myself. Okay, so the, and kids. Okay, good. So that's how we're gonna, we're identifying the supply and push component. We're looking at these changes in import absorption in other countries related to the US. And now we wanna tie them to local labor markets. Well, here's how we do that. So our definition of a local labor market is what's called a commuting zone. It's a cluster of counties where people tend to live and work within the same cluster and the boundaries of the commuting zone are so-called commutable distance, meaning that you could drive from one end to the other. So this is kind of a geographic definition of a local labor market. It means an area where people both live and work that's not so large that they couldn't make, it's impossible to live in one part and work in another. There are about 722 of these. These are defined actually by the US Department of Agriculture. So there's about five counties in each. And we use those to break up the geography of the US into these 722 local labor markets. Okay, some of them are much, much more popular than others, of course. And then what we do is we look at the manufacturing industries that were in those commuting zones in 1980. So we use data from what's called the county business patterns and we say, okay, here's what they produce. And we can link each of those products I was talking about to a manufacturing industry. And then we can say, okay, let's say stuffed dolls were being imported into the United States. Where would that have an effect? Well, wherever they were gonna be produced. So when stuffed dolls come into the United States or let's say, you know, furniture, imported furniture, it doesn't go to the Carolinas where it would be made, right? It goes to Walmart's around the nation. However, the place where it would affect employment most likely is in the Carolinas because that's where they produce import competing furniture, right? In fact, it's a good example because a lot of the commodity furniture production has moved from the Southeast to China. So we're going to look at those changes in imports by category and we're gonna relate them to the initial employment in these commuting zones in the 1980s to say, when we see a surge in imports of this, do we see an effect or import of furniture? Do we see an effect on the areas that used to make furniture, right? That's the basic approach. Okay, and just to give you a sense of the exposure. So our measure here is Chinese imports per worker in a commuting zone in thousands of US dollars. Okay, so the median commuting zone between 1990 and 2000 experienced an increase in import exposure per worker of $890. In other words, for every worker in that commuting zone, total imports of goods that would be potentially produced there from China rose by $890. In the 2000 to 2007 period, it rose at a decadal rate of 2,100 or over that seven year period about $1,800. So it's actually one way to say this is as of 2007, total Chinese imports in dollars divided by US workers came to about $2,800 per worker. So consuming a lot of goods. So when we say a commuting zone is exposed, what we mean is multiple thousands of dollars per worker in goods that would have potentially been produced there are now being imported. Okay, good. So now let me describe the results. So no regression output. This is all just gonna be bar charts. So this shows you the estimated relationship between $1,000 per worker increase in import exposure in commuting zone and the change in manufacturing employment per population. So we're taking predicted changes in imports using these internet flows in other countries relating them to commuting zones, initial employment shares. And we get this relationship says every $1,000 increase in import exposure predicts a 0.9 percentage point decline in manufacturing employment to population. I'm gonna tell you about what that magnitude means in a minute. Okay, you might think that doesn't look like a big number. I'll scale it for you in a minute. I just want you to know it's a robust, statistically significant relationship. You can't see that from the bar chart, but it is. We do the same thing in 2000, 2007. You get a roughly similar estimate of the impact. Now I should say the actual change in import exposure per worker is much larger in this latter period. So the effect is larger. The relationship is pretty similar. Now you may say, ah, maybe this was going on in the 80s, maybe it was going on in the 70s. This could all predate China. We know U.S. manufacturing has been in decline for a long time. So we do the same thing for the 1970s and 1980s. In particular, we relate future growth in Chinese import penetration that occurs between 1990 and 2007 to changes in manufacturing employment in the 1980s and in the 1970s. And you can see, in fact, it's zero or even weekly positive. The reason it's positive, by the way, is the areas that are most affected by Chinese import competition, they're not the traditional rust belt industries. This is not high tech manufacturing. This is not autos. This is not aerospace. This is basically shoes, textiles, and so on. A lot of this is the low wage, relatively low education, labor intensive manufacturing that happens a lot in the Southeast in particular. And so these were growth areas of manufacturing employment. This is when U.S. manufacturers said, hey, we have a low wage country that we can source our goods in. It's the U.S. South. And so there was a lot of growth in this type of employment in the prior decades. And then, so it's weekly positively correlated. And then in the 1990s and 2000, we have this opening of China and that creates a new opportunity for low wage production, which doesn't happen to reside in the U.S. So I just want to say that this thing we find is specific to the period in which China is rising. Now to scale that, let me try to give you a rough estimate. So here are estimates of the change in Chinese imports per U.S. worker in those two decades. So about $1,100 in the 90s, about $1,800 per worker in the 2000s. U.S. manufacturing employment fell in per population terms by a third in that period. So I'm not scaling this U.S. manufacturing as a share of employment. This is a share of potential workers, right? So we implicitly include everyone who could be working. So that falls from 13% to 8.5%. We estimate that you could explain essentially 20% of that decline easily just with this growth and import penetration and the growth that's explained by what's happening in other countries. So we don't just take all of it. We only take the share that we can confidently attribute to China's rising productivity. So if you want to put that in numerical terms, I would say that manufacturing employment was lower by an additional 550,000 workers in the U.S. in the 1990s than it would have been. And in the 2000s, by another 980,000 workers, or so we estimate the net reduction is about one and a half million manufacturing workers between 1990 and 2007. So that's only a fifth of the change, by the way. But it's a big chunk, and I think we're actually being quite conservative about this. Now, let me talk about effects outside of manufacturing. So as I said, you shouldn't really be surprised by these numbers. You may be surprised by how large or how small they are, but you would expect when your competitors get better, you start doing something else, right? So the question is, what happens to employment in these local labor markets? Do we see people moving into non-manufacturing in particular? So here is our estimates of that. So this is the estimated effect on manufacturing employment, 0.6 per pop. Here's the estimated effect on non-manufacturing employment. So you would like to see this equal and opposite, right? So non-manufacturing employment falls by 0.6 percentage points, sorry, manufacturing employment falls by 0.6, non-manufacturing rises. In fact, it slightly decreases, right? If you break that down by college and non-college, what you find is college workers are able to make some transition out of manufacturing and into the non-manufacturing sector. For non-college workers, there's actually as large a decline in non-manufacturing employment. Why is that happening? Well, we think it's what you would economists would typically call a multiplier. That when manufacturing employment declines, that reduces income of those workers so they buy less locally produced goods and services. It also reduces the demand by that employer for local trucking, for food, catering, and so on. That tends to reduce demand outside the manufacturing sector as well. Looks like college workers are able to push their way in and non-college workers get pushed out. So you might say, well, where are these workers going? Well, here's where they're going. They're going into unemployment and non-participation, right? So the size of these is equal and opposite to the effects on the other two in that these are four mutually exclusive exhaustive categories. You're either in manufacturing, you're in non-manufacturing, you're unemployed, or you're out of the labor force. So just putting those all together, here are the effects on employment. Here are the effects on non-employment. And you can see for all education levels, about two thirds is non-employment, one third is unemployment. If you look at the college educated, there's a small effect on non-participation. You look for non-college, that's with high school or lower education. There's a very large effect on non-participation. More of them just seem to be dropping out of the labor force. Okay, we also, I don't want to, because time is limited, let me just very briefly say, we also look at effects on wages in these labor markets. The effects are modest, but not trivial. So the average reduction in hourly earnings is essentially on the order of three quarters of a percentage point per hour for a $1,000 increase in trade exposure. You say, well, how much is that? Well, if you think of someone earning $40,000 a year, that's about a $300 reduction in annual earnings. So it's not small, and when you add that together with the non-employment, it comes to about a third of a large effect as the direct effect of job loss. Okay, now you might say, well, okay, people are leaving manufacturing, they don't seem to be getting re-employed in non-manufacturing, their unemployment rate has risen, non-participation has risen. Surprisingly, I should just say, we don't see people moving out. There's very little mobility, so it's not that they're just going to some degree in their pastures. They appear to be sticking around, and you might say, well, what are they doing? Well, one thing you could look at would be take up a public transfer benefits. So we have a number of programs in the US that are directed at helping people adjust to labor market shocks. One of them is unemployment benefits and trade adjustment assistance. So you all know about unemployment, hopefully not personally, but you all know what it is. Trade adjustment assistance is like an extended unemployment insurance program except it pays for training. It's actually difficult to access, it's relatively stingy, it's hard to prove you lost your job because of trade as opposed to something else, but people do access it. So we find for every thousand dollar increase in exposure, unemployment plus trade adjustment benefits per capita in a commuting zone rise by about $3.65. So those programs are responding, very clearly responding. Now you might say, well, what else is responding? Well, if you look at disability benefits for people going onto social security disability insurance, the effect on that is roughly three times as large, two and a half times as large as trade adjustment and unemployment. Then you look at early retirement, that's about the same size as disability. Then you look at other government assistance, so that's TANF, that's food stamps, that's other training programs, that's larger again, and then medical benefits, right? That's now we're six times as large as the effect on unemployment trade adjustment. So notice only these two are meant to be labor market programs, right? The rest of these are meant to be programs for people who are retiring, who are unhealthy, unable to work, who can't afford food, but these are the programs that are responding. So in particular, if you just sum them up, right? We find that a thousand dollar increase in import exposure raises total transfer benefits by about 60 bucks per capita, of which, you know, one 15th is coming from labor market programs, the other 14, 15th are coming from non-labor market programs. Now let me stress, these are transfers, they're not losses, it's not like we're throwing the money away, we're not taking in things, take our 60 bucks, go burn it, right? We're giving it from one group of citizens to another. So that's not an economic loss, per se. The costs of these are really two or three things. One is, of course, if you're gonna transfer money, you have to raise taxes, or in some countries, if you're gonna transfer money, you have to raise taxes in other countries, you can put that off into your children. But so in general, taxation is considered to be distortionary, so if you have to do a lot of transferring, you have to do a lot of taxing. That has economic costs, that's one cost. A second thing is that these have the effect of paying people not to work, right? So social security, disability, insurance, retirement, these things basically support non-work. So unlike these programs that are meant to be labor market activation, these are closer to labor market deactivation. So it means that we're partly enabling people, unintentionally, to exit labor force permanently. And certainly when someone goes on disability, social security disability, it's very unlikely that they'll ever be working at a significant extent again. The third factor, of course, which is not in this, is the pure personal cost of involuntary unemployment. So when people lose their job, obviously they get to consume more leisure, so that's some benefit, but most people would rather be working than be consuming involuntary leisure. So another economic cost is not simply the transfer benefits, even if we had no transfer benefits, there would still be economic costs of people losing employment where they were earning wages that exceeded their value of leisure, where they had productive skills that are now rely idle. So those are all possible costs of this type of adjustment. Okay, so let me conclude, this is the policy discussion. Okay, so first let me just sort of summarize what I've said, labor market adjustment to trade appears to be slow and painful. And I think what this study shows, very clearly, is that the cost to workers and to the communities that house those firms are large. They're larger than I think has previously been appreciated, sort of in a kind of frictionless labor market, people would just immediately find re-employment, they might get slightly lower wages, they might be less happy with their job, but they wouldn't spend years out of labor force, you wouldn't see these declines in local industries and so on. So this suggests the adjustment costs are quite significant. And at some level that shouldn't really be surprising to me, labor economists have known for decades that when people lose work at mid-career, if they've had long-term employment, they has a substantial effect on lifetime earnings going forward in terms of the amount of work they do and how much they earn. That's one thing. I think the second key point is that these effects are not just in manufacturing and they're not in manufacturing wages at all. They are reductions in manufacturing employment and then rises in local unemployment, declines in local wages and then moving down to transfer benefits. So in terms of, I'm just gonna make two policy points that I'm gonna conclude. One is that distinguishing the net versus the gross benefits of international trade. So most economists, if you wake them up in your sleep, in their sleep and say, is trade good? They'll say, of course, go away. And what they mean is trade raises national income, it reduces prices, it offers more and better variety of goods, it stimulates innovation and competition. I mean, if it weren't for trade with Japan, we'd still all be driving 1974 Chevy Vegas, right? And that would be horrible. So trade has lots and lots of benefits for consumers. But those benefits are generally broadly dispersed. Everyone gets lower prices, everyone gets a better car. But the costs are very concentrated. They're concentrated in the communities on the workers who specifically lose their jobs because it's from import competition. And this suggests that those concentrated costs are significant. So it could well be that the net benefits are positive. I suspect they are. However, that doesn't mean that there aren't a substantial number of people who are made substantially worse off, potentially for very long periods of time. A second question is, do we have the right policies to adapt to this? And I gave a little hint here. The answer is no. The unemployment insurance is a fine program, but it's not a long lasting labor market reactivation program. Trade adjustment assistance is very problematic. One, the starting small, it's stingy. It's hard to access. It requires you to be in school to access it, even if you could find new work somewhere. And moreover, it makes an artificial distinction between different types of job loss. So you could lose your job because a Chinese factory gets much more productive at it. You could lose your job because we invent a robot or a piece of computer hardware that does the same job. From the perspective of the worker, they're still unemployed. And it's still the case that the skills that they had are no longer valued by the labor market. So making a distinction between trade adjustment as opposed to technology adjustment or any other type of adjustment sets up this kind of false bogeyman that trade is the only thing that is disruptive to employment. And that's not true. Trade is disruptive. Technological change is disruptive. They all create diffuse benefits and concentrated losses. And so we should have a labor market adjustment program that helps people adjust independently of who is at fault for them losing their job. Finally, I wanna emphasize that it appears the most important labor market program here, unfortunately, is social security disability insurance. And that is not what that program is intended for. I don't fault people who are going on it, but it has varied perverse long-term consequences of taking people out of the labor market permanently and making them permanent, effectively, economic dependence of the state. Okay, thanks very much. There's a lot on there to chew on. And we have a distinguished panel of chewers to my left. What I'm gonna do is just go down the table and introduce panelists to have them make their comment. And we'll just proceed leftward as we go. First panelist, Thea Mae Lee is an alumnus of this institution, the Economic Policy Institute, where she was an international trade economist. And then she became the chief international trade economist for the AFL-CIO through some strange upward mobility. She is now the deputy chief of staff at the AFL-CIO. And if I read the little items in the press correctly, she is also now on the drafting committee of the Democratic Platform Committee, a document sure to be read by the Romney campaign and no one else. So, Thea. Thank you so much, Harold. And thank you, David, for your paper and for your presentation, which was really interesting. And as Harold says, I came to Washington in 1991 and came to work at the Economic Policy Institute just in time for the NAFTA debate. And I suffered through many other trade debates, including China, permanent normal trade relations, fast track, CAFTA, and I'm covered with bruises and scars to show that. But it's really refreshing and it's great to have such a useful empirical set of research from a prominent mainstream economist to talk about something which we in the labor movement and others have been struggling with for many, many decades. And there are a lot of areas where I welcome and appreciate and admire the work that David and his co-authors have done and other areas where I might have some differences of opinion, not so much in terms of the quality of the research because that was kind of a past life for me is instrumental variables and two-stage least squares and so on, but I do wanna focus on the place that David ended up on the policy implications and how we think about this work. I wanted to start by just putting this debate a little bit in context of the last couple of decades in Washington and the debate around globalization because I think it's important to ground it, that I actually, I have a very vivid memory, 20 years ago or so, at the American Enterprise Institute, I was a nerdy little trade economist at the Economic Policy Institute sitting in a room full of people, much more prominent than I was, and Bob Lawrence said at the time, people are saying trade hurts wages. We need to do the research to show that's not true. Now, that's not really the way we like to think about academic economists coming up with their research topics, but that is the way it was being talked about then and sure enough, he did come up with a paper that purported to show that it was not true with, but fast forward another couple of decades to, I think it was around 2007 at the Center for American Progress, so in this building and Larry Summers, who you all know, was said at a big meeting, a meeting of economists that was talking about some of these issues, he said, you know what, any idiot can see that trade hurts wages, but it may take a while for the empirical work to catch up with that. It doesn't really matter whether we have the work or we don't have the work, but anybody can see that that's true. So in between has been a lot of rough debates, I think the point, this research is so interesting because it validates what a lot of us experience and see and feel every day when we go out and talk to our members about what kind of impact trade and particularly trade with China is having on the labor market, on wages, unemployment, on communities, and that's something that I think we need to focus on and for too many decades, we haven't been able to have an intelligent conversation about that because as David said, every time you raise this issue the educated class, the academic economists, the editorial writers for the New York Times, the Wall Street Journal, and the Washington Post would basically shut it down by saying you must be an idiot if you think that there's anything wrong with trade, we can't talk about that. Every economist knows free trade is good and therefore you really shouldn't even raise the issue. So I think we've come a long distance so that we can have what I hope is an intelligent and nuanced debate and discussion about what this impact has been. But I wanna start with China. Well, actually two things. One is to start with the point that David raised in his presentation about the 1990s and that trade with low wage countries at that time in his view is too small to have a big effect on labor markets and wages. Of course, this was the period that we were beginning to have this debate and we're having an interesting debate about the North American Free Trade Agreement and about China's eventual entry into the World Trade Organization. And I would argue that there were certainly forces put in place at that time, some of the dynamics of globalization that were exactly what we're experiencing today in the sense that, and this is one of the players that's absent from David's report because it's not what he's writing about, but the role of US multinational corporations and corporate strategy in terms of outsourcing and moving production and fighting for trade agreements that protect their investment overseas, their intellectual property rights overseas and pave the way for better lower trade barriers and market access to the US market. But so the corporate strategy was in place and it was very much, I mean, the other issue that David didn't talk about is about bargaining power. Bargaining power of American workers vis-a-vis their employers. And what was the role that, not just trade with China, but NAFTA and globalization and the increased flexibility and mobility of US corporations had on shifting that balance of undermining the bargaining power of American workers in a way that made it harder for them to hold on to their jobs, to hold on to their wage gains, to hold on to their benefits. And that, I think, is an important piece that was definitely in place, even though, as David said, you can't see the big numbers in terms of the employment impact in the 1990s. I don't think it's right to say that there was nothing happening and it was only as China rose and became so empirically important in terms of overall trade that I think that was when, as Larry Summers said, you could actually trace the empirical impact better, but it doesn't mean that there wasn't something happening that was important and worthy of note in the earlier piece. The other piece I wanted to talk about that I think is important is David talks about China's rising comparative advantage and falling trade costs and the supply push. And I think a lot of that is about rising productivity in China, but I think it's important also to deconstruct, what does that mean? Because it's relevant for us in the policy debate, that it isn't just a question of China getting better at producing things because that would be one piece and it's important piece and it's relevant to us, but it's also about what was the unholy relationship in some ways between the Chinese government, which is not a democratic government, between U.S. multinational corporations and the U.S. government. That trinity, we're all complicit in the rise of China as a major exporter. That, and I think one of the things that's interesting and I'd like to get more into it in the Q&A period is some of the similar trends that David finds between exports from China to the United States and exports to other industrialized countries, but you noticed in his graph that other countries have better exports to China than the United States does. So they have a less imbalanced trade relationship. So some of the factors that I think are important, the currency manipulation by the Chinese government, some folks in this room have worked with us on this issue, the mercantilist actions of the Chinese government with respect to illegal subsidies and other kinds of actions that are actually in violation of World Trade Organization rules but are very harmful and disadvantageous to both employers trying to sell into the Chinese market and any producer trying to compete with China in third country markets. And the third thing, which is extremely important, of course, to the labor movement, but should be important to everybody is the systematic and egregious violation of workers' rights the Chinese government engages in. And you look at the picture of the rise of the special economic zones along the coast, that was definitely an economic policy by the Chinese government, but it also relied on the fact that China is not a democracy that workers don't have any rights to form an independent and democratic union. They can't, and for many, many years because of the restrictive immigration policies within China, Chinese workers can't get up and walk out of one factory into another because their employment status hinges on their migration status about whether they're allowed to be in one place. If Chinese, in many places, if Chinese workers complain about, let's say, not having gotten paid for six months or working many more hours than they are being paid for, they can simply be internally deported, sent back to their village without their back pay and that could be very disadvantageous. So those things, I think, are extremely important and it changes the picture because I think it's not quite as clinical. China just got better at producing things and that had an impact on American workers and this comes to the policy piece and then I'll look forward to my co-panelist presentations too, which is if, in fact, in order to be more competitive in the global economy, the Chinese government is not just being good at producing things but is systematically violating its obligations under the World Trade Organization, violating the human rights of its workers and spoiling the environment. These are things that are relevant to us as we engage. China is our single largest trade deficit partner and as David pointed out, we have not just a trade deficit with China but we have a massive imbalance, lopsided trade relationship with China where we import more than four times as much as we export to China. Two thirds of our non-oil trade deficit is with one country, with China and so if we can, our own government, and this is where the policy piece is that our own government has been unwilling to step up to the plate and challenge the Chinese government in areas that are tremendously disadvantageous, not just to American workers but also to American businesses and that's where I think the value of David's work is something I hope we will be able to build on and build some new policies in the future. Thank you. Thank you, Thea. Our next commentator, Gary Burtlis, joins us today from the Brookings Institution where he is the John and Nancy Whitehead Chair in Economic Studies and the topics under discussion today are topics that Gary Burtlis has been writing about for years, looking at whether American jobs are going to have a low-wage future and a book he did as long ago as I think 21 years ago. So he is definitely a distinguished guest to have in this discussion, Gary Burtlis. Well, every time I hear a paper or read a paper that David Autour has written alone or with co-authors, I always finish it with a mixture of admiration and exhaustion. My admiration comes because the research is almost always timely and it's usually very important not to boot and it's invariably done with a great deal of craftsmanship and this is the kicker for at least a fellow economist. It's lucidly written. Now, the exhaustion comes because I think of the nights and weekends that I would have spent assembling the data, organizing it, analyzing it and then turning it in to clear prose descriptions and that tires me out. And this paper is no exception to the general rule. David and his co-authors have produced a wonderful and a very important piece of work. The agrees with that. They've expanded on the range of issues that economists look at when they consider the impact of trade on the job market. The version of the paper I read had an intriguing statement on the front page which you rarely see on economist papers and to my experience it was the first time I've ever run into it. Quote, at least one co-author has disclosed a financial relationship of potential relevance for this research. Further information is available on the NBER website. So what could this relationship be? Was one of the co-authors in the pay of the National Association of Manufacturers or the AF of LCIO or perhaps the Chinese Employers Association? Okay, this is what I found. I, David Autor, have written policy overview papers for the following nonprofit organizations that may have a policy interest in the contents of the current paper. Number one, the Brookings Institution. Number two, the Center for American Progress and number three, I have served as an academic advisor to the Singaporean Ministry of Trade and Industry. Now I'm not sure what to make of this but in the interest of full disclosure, let me tell you I've worked on projects funded by the Social Security Administration, the Rockefeller and Sloan Foundations. I'm employed at Brookings and hold a chair that was endowed by John Whitehead in case you don't know who he is. He's a former managing partner and chair of Goldman Sachs. And if those financial relationships don't make you suspect of everything I say, thank you. Now, as you've heard, David and his co-authors developed a very ingenious way to test the impact of rising Chinese exports on local labor markets here in the United States. Using estimates of the surge in Chinese exports at the industry level, they figured out how much employment in each local job market might be affected by the surge. What fraction of workers in the job market is employed in the industries in which the import surge is concentrated? There are many ingenious parts of this, and I don't want to get into the moving parts or I'll never get to a comment. So they're looking for the net effects of Chinese trade, and because basically Chinese trade rose by a factor of 12 and a half over the period, virtually I think 85% of the increase in Chinese exports was an addition to the US deficit. So there is very little net offset. We're not shipping more to the Chinese in exchange for the extra imports. So basically it's a very one-sided relationship. Now, he and his colleagues examined a range of effects of the import surge, including the impact on employment and wages, which is what economists typically look at. They look at it inside and outside of regional manufacturing industries. They also look at the impacts on government transfer payments, social security disability, old age benefits, UI, trade adjustment assistance, medical benefits. Remember, they are statistically identifying these effects by comparing local labor markets where the net impact of Chinese imports is expected to be large because a lot of the region's baseline employment is in industries, import competing industries with China, and they're comparing those with labor markets where net impacts are expected to be small because there aren't a lot of people employed in the industries in those import competing industries. The regions where these industrial employment effects are expected to be large do in fact see bigger increases in disability insurance and other kind of government programs, government transfer programs. So one side effect of the Chinese import surge, one that seldom, if ever, been looked at by economists, spills over onto general taxpayers through its effect on transfer benefits that I receive by people in the harmed communities. The costs are not all born by the workers in the industry suffering the employment losses, nor are they born by the workers in those local labor markets who suffer the spillover effects of the workers who are let go as a result of the displacement from this import competition. Are there any offsets of the adverse community impacts that the paper documents? Remember the implicit comparison that this analysis depends on. Communities like San Jose and Providence and Los Angeles where the industry mix relied heavily on industries where Chinese imports surged, in comparison to communities like New Orleans, Orlando, Washington DC, where little local employment was tied up in those industries, okay? By relying on the contrast between these kinds of communities, it's a little hard for us to draw conclusions in which we can be 100% confident about the nationwide effects, because remember we're comparing two kinds of communities. One of those kinds of communities might have been advantaged by this development. And if there's some overall effect in the country of the benefits, we may not see it by comparing communities that gain and lose under this kind of index. One thing that we know is that by the end of the period, US and foreign buyers preferred to buy stuff made in China rather than from old suppliers in San Jose, Providence and Los Angeles. An important reason presumably is that the Chinese stuff was cheaper. The welfare gains from lower consumer and producer prices are gonna be geographically very diffuse, as David said. The cheaper toys, footwear, apparel, furniture and electronic goods are available both in Providence, which has a lot of import competing industrial workers, and in Washington DC, where there aren't very many of those kinds of workers, and consequently where the producer bad effects are not gonna be very severe. Now, there are certain ways we could extend David's analysis in order to figure out what kind of Americans benefited from the producer and consumer cost savings connected with the Chinese import surge. More than one economist has probably already done such a study, but try to imagine it. The study would examine in detail the consumer and producer goods, whose prices rise more slowly or actually decline as a result of this surge in imports from China. It wouldn't surprise me if a lot of these cost savings flow to Americans with average and below-average incomes. Someone is going to the local Walmart and buying all those products that are made in China, and I know it isn't me. Because you get them on Amazon. No, I buy books on Amazon. They were still made in the United States. The cost savings would result in a slower rise in the CPI than otherwise would have occurred. Transfer benefits that are linked to the CPI, like the disability insurance and old age part of Social Security, would also increase more slowly, offsetting part of the extra spending, because in some regions of the country we got more DI recipients and earlier Social Security acceptors. American taxpayers and borrowers would also benefit from another channel. Lower interest rates, remember. China is accepting our debt in exchange for all those larger trade deficits and that keeps the price of borrowing lower in the United States than it would be if we didn't have foreign borrowers taking our national debt and taking our other assets off our hands in exchange for those goods. What should the country do about the problem? We should keep pushing China to stop subsidizing its exports through an unwarranted exchange rate, but let's not kid ourselves. Even if China reversed its exchange policy overnight, there are at least a couple dozen countries waiting in the wings who have seen the success of Japan, Korea, and China in turn. Those countries achieve remarkable growth through a combination of high investment in human capital, high forced savings, and an undervalued currency, an undervalued currency that may not initially have been undervalued, but after a while it became severely undervalued, giving the country a tremendous trade advantage. If China is persuaded to change its ways, as eventually I'm sure it will be, just as Japan was, there's going to be another country or a set of countries waiting in the wings to pursue exactly the same paths to income growth and industrial success. One last remark. The word that riles us in David's title is China. If we substituted the word Georgia or North Carolina, it would be hard to arouse very much passion, especially in readers in Georgia and North Carolina, I suppose, but suppose David and his colleagues had done a similar study around 1975 in which they tried to analyze the impact of the surge in southern manufacturing on the communities of New England, the mid-Atlantic states, and the Midwest. Does anyone doubt they would have found a long laundry list of problems in some of the northeastern communities that lost manufacturing jobs to the depredations of those evil manufacturers in the southeast? The point here is that competition within the US plus the introduction of new technologies and shifts in consumer tastes can all produce the same kinds of adverse effects documented in this paper. Before coming here, I checked one of the statistical series that David mentions in the paper and displayed at the start of his talk, namely the number of manufacturing employees in the United States as a percentage of the working age population. Indeed, David's chart showed a shocking drop in this ratio over the period he analyzed. But it's hard to see much of a deviation from the path of decline before the surge in Chinese exports. Between 1990 and 2007, the manufacturing worker, working age population ratio, dropped about three tenths of a point a year. In the 17 years before 1990, 1973 to 1990, it dropped slightly faster, about 0.32% a year. It would be very hard to accuse the Chinese of responsibility for the earlier decline because as the paper shows, they contributed almost no exports to the United States at the beginning of the analysis period. Now, the policies I favor would help displaced workers, regardless of the reasons for their displacement. I think it's whimsical to say that if the competition comes from China, we're going to make an effort to help workers as we do in trade adjustment assistance. But if it comes from competition from North Carolina or Georgia, we're not gonna help the workers in Michigan. It's nonsensical and it seems to me, I don't think we should be checking the reason for the job loss when we give help to displaced workers. If the past 50 years is any guide, and I think it's a very good guide, workers are going to be trying to make a living in a tumultuous job market for as far as the eye can see. And so I think we have an obligation to help not only current workers exposed to this kind of competition, but future workers cope with a job market that also I think is likely to be just as tumultuous. Thank you. Thank you, Gary, very much. Rob Scott joined the EPI in 1996 where he's been the international economist in a trade. First of all, I'd like to note that what he's talking about as the surge in China and its impact on the US is really, and it is the, most importantly, the increase in imports. It's the import supply shock that has caused the loss of jobs and the impact on wages and the impact on the other social variables that talked about in his excellent paper. And I have found in my own work on the impact of China trade on employment that this has been a source of controversy that I frequently hear comments from people saying, imports can't cause job loss. This just does not happen. Well, here's proof in the extensive detail that in fact the growth of imports from China has in fact caused substantial job loss. Now, the second point I wanted to make was that this is one estimate. And it has some limitations. They've, David and his co-authors, use a two-stage least squares technique where they're instrumenting for imports in China with imports from other countries. And so you're getting an estimate, an approximation for the impact of imports on domestic employment. And I just remind you that, again, the period from 2001, but from 2000, right, or to 2007, you found that approximately one million jobs were displaced with the growth of imports from China. You ever take 2000? I have been looking at the effect of trade with China on U.S. employment. Since China entered the World Trade Organization, I've issued a number of studies of this. I'm just in the process of updating the study. I want to give you some preliminary results to talk about here to give you a second point estimate of what that number might be. And they're actually quite close. So it confirms the results that David talks about. So I wanted to walk you through this just very briefly. One slide to show. This is the jobs displaced by the growth of imports, sorry, the growth of the trade deficit with China since it entered the World Trade Organization in 2001, now 2000, 2001, pretty similar starting points. This is total jobs to play, displaced both in manufacturing and in those indirectly affected. I use an input output technique to do this. So these are just counting up the jobs affected. Overall, about three quarters of the jobs displaced are in manufacturing. The rest are in industries that supply manufacturing. Now from 2000 to, 2001 to 2007, found that about two million jobs were displaced. So of those about three quarters or about 1.5 million, I would estimate were in manufacturing. So I come up with a number that's about 50% larger than David does with certainly the same order of magnitude. Now, taking that estimate all the way out to 2011, the latest and best available data that I have from the Bureau of Labor Statistics suggests that the total number of jobs displaced by the growth of the trade deficit with China continues to increase. It's now up to about 2.7 million jobs displaced. So this process continues despite the fact that the US economy today remains in a relatively depressed state. We have 8% unemployment. The overall level of output remains not much higher than it was in 2007. We first entered the recession and trade deficit certainly is not, overall is not as large as it was in 2007. But the deficit with China is much bigger. So China has been taking, will continue to take, mark the share away from the United States. I wanna just touch finally on a couple of policy issues. We've already heard from Mathia about issues and the importance of addressing issues such as currency and China's subsidies and other unfair trade policies. I think it's also important to consider the importance of policies that help rebuild manufacturing, not just those eight workers who displaced, but manufacturing is important on its own sake. We need to invest in worker training, both for workers and for companies. So we help pair of workers for jobs that are actually available. We need to invest in R&D to help create new products to fill the manufacturing pipeline in, for example, and in some of the manufacturing incubators and I think another set of policies we can invest in substantially would be infrastructure. Infrastructure investments create demand for manufactured products and help make us more competitive, increase productivity of manufacturing. Finally, we can invest in clean energy technologies to help again, build demand for manufactured products from their own domestic industries. So other countries around the world are competing effectively. For example, as is well known, Germany has continued to maintain large and growing trade surpluses while we've developed these large trade deficits to do it through combination of all of these policies and others that Harold and others have written about and we should consider a much more aggressive industrial policies in our program ourselves. So I think I'll stop there. Thank you. Thank you, Rob. David, the three commentators raised a range of points. You might want to respond to now. Gary Burtlas was talking about how you get to a national balance sheet on this as opposed to particular communities that are affected, some greatly, some not. Thea was talking about there being more factors than simply rising productivity in China, state subsidies for business and other things that have an effect on this. There's a range of points were brought up. So why don't you take a few minutes and respond and then we'll get to questions. Okay, I appreciated all the comments and I don't want to linger long and have it sort of an insider discussion on too many of these things. So let me sort of try to be brief. Let me first turn to Gary's comments. They were sort of most specifically about the sort of the mechanism, the mechanics of the paper. I appreciated your exhaustion. I take that as a sign of respect. I think you raise a couple of issues. One is the sort of the nationwide versus the localized effect and we worried a lot about this and an important thing which I think operates in the background of all these discussions is the trade deficit itself. That you would be much more likely to have a, then you might have positive and negative and net be much closer to zero were we in a situation of trade balance but having a very large trade deficit is essentially equivalent or very similar to having a large increase in labor demand in China and a large decrease in labor demand in the US. So I think that is an important part of thinking about the net effect but I agree it's a limitation that it's difficult for us to say and everyone's better off by X percent. You raise the issue about falling consumer prices. Clearly that's true and there's a lot of goods that are less expensive, substantially less expensive and I think there is evidence by other researchers that low income individuals benefit more from these falling prices because they consume more of those particular types of goods. It could also be the case that prices fall even more in affected communities like rents will decline for example. We did an earlier version of the paper attempt to do a calculation of the static gains from trade using the work of Archelacus, Cosinode, Rodriguez, Clair and finding that basically sort of one third to one half of the quote gains from trade were being offset by these frictional adjustment costs. We took that out because it was so controversial among trade economists. So I think all your points are well taken and the point I want to emphasize on all that and something I emphasize at the end I do think trade probably has net benefits. It's the very concentrated costs on those individuals. So I do not think that the individual who loses work permanently is in net better off because things are cheaper at Walmart. I'm sure you don't think that either. So okay, so those were the specific comments on what Thea was saying that I want to make clear that my paper is really it's a positive study of what happens when you have a surgeon import competition whether that comes from currency manipulation, exploitation of labor, dispoiling of the environment or simply rising productivity. It all has the same effect from the perspective of import competing US producers. So I don't want to take a strong stand on that because I don't pretend to understand it. I do think, yes, it's true that China engages in some forced savings. It's true, I'm sure that China's currency is lower than it should be, weaker than it should be relative to the dollar. Some of the worker things are exploitation. Some of them are where US workers wishing that Chinese workers required to only work 40 hours so we can get paid a US style minimum wage and that wouldn't be in their interest either. In fact, there are many examples of Chinese workers complaining that they would like to work more hours but law prevents them from doing so because when you go and work in one of these, work in Shenzhen for example, there's nothing else to do. You're there for a couple of years, you're living in a miserable bunker and you're there to accumulate savings and go back home. So it's not supposed to be fun. Also if you can't live on what you're earning you want to work more hours. Well I don't think they're starving. I mean, most of the time you're working, you're actually making a relatively high rate of pay and you're saving, you're bringing it back home where people are much, much poorer. So I mean, this has been enormously welfare improving for China and it's not just benefiting the government, it's benefiting lots and lots of people. That doesn't mean it's all good but I think I certainly understand it through that lens as well. But the main point I wanted to make is what our research can inform is really just the net impact of this on US employment, whatever the source. So I can't, I'm not trying to point, I'm not trying to blame, I'm just trying to evaluate what happens. On what Robert was saying, Robert was saying about the sort of net impact, or whether it's one million or two million, obviously these are sadly in economic terms one million, two million, eh, pretty close. But the, I think there's a difference in the methodology that we're using in the sense that you're sort of cranking through an effect using the IO tables and saying well this many people would lose jobs because this many people are indirectly and directly employed in these sectors but of course that doesn't get the net effect, the general equilibrium effect, if that creates other employment, if that creates people move across sectors and so I think what our work was hopefully allowing us to shed light on is the degree to which that occurs. Whether people are actually reallocating the way we'd like to see them do. So you could have a situation where you have lots of trade displacement but people move into other sectors and still they may earn somewhat lower wages and they wouldn't be happy about that but if they can actually rapidly adjust and reallocate then they have lower prices, some lower wages, some winners, some losers but it's much, much less cost in a situation when lots of people leave the labor market long term, potentially go on disability. So I think what our, the contribution of our work is to show that the adjustment processes is really sluggish and costly in economic and psychic terms and I think that's what I think the work makes very, very clear. Thanks. David, let me ask you a question. One of the I think real interesting surprising points as I said at the outset of your study is the extent to which this has really significant effect on non-manufacturing workers in impacted communities. Now there's been a lot of discussion up here about fixing things like trade adjustment assistance, a crummy program in and of itself but also in documenting the rise of these other programs. I mean, it's the case, is it not, that service sector workers who for, as it were, multiplier reasons are in essence downwardly mobile or lose their job or whatever because the manufacturing dies in the regions. They're not really eligible, are they? For TAA and if you're talking about coming up with better programs and you are talking about coming up with better, more effective programs, A, how do you do that? And B, isn't the rise in really non-trade related government transfer programs partly dealing with that in a very indirect and maybe not super efficient way? Yeah, so I am very worried about this set of policies and I agree that it's unfortunately the case that the most generous transfer programs we have are not intended to be labor market programs but serve in that capacity to a substantial extent, social disability insurance being the leading example. Not that there aren't, social disability insurance serves very well a substantial extremely disabled population. However, a lot of the marginal inflows into disability are people who basically wash out of the labor market. They have some work capacity but there's not opportunity for them and they're able to receive disability benefits. And that's unfortunate because that program basically the surefire way to disqualify yourself from disability is to work, right? So that is a program that once you go on it, it's crazy to actually leave it because it's like receiving an annuity. It's guaranteed income until retirement, index to inflation with medical benefits. It's like getting a full-time wage with a cost, like a minimum wage job with a cost of living allowance and a great healthcare plan. You're not gonna wanna give that up. So that's a very maladaptive program. Now, of course it's easy to criticize what we have. What would work better? It's difficult. There isn't a long story golden set of success stories in worker training. On average, a bunch of programs have been evaluated. Some of them work better than others. I think that in thinking about the, what kind of rate of return you demand, it probably also thinks you have to think about what the alternative is. So it's not simply the individuals whether they get a higher wage, but also if they are employed, that also means that you pay fewer benefits on the other side. You have fewer people on disability, fewer people receiving TANF and so on, fewer people receiving SNAP food stamps. So many other countries invest a great deal more in labor market activation than the US does. And our programs that are intended for workers really don't do much to activate people. So I think we could learn more from countries like Denmark, for example, that do a lot more of this. Okay, I'm wondering if each of the panelists might have one question in particular they would like to ask David. All right, now, oh, you have a, okay, all right. Well, in theory, cards were passed out. Have a. Got some more. Oh, we have them? I have some more here. Oh, okay. Well, at this juncture, since we're going to the audience, and I don't have any cards back, let me just call on people. Who has written this question? Yes, yes, back there you've already written a question on a card? Okay, well, why don't you just get up and say it at this point, because. The advantage of community zones is, or sorry, the disadvantage of just looking nationwide is you don't have any comparison group, right? So you can only look across sectors in that case. I mean, in general, the sort of the pitfall of international research on the effect of international trade on anything is that your unit of observation is typically a country, and you just have sort of wages and employment, and that's not enough data to develop any confidence in your inference. So you have to find multiplicity somewhere, find something to, you need a comparison group, something that's affected and unaffected. So you can look across industries, and people have been going to do that. And I think that's fine. Community zones gives us, I think, more granularity, so we have industry times community zone, but also we can look at the spillover that way, right? Because we can say not only what is the effect on local manufacturing, but how does that spill over to the larger area? And it turns out, I think this multiplier is quite important, and we would have no way to estimate that at the national level. We couldn't say because this sector declines, this sector declines, how did it affect the other sector? Because we wouldn't have a comparison group for it. But if you multiply- I think there's, it could be that there's a, there's a multiplier out, but the other point, and this is the point that Gary emphasized, I'm sure there are benefits as well that we can't pick up, right? So there's no question that, you know, it's hard to imagine an Apple computer being as productive and successful and profitable if there weren't a China. And that's not in our analysis either, right? So it's, I think we're really well geared to estimate the impacts on local community zones. As soon as we, and not just the direct effect but these spillovers, as we try to extrapolate outward our degree of uncertainty rises considerably. So we don't want to overclaim. It's not that we don't want to answer the more ambitious question. It's that we lose confidence in our methodology once we go get a too high level of aggregation. May I make a remark? Yeah, sure. In 2007, the economy really was close to full employment. We may have been very dissatisfied with the distribution of earnings that full employment was generating in the workforce. But the fact of the matter is it was not that far below what the employment to population ratio was in 1999 and 2000. No one would dispute that those were full employment once you adjust for the fact that the US population got older. So one of the claims that many defenders of free trade makes is that the policy makers can adjust to the trade to push employment toward full employment. Clearly they're not succeeding at the moment. But it's very hard to make the claim in 1999 and 2000 and to a lesser extent in 2007 that the US economy was operating well below full employment. So in that case, in those particular years, David and his co-authors are comparing communities where the nation as a whole is not far from full employment. Some of them have been badly hurt by Chinese imports. Others you have to conclude have derived some kind of a benefit from it because in the nation as a whole we did not fall far below full employment and we didn't fall at all below full employment in 1999 and 2000. I want to respond to that. So I think you're making it a powerful point but I think there was, and we certainly were at full employment in 1999 but I don't think that was true as the 2007 the employment population rate fell considerably. There was very slow job growth. That of course is the period in which Chinese imports, the rate greatly accelerated. We had a doubling of the growth of penetration and there's recent work, for example, and this hasn't been refereed, it hasn't been vetted by the recent work by Eric Hearst and Matt Noto de Ligdo of Chicago Boo School showing that essentially they make the argument that many communities that saw declining manufacturing employment basically had artificial housing booms that absorbed a lot of those workers and that actually masked part of the problem. Yeah, I mean this full employment as a reality and an abstraction is all well and good but clearly it's not a lot of the impact simply sectoral shift even when you do have full employment and some of the sectors I've been thinking of because I'm about to be writing about the bankruptcy of San Bernardino. Some of that sectoral growth was money flowing into the mortgage market, into housing bubbles. The adjustments you do make to stay at full employment under those conditions may not be optimal adjustments. One of the most interesting things about the paper is the wage versus employment effect and the impact on non-college educated workers because I think in 2007 it's an interesting moment. It's not really a healthy economy. We recovered from the recession but median family income wasn't really recovering and you had bubbles that were inflating the spending and so on but I think for your research is shows this difference between how many of these folks were dropping out of the labor force and I just think that's one of the huge phenomena of the last couple of decades is particularly non-college educated males participating in the labor force at a much lower rate and so if you sort of superimpose this research on that picture of not a healthy labor market and also the distributional impacts that were happening and I think they're both really important to the compositional impact of the labor force as well because I know when people trade economists always like to say the same thing which is trade doesn't affect the macro jobs numbers it only affects the composition but I think what your paper shows is it affects both. Okay, Rob is collecting some questions. Here's one that you omitted from this discussion is the exit, the decline and the exit of purchasing power and the question goes on to say it's important for two reasons, the current account deficit results in increased government debt to prime the economy and without this job losses would be higher and foreign debt owed to China must be repaid in the future which means loss of future purchasing power. So that's not part of this discussion. If it were, what would you say? I think it's absolutely right. That basically in the long run we can't run huge deficits forever and to repay the debt we're gonna have to have a devaluation of the dollar it's gonna have to fall relative to these other currencies which means substantial loss and consumer welfare so it is the case that basically we are consuming at present against future consumption it's nothing wrong with borrowing especially when you're borrowing to invest but if you're simply borrowing to consume it just means someone will be consuming less later it may not be you but it will be a subsequent generation so I agree with that and it is the case that the government expenditure does help to mask some of that falling employment whether it's in the military whether it's supporting the loan industry whether in a variety of ways so I agree, I do think this is borrowing heavily to finance consumption is not really considered sound policy. All right, Rob, did you wanna, were you? No, okay. Here's a question since the percentage of employment has been falling have rising sectors contributed to a positive or negative trade deficit? Is there more here? I think so. When you looked at the impacts separated by final and intermediate good import, good imports. Well, I mean, I don't think I'm gonna do justice to the question, but I mean, the net, unfortunately, the reality is that the exports are only 15% of the gross flow so the US runs a very, very large trade deficit that's not true for most of Europe so there's not, I'm sure there are, there certainly are sectors where the US is very successfully exporting and that creates employment, it's just that the net effect probably is not in that direction and then the second question on the, in the paper we do look at intermediates versus final goods, it doesn't appear to be, it doesn't qualitatively change the type of conclusions that we draw. There's a question as to whether you can distinguish the effects of education level in manufacturing employment at a higher level of specificity than just college or non-college. Yes, definitely. So our division is actually, so what non-college means in our paper is high school or lower so college is everyone with, some years of college education. When we do it at a greater level of granularity, you do find that the effects are smaller for more educated workers so if you define college as four-year college and above or if you define it as post-college education. So it is the case that the largest impacts are on the less skilled, but it's interesting, it's not that they show up in wages, they show up in employment. So a lot of the earlier trade and wages debate was focused on the wage margin. As far as we can tell, the really elastic or responsive margin is actually people losing jobs and staying out of labor force. That's not what should happen in a labor market that's functioning where markets are clearing, but it appears that they don't clear. If they clear prices fall, quantities, everyone stays employed, if wages don't fall, then more people lose employment. Rob? Can I just add a comment to that? Just to summarize, I think Josh has gone already, but to summarize his conclusions from his book, the effect of globalization is that it tends to depress the wages of manufacturing workers in his research and everyone who looks like them. And what struck me about your results was that the wage effect was actually much larger amongst the non-manufacturing workers. That's where you saw a positive result. You didn't see one in manufacturing because of this substitution effect that you talked about. But we have to remember that, I mean, 90 some percent of the labor force is now outside of manufacturing. And nearly 70 percent of workers in the service industries are non-college educated workers. So if they're suffering a wage loss as a result of trade, that's a massive redistribution of income. There's a question about the theory of free trade itself and the degree to which it's dependent on displaced workers getting other jobs, which, yeah, the gains from trade depend on displaced workers getting other jobs. And if that's not happening, what does that do to our conventional theories of free trade? Since human beings are stickier, perhaps, than the trade theory involves. I think you're raising a valid point that basically the canonical result that trade is in net welfare improving meaning that the winners could compensate the losers and still be better off as soon, right? Right, but they don't have, right, could in theory, it's okay, right. But even that result depends. We're talking theory, we're talking power. But you asked about the theory, right? Okay, so that theoretical result depends on the idea of full employment that all factors are employed. If you actually have factors that are quote destroyed or not used, then that result might not even hold. Now, the way, so I think your point is valid, I tend to think that these adjustment costs are temporal in the sense that it is the case. I mean, even these workers who leave the labor market a few years early, they weren't gonna work forever. People reallocate, the younger people take new jobs, industries evolve. So you could say the gains can be very durable because we have lower prices and so on. And the adjustment costs can be long term but not permanent. So that would be one response. But I do think there's no question that in the short to medium term, these frictional adjustment costs can soak up a lot of the gains and the gains don't even have to be positive in that period. I think another gain from trade, and this is something that's much harder for economists to formalize, but people are working on it, is I think there's competitive gains from trade. I think that competition creates innovation and creates better products. I mean, I wasn't kidding when I said, I mean, I don't know if you guys remember, but US autos were junk in the 1970s. They were absolute garbage. And the reason the Japanese auto industry was so effective, and the reason we drive good cars now is because competition was introduced. And that's true in many other products. So trade and in general competition, it doesn't have to be from between Georgia and another country, or Georgia and the other parts of the US, Georgia is not really another country, or the cheese and cheese. Causes people to innovate, causes people to find better ways to do things. That increases welfare. So I think there are dynamic gains from trade as well, but it certainly is the case that the textbook result that trade is in net beneficial assumes that there are no adjustment costs, and there are adjustment costs. I wanted to jump in on that point, because I think it's a really interesting one about competition, innovation, and international trade, or so-called free trade. And I think one of the points that we would certainly make is that it isn't just, you say the word competition, is that all good? Is it all about innovation? I mean, some competition is about beating down your workers and busting the union, and putting a military dictatorship in place, and wrecking the environment. And that is not enhancing to comparative advantage. It's not productivity enhancing, it's something else. It's a relative brutality, as opposed to comparative advantage. And so we talk about the rules of the trade system, whether it's the World Trade Organization, or free trade agreements, whether the rules of trade are simply about protecting business interests around limiting subsidies and protecting intellectual property rights, or whether it goes to things that are important to human beings, like protecting workers' basic human rights and having some minimum environmental standards. I think there's a real difference. But the other point I think is about innovation, which is that there can be another part of trade, which is in terms of competition policy, whether there is market power, which is welfare reducing at some level, where you have enormous multinational corporations expanding their market power across borders in a way that doesn't necessarily lower prices to consumers, doesn't necessarily increase innovation. It can increase innovation, but it can also just concentrate wealth and profits in the hands of fewer people. And we can have trade regimes can either facilitate that or not. So I think it's too simplistic just to say that free trade creates more competition, which creates more innovation. It can, but it doesn't have to, and it doesn't always. I just want to respond to that, because I think actually a lot of what trade has done is eroded market power, which is exactly what supported high wages in the manufacturing sector and allowed unions actually to extract very high wages. I mean, GM and Chrysler and American motors at the time, they were not very good corporations that had a lot of control over a huge market, and that made them very profitable, and they didn't actually have to make very good products and they could pay charge high prices for them and pay wages high wages to workers. We have a much more competitive environment in most manufacturing goods, including airplanes, including cars, including consumer apparel, and that drives out market power, it drives out the rents, and it does put pressure on wages, but not all of that is because corporations were good before, bad now, it's because they enjoyed a sheltered environment, which was profitable and so on, but it wasn't particularly good for consumers. So I don't think it's, I mean, I agree with you that not all competition is good, but not all competition is leading to concentration of economic power. Although anyone who's ridden on an airplane in the last 10 or 15 years would have to acknowledge that the effect of greater competition on consumers is not necessarily also positive as well. Plain tickets are cheaper. That's true. Plain tickets are a lot cheaper, and the number of people in this nation who enjoy flying with smaller than the number of people I suspect in this room. It's a question. How should we view the effects of regulatory framework in the US economy in relation to the role that homegrown exports will have in the long term when compared to manufacturing capabilities of China, which presumably have a very different and at times non-existent regulatory framework in terms of many of the regulations that US manufacturers have to adhere to? So I mean, I'm stepping way outside my area of expertise in the sense I don't claim great cognitive dominion over all trade policy labor economists, and I've really focused on employment issues. I do think there is a very active debate and a fruitful debate going on about how important is manufacturing as a kind of a strategic area in which a lot of innovation occurs in which it's basically a generator of wealth beyond it's, as Gene Spirling would say, punches above its weight in the economy. And I think that's a very important question. However, it's not about textiles, it's not about footwear, right? It's about high-tech manufacturing, and it is the case that US remains a very large high-tech manufacturer and is the world's second largest country in terms of manufacturing value added. However, that doesn't mean that base isn't being eroded. I think there's reason for concern about that, but it's not about the job side per se. It's about strategic innovation, as Theo was speaking of, in terms of R&D investment, in terms of infrastructure investment, in terms of tax credits to facilitate knowledge creation, including supporting of basic science and industry. And I do think that if you look at the US history, so much of our wealth comes from innovation, that we should be very concerned about the possibility that we would lose that. And manufacturing is home to most of the, something like two-thirds of all the industrial R&D done in the United States. So I think that's a very, I think it's a very important concern. I don't think it's nearly as central to the types of goods we're primarily talking about here, but China's moving up the value-added chain, for sure. China's share of value-added in its own outputs is rising a lot, and that's a good thing for them, but we should make sure that we are also making similar investments. I'm wondering, I see Scott Paul here, who is the director of the Alliance for America Manufacturing, and since that seems, we're discussing this now. Scott, do you have a question or follow-up to? Yeah, one. Absolutely. As well as the auto sector trade markets. Right. Yeah, I think it's a really good question. We are doing, we do have, quote, follow-up studies, but they're actually, they're not follow-up in time, they're follow-up on related questions. So I think at the moment, the strategy we use, we wouldn't be able to use it for the same, for the most recent time period. We just wouldn't have the same, I don't think we'd have the same type of variation. So I think partly in empirical economics, you have to find your targets of opportunity, sort of the question you want to answer with the approach that's going to work for answering that question. I don't know if we'll be able to evaluate what's happened in the last few years. I will tell you that we do have recent work looking at the effect of trade displacement on individual workers. So we look at workers, according to the sector of employment in 1991, and we look at the shocks that occur to those sectors due to the same trade factor. And then we ask how that affects the evolutions of individuals' earnings, employment, mobility across sectors, and also their disability uptake over the course of the next 15 years. And we do find consistent what we're seeing here that the person-level impacts are significant. You sort of see this trade adjustment process play out. But I don't think that answers your question. I think it's a really important one. Gary, you'll do that follow-up. I'm too exhausted. Maybe we have to talk. Given that there are countries other than China that may experience this kind of surge in productivity, are there other U.S. government activities that should be considered, what does it say? To raise U.S. firm productivity. To raise U.S. firm productivity. So actually, so I want to, this is a point that was brought up earlier, Gary brought this up. There are other countries that want to follow in China's footsteps, but there's no other country that says large. And in trade, size matters. The size of a country affects the amount it can produce of something competitively. And so if Cambodia had undergone exactly what China underwent over the last 20 years, we wouldn't be talking about it because it's just not that big. So you need a large, populous country. So you need, well, a populous country. I mean, I think India's a possibility, Brazil's a possibility, but there aren't that many like this. Nor will the next 20 years of China look like the last 20 years, right? It's easy to get to the frontier when you're behind because it's not simple, but you don't have to invent something new. You just have to figure out how to do what other people are already doing. To get 20 years beyond the frontier, you've got to do something really special. So that's normal. So I don't think we're gonna see the same phenomenon repeated in the same way. I don't think there are a lot of other countries that are gonna be the next China just because they can't be as big. But should we be concerned about this? I think we should be concerned about the US trade deficit. I think we should be concerned about our employment rates than the dramatic falls in the employment population of especially less educated Americans. I think we should be concerned about investing in the educational resources and the infrastructure in R&D that will allow us to continue to be innovative. Okay, we have a question here, David, that you looked at income and employment effects. So it would be possible to look more broadly at other indices of standard of living effects, loss of home equity, loss of local services. How many other things do you think you might be able to measure and link and correlate to your data? Oh, an unlimited number. The, I will say we, so we do actually have a couple other projects that we're working on this. We just got a grant from the Russell St. Foundation. One is looking at kind of what you might call health and behavioral outcomes in communities in terms of high school dropout, teenage parenting, other things that might look like maladaptive behavior, depression, so on. The other aspect that we're looking at is political polarization or whether how economic shocks change voting patterns and to ask, trying to understand, for example, the wildly documented phenomenon of the sort of white working class males and their very, and their views that have become so dissimilar from many other. You need a multivariate analysis, they're speaking as a political journalist. Yes, so there's a lot of other things we're looking at, I think. But it's still years away. Hey, as I am fumbling through cards, we've already read, if anyone wants to raise a hand, that's Larry, Larry Michele, president of the EBI. A greater universal system that has to kind of give a real living in a world where we have regular unemployment insurance benefits, which some states are now, we know that real wages for, not just less education, it's the reports of clearly fell that the wages fell and that, you know, constraints vary that you would expect them. That's why Josh's book says that trade is, you know, everybody wins except for most of us. Because we know that the inequality affects a large part and the downward pressure of wages is larger than the benefits of the lower prices. Two comments. Can I make observations on both those things? Sure. This is not to disagree with either of them. One of the, in the early 1990s, when I was participating in a lot of joint trade economists, labor economists conferences, one of the only ones I ever attended where political scientists were also represented because it turns out that trade theory and its impacts on politics is a major topic of political science. Who knew? I did not know. The political scientist present universally agreed that open economy countries, small open economy countries, ones that were most buffeted by the vagaries of currency fluctuations and shifts in comparative advantage had the largest social safety nets. I mean, I did not know this. So this is an apparently empirical regularity among democracies. Countries voluntarily vote for a larger social safety net because they think they have to defend people against the adverse consequences of trade. So in one respect, David's paper showed, documented, why that would be. I mean, here's an event that came out of the blue, right? China goes from nothing to being the second largest economy in the world in the space of 20 years. And it does tremendous harm to lots of communities around the country and lots of individuals that live in those communities. And he documents in this paper, the absorbing effect of the social safety net on these workers. Now, David and I, and I'm sure Larry, don't like the design of these programs. We think that they could be improved. I've made specific suggestions about how to improve them. But that is an empirical regularity with regard to the price index and how it's already reflected in the real wage. Remember, Larry, the way that this is calculated, there's a one uniform CPI. The critique of people who say that shoppers and Walmart have derived better than average improvements in living standards is the argument that the goods and services produced in those kinds of entities have in fact delivered faster gains in wellbeing than are measured by the CPI. They have gotten much cheaper prices in Walmart than we get who don't shop at Walmart. So that's the nature of the debate. Are some people seeing improvements in their real wages that are less well measured by the price index, given that it's a common price index for everybody in the country, millionaires and paupers? I agree completely with you. So these are technical points that sort of obscure what is the larger picture. Even though someone may wave their hands at that one, but it's not, it doesn't really... Well, it was the heart of one of my arguments. The heart of one of my arguments was that you want to document where the... Just as you want to document what communities and what kinds of workers have suffered, you also want to document on the flip side how the benefits are distributed. That was my only point. And I agree with you, Larry. I don't think that... I don't think that the trends have been beneficial for middle and lower middle-income people. I don't think it would, that's right. All right, we are hitting 230, which is our time limit, so let's get some closing comments from David. Well, I actually just wanted to weigh in a little bit on this debate. I agree with just what was just said. I do think actually that it makes some difference, and there's work that suggests amazing some difference, but it's hardly full compensation. But here's the other thing I wanted to say, which I didn't want to leave without being a bad guest and saying something that'll make me unpopular around my hosts, which is when you talk about trade adjustment assistance policy, my understanding from the individuals who have been involved in negotiations of this is that it's actually a very unfortunate stalemate between Republicans and labor unions, that Republicans would be willing to make it more generous if it weren't going to be called trade adjustment assistance and labor unions don't want it to be called anything but because we want to be able to blame those foreign workers for the problems that we face here. And so the compromise is we have a crappy cheap program but it's called trade adjustment assistance. That's just wrong. I mean, Republicans are not willing to make it more generous, period. Okay, well, this may be an artifact of the past, but let's say in the Clinton years, this is my understanding of how the debate over trade adjustment assistance played out. How much you cut the trade adjustment assistance benefits to make it universal? Well, I could be wrong, but I at least achieve my goal of slandering my hosts. Okay, all right, well on that note, and there have been other consensual notes here as well, let me note that. Let's thank our panelists and let's particularly thank David. Thank you. More seriously, I thank my hosts very much. I appreciate this forum, and I think it's been a productive discussion, and I hope this research is useful for that discussion. My impression was... Well, I said I do know someone who was involved in negotiation and there was a real debate about whether it could be a adjustment assistance or a trade adjustment assistance, and there was a real sticking point. Remember the way it could not be called trade adjustment, so it could just be called adjustment assistance. And so it would be... To save the red, which we have the number of workers... Yeah, yeah, yeah, okay, exact. And so you do that, and then what happens is that the workers end up being beneficiaries of per room, and so they don't... I see you were saying reduce for benefit, for benefit, so you do benefit, okay. But I think if you ask them, would you take the trade agreement and say, no, we're going to run around and have a different point of relation to trade. I agree with your question. I want you to comment. I appreciate your comment. I appreciate your comment. Oh, yes. Always my pleasure. Thank you so much. I'm really patient you're making the time of your comments are very eloquent, very on point as well. So thank you. We're going to do it now. We're going to do it now. No, I agree with that. I agree with that. We're going to do it now. Thank you so much. We're going to do it now. We're going to do it now. We're going to do it now. I'm not showing you a controversy here, so please see. Hi, Barbara. What is this? Hi. She's literally thinking about it. Oh, oh, shit. Nice to meet you. Right, I was going to email you. Thank you for coming. I'd love to have lunch. OK. Good. Do you have an idea? Oh, great. I suppose you would pay for it. That'd be fun. I'll send you an email. That'd be so fun. Because I think just a part of what the Chinese mistreat for their world is true. I guess not. I think we have to consider value and more. So right now there's a lot of discussion about the China exposure. You know, we've tried a whole lot of different things. Absolutely. High tech, very far. You've been with them a couple of times. Of course. And as they're tied in with practice, right? Right. Then we need to assemble, and then public policy. That's right. Debate. So long as we need it, it's better to look at it. That's right. No, no, I agree. There's a point we talked about at some point in the paper. And the Chinese value added share of its exports has risen a lot. And there's recent work by things that's new. That's good. That's fine. Thanks, Barbara. Nice to see you again. And it's very nice to meet you. It was really nice to meet you. Thank you for your comments. I really appreciate your time, guys. It's very interesting. And I look forward to spending more time with you and with your next round. Great. Well, I think it was a really productive discussion.