Winners and Losers: The Psychology of Foreign Trade

WINNERS AND LOSERS

Tali Mendelberg, Series Editor

Winners and Losers: The Psychology of Foreign Trade, Diana C. Mutz

The Autocratic Middle Class: How State Dependency Reduces the Demand for Democracy, Bryn Rosenfeld

The Loud Minority: Why Protests Matter in American Democracy, Daniel Q. Gillion

Steadfast Democrats: How Social Forces Shape Black Political Behavior, Ismail K. White and Chryl N. Laird

The Cash Ceiling: Why Only the Rich Run for Office—And What We Can Do about It, Nicholas Carnes

Deep Roots: How Slavery Still Shapes Southern Politics, Avidit Acharya, Matthew Blackwell, and Maya Sen

Envy in Politics, Gwyneth H. McClendon

Communism’s Shadow: Historical Legacies and Contemporary Political Attitudes, Grigore Pop-Eleches and Joshua A. Tucker

Democracy for Realists: Why Elections Do Not Produce Responsive Government, Christopher H. Achen and Larry M. Bartels

Resolve in International Politics, Joshua D. Kertzer

Winners and Losers

The Psychology of Foreign Trade

Diana C. Mutz

PRINCETON UNIVERSITY PRESS

PRINCETON AND OXFORD

Copyright © 2021 by Princeton University Press

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CONTENTS

List of Figuresvii

Prefacexi

1 Beyond the Conventional Wisdom1

2 At Face Value: What Americans Say They Like and Dislike about Trade25

3 Partisan Trends in Mass Opinion on Trade52

4 How Much Is One American Worth?72

5 Trade with Whom?95

6 How Racial Attitudes Affect Support for International Trade123

7 Is This Inevitable? A Cross-National Comparison140

8 Media Coverage of Trade: The Vividness of Losers162

9 Attributing Responsibility for Job Loss189

10 The Impact of Trade on Elections203

11 The Role of Trade in the 2016 Election227

12 Shaping Opinions on Trade: What Works and with What Consequences245

13 The Future of Mass Support for International Trade263

Appendix: Descriptions of Sources of Data277

Notes281

Bibliography301

Index331

Online Appendix: press.princeton.edu/books/winners-and-losers

FIGURES

1.1 Extent to Which Trade Is Mentioned in Conjunction with Competition and Cooperation in Major US Newspapers, 2000–2018

2.1 Percent of Respondents Mentioning

Specific Reasons for Opposing Trade

2.2 Percent of Respondents Mentioning Specific Reasons for Favoring Trade

2.3 Perceived Benefits of Trade for US and Trading Partner Countries

3.1 Republicans and Democrats on Trade, Then and Now, 2016

3.2 Support for Globalization, by Party, 1998–2017

3.3 Perceptions of Whether Trade Is Good for the US Economy, by Party, 2004–2019

3.4 Support for Trade by Party, October 2016–March 2020

3.5 Effects of a Change in the Party-in-Power on Trade Preferences, 2008 and 2012 Presidential Elections

3.6 USMCA: The Best Trade Deal in the World

3.7 Major Correlates of Support for International Trade, 2016 and 2020

3.8 Over-Time Increases in Individual Support for Trade by Change in the Perceived Standing of the US in the World, by Party, 2016–2020

4.1 Changes in the Probability of Strongly Favoring Trade, by Levels of Perceived National Superiority, by Experimental Condition

4.2 Support for Trade Policy Varying How Many Jobs Are Gained/Lost by US and Trading Partners

4.3 Effects of Trading Partner Gains/Losses on Support for Trade Policy, Holding US Gains Constant

4.4 Preference for Relative Gains Among Those High in Social Dominance and Those Perceiving Trade as Zero-Sum

4.5 Ingroup Favoritism and Outgroup Indifference by Partisanship

5.1 Favorability Toward Trade Agreement Based on Experimental Manipulation of Similarity of Country Characteristics

5.2 Favorability Toward Trade Agreement Based on Dissimilarity/Potential Threat from Trading Partner Country

5.3 American Perceptions of Top Trading Partners

5.4 Relationship Between Accurate Knowledge of Trading Partners and Support for International Trade

6.1 Racial Differences in the Effects of Country Similarity on Support for Trade Agreements

6.2 Effects of Country Similarity on Support for Trade Agreements, by Race of Respondent

6.3 Support for Trade Agreements by Whether US or Trading Partner Country Gains/Loses Jobs, by Race of Respondent

6.4 Favorability Toward Purchasing Imports from Trading Countries Based on Dominant Skin Color in Trading Partner Country, by Race of US Respondent

7.1 Ingroup Favoritism: Trade Support by Country and Who Wins versus Loses

7.2 High Social Dominance Encourages Ingroup Favoritism, Especially in the US

7.3 Zero-Sum Perceptions Encourage Ingroup Favoritism, Especially in the US

7.4 Outgroup Indifference: Trade Support by Country and Whether Trading Partner Also Wins

7.5 High Social Dominance Orientation Encourages Outgroup Indifference in the US, but not in Canada

7.6 Zero-Sum Perceptions Encourage Desire for Greater Relative Gains in the US, but not in Canada.

7.7 How Much Is One Canadian Job Worth According to Canadians?

7.8 American Exceptionalism: We’re Number 1!

8.1 Domestic Tariffs Made in America

8.2 Vividness of Trade Winners and Losers, by Whether the US Gains/Loses Jobs

8.3 The Vividness of Individual versus Collective Trade Winners/Losers, by Whether the Winners/Losers are Americans or Foreigners

9.1 Newspaper Articles Linking Job Loss to Trade versus Automation

9.2 Effects of Attribution of Job Loss to Trade versus Automation

9.3 The Perceived Acceptability of American Superiority, by Education and Attribution of Job Loss to Trade versus Automation

10.1 Percentage of Americans with Personal Opinions on Trade and Perceptions of the Major Party Candidates on Trade, 2008–2016

10.2 Change in Support for Trade Pre- to Post-Recession Based on 2007 Assessment of Whether Trade Helps or Hurts the Economy

11.1 Extent of Perceived Discrimination Against Racial, Religious, and Gender Groups, by Trump Voter or Not

11.2 Average Respondent Opinions and Perceived Candidate Opinions, 2012–2016

11.3 Net Change in Predicted Probability of Republican Vote for President, 2012–2016, among Validated Voters Only

12.1 Effects of When China Met Carolina on American Attitudes Toward the US and Chinese Governments

12.2 Effects of When China Met Carolina on the Extent of Perceived Similarity Between Americans and Chinese, Support for Chinese Foreign Direct Investment in the US, and International Trade

12.3 Effects of So You Want To Be President on American Attitudes Toward American and Chinese Governments

12.4 Mine is Taller: Out-toughing the Opposition on Trade

12.5 Effects of Obama and Romney China-bashing Ads on Respondent Anxiety Levels and Attitudes Toward China

12.6 Effects of Obama and Romney China-bashing Ads on Attitudes toward Foreigners

13.1 Trump and the Trade Deficit

PREFACE

This book was supposed to have been completed before Donald Trump took office. That book would have addressed a relatively low-profile political issue, how the mass public decides where it stands on international trade. With Trump’s candidacy and subsequent election, this turned into a much larger project. By choosing foreign trade as one of his signature campaign issues, Trump raised the profile of this issue tremendously, creating turmoil in both mass opinion and elite reactions.

As a result, this topic has become far more interesting as an academic subject. It is also far more important as a political issue. Unfortunately, the dynamics of opinions toward trade also became far more puzzling after Trump’s election. Had I stopped then and sent things off to press, what I had observed would have been far easier to explain. But it would not have withstood the test of time. No one wants to write a book whose theory is out of date almost immediately after it is published. So, in retrospect, the book comes closer to offering a thorough understanding of mass trade opinions as a result of having slogged through the baffling dynamics of trade opinions throughout Trump’s presidency.

As someone who is not trained as an economist, I approached trade as a lay person might. I had always assumed—and found to some degree—that trade opposition was borne of empathy for the victims of trade, the unfortunate people we hear about on the news whose factories are closed and livelihoods thus devastated. I say hear about on the news because most Americans are not employed in import-competing lines of work. Given that most of us are employed in non-tradable sectors of the economy, we learn about this problem through sources other than personal experience.

My own early sources of information gave me mixed feelings. I grew up in the state of Indiana at a time when the steel and automotive industries in the northern part of the state were experiencing massive layoffs. Whole communities were decimated by factory closings that were widely blamed on international trade, and particularly on competition from Japanese car manufacturers.

Many years later, as a scholar studying public opinion in American politics, my colleague Ed Mansfield re-introduced me to this interesting issue as a topic of academic research. What surprised me most was how differently international relations scholars and students of American politics viewed the public’s knowledge about trade and the likely bases of their policy attitudes. The kinds of calculations political economists attributed to average Americans did not mesh well with what I knew about levels of voter knowledge or the usual bases for forming opinions on policy issues. International relations scholars clearly had a lot more faith in the expertise of the mass public than scholars of American politics did. But the types of evidence they marshaled to make their cases were also quite different, making it difficult to reconcile such starkly different conclusions.

The initial studies that Ed and I pursued out of our mutual interest in this topic laid the groundwork for what later became this book. Without his encouragement and expertise, I would never have taken on this topic at all. That said, he bears no responsibility for the conclusions herein.

As happens to me with many topics, as I learned more about the origin of mass trade opinion, my own views changed. First, travelling internationally to less economically developed countries made my mental images of inequality far starker than what I had seen in the US. There was poverty, and then there was extreme poverty. Few will argue with the claim that trade has helped the world economy, expanding the size of the global middle class.¹ Around the globe, people have benefitted and levels of worldwide poverty and inequality have dropped. Nonetheless, among Americans, trade’s effects on domestic inequality tend to be the more salient concern. So, while I continued to find trade’s negative effects on American jobs off-putting, I became increasingly cognizant of the positive aspects of globalization and the beneficial consequences of international markets.

Further, the results of my studies did not paint as well-intentioned a portrait of trade opposition as I had anticipated. First, it was not the people losing jobs who were most upset about trade as had been widely assumed. I had thought that in addition to concerns about displacing US jobs, those opposing trade would be concerned about its environmental impact, and about problems such as child labor and unsafe working conditions. Those concerns were out there, to be sure, but only to a very small extent. Instead, what I found was that it was all about us, that is, all about the US getting what Americans see as its fair share of the international pie. This seemed like a bizarre perspective from one of the richest countries on earth.

In one of our early studies, Ed and I found that domestic ethnocentrism—differences in how positively Blacks, whites and Latinos in the US judged their own group relative to other racial groups—was the best predictor of trade opposition. Those who didn’t like racial outgroups, didn’t like trade. In another experimental study, people’s judgments indicated that no amount of job gains for trading partner countries could justify the loss of even one American job in most Americans’ eyes. In another study, white Americans supported trade with dark-skinned countries systematically less than trade with light-skinned countries. And countries without the same language and cultural customs were also deemed less worthy. On and on it went. I thought I was studying an economic issue, but people’s views were less about the bottom line than about what kind of people they viewed as deserving.

When the culture within a country encourages favoring co-nationals in a supposed competition against citizens of other countries, I’m afraid that it brings out the worst in people. For that reason, I end this book with some practical suggestions for approaching discussions of trade with mass publics. There are many legitimate reasons to favor or oppose international trade, but appealing to Americans’ competitive instincts and their desire to dominate other countries and win against the competition are not the most admirable. While economic self-interest is easily justified, racism and ethnocentrism give trade opponents a bad name. When people are keen to support trade only if it allows them to take advantage of countries that are not like them in terms of being well-off, white, and Christian, then trade opposition loses some of its nobility. In short, the roots of opposition to trade were not as rational and well-meaning as I had assumed.

During the writing of this book, I have incurred a huge number of debts. For funding that made much of this data collection possible, I am grateful to the Guggenheim Foundation and to the Andrew Carnegie Foundation for their support of this project. At the University of Pennsylvania, the Christopher H. Browne Center for International Politics and the Institute for the Study of Citizens and Politics also made important contributions. Penn undergraduates Veronica Podolny and Ivy Hunt helped with preparation of the manuscript. My graduate students were heavily involved in many of the projects that ended up in this book, and I could not have handled such large volumes of data without them. I give special thanks to Laura Silver, Eunji Kim, Kecheng Fang, and Amber Hye-Yon Lee for their contributions. Kyle Cassidy helped with preparation of the figures and tables. The series editor, Tali Mendelberg, and my editor at Princeton, Bridget Flannery-McCoy, both provided valuable encouragement in taking on this controversial topic.

Finally, I thank my husband, Robin Pemantle, who is neither an economist nor a political scientist, for being precisely the right kind of person to read many drafts of these chapters. As another kind of outsider, his advice was extremely valuable in conveying what did, and did not, make sense as I pulled this book together.

Just as I was concluding this book, COVID19 descended upon the United States. Some are predicting that it is yet another nail in globalization’s coffin. My own, far more optimistic, view based on this research is that while economic hard times in the near future may temporarily turn people inward, COVID19 brought to the forefront of public attention the need for global cooperation in order to address the world’s most pressing problems, that is, problems without borders. Toward that end, it is incumbent upon the US to provide global leadership, including a new image of trade as a path to enhanced international cooperation.

Diana Mutz

Haverford, PA

November 2020

WINNERS AND LOSERS

1

Beyond the Conventional Wisdom

Kevin Watje manufactures garbage trucks in Iowa. He knows a lot more about international trade than most Americans because his company gets the steel it uses in its trucks from China. Trump’s trade war with China has made obtaining materials much more expensive for his company. Yet when a reporter interviewed this Trump supporter about his views on trade, he remained steadfast in his support for both Trump and his trade policies, suggesting that we got to do what we’ve got to do. When asked about this larger goal, he described his quandary:

I get it, there is an imbalance of trade, and that needs to be dealt with. And I support him in that, but we just want to make trucks out here, O.K.? And I understand it needs to be done, and I support his efforts, but I think it’s been adding a lot of stress to our company because of these tariffs and how it’s disrupted our supply chain.¹

Pressed further by the reporter about why he supports a policy that is personally hurting him and his company, Kevin explains,

There’s men and women that go to war and put their lives at stake. And we’re Americans, we all ought to fight this fight with our president. And we’re not risking the things that soldiers do to keep our future safe and prosperous. So, I think it’s a small price to pay. I think we ought to stand in there and help him.

Kevin may be unusual in his level of knowledge about how he and his company are affected by trade, but the way in which he thinks about where he stands on trade is more commonplace. It has less to do with how he is personally affected by the policies in the short term than about broader, often symbolic long-term objectives.

This book examines how Americans decide what they think about international trade. Some scholars question whether they even think about it at all. But in the twenty-first century, globalization of the world economy is difficult to ignore. People know that products and services come from all over the world, that globalization is an inevitable fact of everyday life. But is this development something they welcome or something they view as best avoided, if at all possible?

From the initial conversations about trade that I had with everyone from neighbors to participants in random national surveys, three general observations emerged, themes that seemed to me to contradict much academic thinking about mass opinion on trade. First, for most Americans, globalization is something happening out there, away from their everyday lives. Unlike Kevin, most do not see themselves as an integral part of this narrative. For example, a consistent majority of Americans say that their families’ personal finances are unaffected by international trade in either positive or negative ways.² While I’m certain that economists and policymakers would beg to differ, it is nonetheless striking that most Americans see it that way.

Second, when people talk about what they like about international trade, they seldom talk about economic principles. For economists, there are two standard reasons that trade makes sense as a mutually beneficial enterprise.³ One logic, credited to Adam Smith, is that specialization saves everyone time and money.⁴ People can produce more things of value if each person does one thing instead of trying to do everything for themselves. By trading for other things that they need, production is more efficient, and everyone gets more of what they need than they would working on their own. I have once, and only once, made my own butter. It was interesting, but highly inefficient relative to buying it at the store.

A later extension of the logic in favor of free trade is more complex. In his theory of comparative advantage, David Ricardo argued that international trade was mutually beneficial due to differences in countries’ capacities to produce goods. A country does not have to be best at anything to gain from trade, but mutual benefits occur when countries specialize in things they are relatively better at, even though they may not have an absolute advantage in those areas. I find that even college-educated Americans are not thinking about these logics when asked about international trade. They lack confidence in their understanding of the expansive and complicated range of large-scale interactions constituting the international economy.

When average Americans who favor trade articulate its benefits, these virtues are notably absent. For example, even among those who are enthusiastic about trade, few wax poetic about the wonders of the invisible hand, the efficiency of market specialization, or even the lower cost of consumer goods. And not a single individual mentioned the importance of trade relationships to the liberal international order, a common refrain among political scientists. This is not to say that these ideas are completely absent from their reasoning, but they speak a different language about trade from that of economists and political scientists.

A third observation is that despite limited economic knowledge, people do, nonetheless, hold opinions about international trade, even quite strong opinions in some cases. People are not so much misinformed as they hold alternative, lay theories about how international trade works. But again, contrary to what much of the academic literature suggests, these opinions are seldom expressed as a matter of personal economic costs and benefits. Instead, the mass public’s views are rooted in their understanding of the psychology of human interaction, projected onto their nation’s relationship with foreign countries. The way ordinary Americans think about trade is very different from the way economists and policy wonks think about it.

Previous work on how people form attitudes toward trade has focused almost exclusively on people’s economic reasons for supporting or opposing trade. Consequently our understanding of public opinion has been incomplete. This book addresses that gap by focusing on the lay theories and internal logic the public uses to make judgments about international trade.

I begin by briefly rehashing what we thought we knew about how the public formed its opinions on trade. I then outline an alternative framework that has emerged from my observations over fifteen years of studying the American public. Fortuitously, this time period happens to have been a particularly tumultuous time for American attitudes toward trade, thus shedding light not only on how people form their views, but also when and why they change them.

The Conventional Wisdom

There are two well-known theories that have been offered to explain the origins of mass opinions on trade. Both focus on individuals’ pocketbooks and how they are personally affected by trade. According to the Heckscher-Ohlin model, trade preferences depends on a person’s skill level and what kinds of products their home country produces most efficiently. In a high-skill country like the US, highly skilled people should favor trade, and low-skill individuals should oppose it. An alternative theory, known as the Ricardo-Viner model, suggests that people base their opinions about trade on the industry in which they are employed. If their industry benefits from trade by exporting goods, they favor it. But if their industry must compete with foreign imports, they will oppose international trade.

Such highly rational expectations are common in economic analyses, but they seem much less plausible from the perspective of what we know about American political behavior. Situations in which people have been found to express self-interest-based policy preferences are known to be rare. They are limited to simple, straightforward issues, or to populations of especially sophisticated people.⁵ Trade policy does not fit that mold well. As an economic issue, trade is complicated, abstract, and multi-faceted. There is a lot for people to consider and potentially synthesize, particularly when trade has simultaneous positive and negative effects on people as workers, as employers, and as consumers. As one study recently concluded, The sheer complexity of the global economy makes it difficult for economic actors—and the scholars who study them—to predict how policies would affect material interests.⁶

Nonetheless, it is not difficult to convince people that there is merit to theories rooted in self-interest, and not only because economists have widely endorsed this idea. Media coverage also promotes this idea as a natural reaction to the loss of jobs that is caused by trade.⁷ Apparently humans have a well-documented psychological tendency to overestimate the impact of self-interest on others’ attitudes and behaviors,⁸ even when they are not personally influenced by it. In the context of international trade, this means it is easy to sell the idea that opinions boil down to how it affects people’s pocketbooks.

Why have alternative explanations for trade preferences been so slow to emerge? My best guess is that this is because people seldom find what they are not looking for. Initially the economic studies supporting self-interest-based interpretations were exclusively aggregate-level analyses based on measures of collective behavior within geographic units of some kind. When scholars turned to individual-level survey data to test these theories, some findings still seemed supportive of skill-based self-interest because education level was equated with skill level. Education consistently plays a role in promoting support for international trade.⁹

Studies of individuals as well as analyses of geographic aggregates agree on the importance of education in predicting trade preferences. Higher levels of education are directly related to support for open trade, even when taking characteristics such as income into account. Where these studies disagree is in the interpretation of what the relationship between education and trade support means. When economists are interpreting this evidence, education is often viewed as an indicator of a person’s job skills. Political psychologists, in contrast, are likely to note that education is associated with a wide range of potential explanations for trade preferences, including many that have nothing to do with whether trade threatens a person’s livelihood. For example, low levels of education are terrific predictors of negative attitudes toward outgroups, whether domestic or international. Low levels of education also support the tendency to see the world in an us versus them framework.

Survey data ultimately made it possible to distinguish among these various interpretations of education. People could be asked about their industry of employment, as well as their skill levels, and this could be matched with official data on how industries were affected by trade, as well as with occupational wages. The overall consensus from these studies is that personal economic self-interest plays little, if any, role in people’s opinions on trade.¹⁰ With the exception of varying interpretations of education’s impact, relationships between labor market attributes and trade policy preferences do not hold up in US survey data.¹¹

Indeed, the behavioral revolution in international relations increasingly suggests that inferring ordinary people’s preferences based on complex economic models can lead scholars astray. Thus a second wave of studies of trade opinions has pursued a variety of alternative, largely non-economic explanations. This book attempts to pick up where the early explanations left off, focusing on explanations for trade preferences that have surprisingly little to do with economics and far more to do with basic human psychology.

To be clear, the fact that personal self-interest matters little to trade preferences does not imply that Americans are altruistic or that the economic impact of trade does not matter to them. When contrasting self-interested and sociotropic predictors of trade preferences, that is, how a person believes he or she is affected by trade as opposed to how he or she believes the country as a whole is affected, scholars have at times equated sociotropic impact with altruism.¹² This characterization overlooks the fact that there are many reasons that people base their policy views on perceived national impact, reasons that have nothing to do with altruism as traditionally understood. Rooting for the home team to win is not an altruistic act.

Although personal economic interests may not predict trade preferences, perceptions of how trade affects national economic conditions, that is, sociotropic perceptions, matter a great deal.¹³ People’s perceptions of the national-level impact of trade may or may not be accurate, but these perceptions are key to understanding their opinions on trade policy.¹⁴ Regardless of how selfless or selfish one might be, it is simply much easier for people to connect policy decisions made in Washington to those policies’ collective national consequences than to connect events in their daily lives to decisions made in Washington. Surprisingly, even something as gut-wrenching as losing a job is widely viewed as a personal rather than a political problem; unemployment is seldom a cause for a change in political attitudes or behavior.¹⁵ Far from being a default reaction, politicizing personal economic experiences is difficult and uncommon.

This is surprising to many because personal experience is such an easily accessible source of information. But the process of politicizing personal experience involves multiple steps, any one of which can break down the process. In the case of international trade, first, ordinary people need to be able to formulate accurate assessments of how trade affects their personal incomes and purchasing power. Second, they must attribute these effects to actions (or inaction) by government leaders. Finally, they must link the personal economic consequences of trade to support for specific policies. What is depicted by some as a puzzling disconnection between material interests and policy preferences¹⁶ does not seem puzzling or even unusual to those who study how ordinary Americans form policy preferences. Across a wide range of issues beyond trade, evidence of self-interested policy preferences is uncommon.¹⁷

Most Americans have a difficult time figuring out when a policy aligns with their personal financial interests. There are some exceptions, of course, but trade policy does not seem likely to be one of them. It is very difficult to observe directly the positive and negative effects of trade on individual American lives. With the exception of when a person knows that he or she has lost a job due to trade, this is a complex calculation.¹⁸ The effects of trade on the lives of people overseas are even more difficult for Americans to observe.¹⁹

The progression of research on how people form attitudes toward trade closely parallels the progression in studies of how the national economy affects voting. Initially, the idea that people voted their pocketbooks was considered a self-evident truth.²⁰ But as individual-level data became more widely available with the advent of representative national probability surveys, serious questions were raised about this interpretation.²¹ When family financial self-interest did not predict voting behavior as had been anticipated, some explained this by saying scholars simply had not measured self-interest properly. Others suggested that perhaps it was group-based financial interests that mattered.²² But neither of these approaches did much to resolve the inconsistency between aggregate patterns that seemed to support the idea that people voted their pocketbooks, and individual-level evidence suggesting that they did not. This disjuncture was resolved to some extent by the concept of sociotropic economic voting. People did not vote on the basis of how they themselves had been affected economically, but they did vote on the basis of how they thought the nation as a whole had been affected.

Studies of trade preferences have followed a very similar path. In contrast to the lack of evidence that personal financial self-interest drives attitudes toward trade, there is clear evidence that the perceived collective effects of trade on the country as a whole matter a great deal to people’s policy preferences.²³ Here, as in many other policy domains, sociotropic perceptions, that is, beliefs about the impact of trade policy on the country as a whole, are more easily linked to policy preferences. What is unique about international trade is that in forming opinions, one can potentially consider not only its perceived effects on one’s own country, but also its perceived effects on trading partner countries. In this sense I have termed it doubly sociotropic because people may consider trade’s impact on trading partner countries as well as its impact on the US.

Conceptualizing a Global Economy

It is easy enough to criticize Americans’ lack of formal knowledge about economics and international trade. But it is worth taking a step back to remember that the sheer idea of a national economy is highly abstract, and only a recent phenomenon. One hundred years ago, people did not talk about something called the national economy. Unlike the national anthem, or the American flag, there was no national economy until social scientists imagined it into existence in the wake the Great Depression. Indeed, 1934 was the first time the US government had a quantitative indicator of how things were going in the country as whole, something they initially dubbed National Income. Before that, concepts like GDP were not a part of public consciousness.²⁴

Today it seems as natural to talk about how the economy is doing as it is to discuss sports scores. We forget that economies are highly abstract entities, reified at regular intervals by economists and journalists. We don’t see them or touch them, and we rely a great deal on experts to tell us in what shape they are in. Few people would have enough personal exposure to the extensive American economy to assess how it is doing across this large country were it not for regularly released government statistics.

If the notion of a national economy is abstract, then an international economy is even more incomprehensible. Global trade has brought about relationships on a scale and at a level of abstraction that was previously unimaginable. Because these relationships are indirect and typically mediated by complex international markets, they are extremely abstract and difficult for most of us to wrap our heads around. What’s more, when these abstract entities seem distant and divorced from everyday life, people may feel the lack of control that naturally comes with not understanding how distant processes work.

Because humans are guided by a psychology that is deeply rooted in concrete, face-to-face, interpersonal interactions, our thought processes are poorly suited to comprehend large-scale, complex systems such as international trade. To deal with this problem, people often try to extend what they know about human interaction to understand international interactions, an approach that does not always serve them well.

Relationships and interactions on scales beyond our comprehension lead to some predictable responses. One is to simplify the target of our consternation down to something concrete that we do feel we can understand. When someone tells us that balancing the federal budget is just like balancing the family checkbook, then we are reassured by the familiarity, even if it is misleading.²⁵ Likewise, the stories we tell one another about trade can influence the attitudes we form, regardless of their veracity. Whether the stories are about foreigners stealing our jobs or about poisoned dog treats from China, once these ideas are reduced to compelling narratives, they can spread quickly.

Such narratives and metaphors encourage people’s sense that international trade is a source of risky relationships, unlike relationships with people we can see, hear, and know firsthand.²⁶ After all, we tell children at a young age not to speak to strangers, let alone to have relationships with people in far-flung countries. Distant relationships are naturally seen as less trustworthy and reliable than those close to home. Thus globalization runs headlong against the grain of much of basic human psychology, asking us to trust distant, impersonal, and dissimilar others, and to cede the control we may feel over at least our immediate environments.

For someone who has never thought much about whether trade is beneficial or harmful, intuition based on everyday experience is a natural starting point. Americans begin by forming lay theories about how their day-to-day lives are influenced by trade.²⁷ Given an admittedly challenging task, this approach seems like a reasonable way for people to try to grasp the highly abstract concept of participating in a global economy. Indeed, one major theme running through this book is that people react to trade relationships in much the same way they do other relationships in their lives.

Competition versus Cooperation

If their opinions are not based on economic considerations, then how do Americans think about trade? The most basic difference that comes through when Americans talk about trade is whether they view it as a form of cooperation or as a source of competition. One recent observer characterized the kind of people predisposed to be unfavorable versus favorable toward globalization as either drawbridge up or drawbridge down types:

Do you think the bad things will all go away if we lock the doors? Or do you think it’s a big beautiful world out there, full of good people, if only we could all open our arms and embrace each other?²⁸

The former, drawbridge up types, tend to be distrustful of people beyond their borders, and fearful of being taken advantage of by others. They believe cooperation is for suckers. These are people who tend not to trust strangers and especially do not trust foreigners who seem very different from themselves.

Drawbridge down types, on the other hand, come out of central casting for the old Coca-Cola commercial featuring a multicultural chorus of young people from all over the world gathering on a mountaintop to sing, I’d Like to Teach the World to Sing in Perfect Harmony.²⁹ Of course, this characterization is overly simplistic and definitely corny. But as I describe in the chapters that follow, this warm feeling is an important part of why people who favor trade feel so positively about it.

Nonetheless, most Americans appear to view trade as a form of international competition. In a 2013 address, the economist Paul Rubin lamented this fact, noting that introductory textbooks on economics in the US mention competition eight times more often than cooperation.³⁰ Of course, most Americans do not read economics textbooks anyway. But this raises the question of which of these perspectives—the cooperative or the competitive one—dominates in popular discourse? To provide a quick answer to this question for the US, I downloaded a large quantity of text from an extensive database of major US newspapers from 2000 to the present, including all articles that met specifications indicating that international trade was being discussed in some capacity.³¹ I then plotted how many times articles mentioning trade co-occurred with the word competition versus cooperation over time, including variants of these words.

The findings in Figure 1.1 suggest that trade is overwhelmingly mentioned by the press in conjunction with competition, far more often than in conjunction with cooperation. Although this is admittedly a quick and dirty assessment of the emphasis on competition versus competition, regardless of the terms I used to specify these ideas, competition always dominated cooperation. Whether this coverage simply reflects the pre-existing emphasis of policymakers or helps to shape the competitive emphasis among the public remains to be seen. But competition clearly dominates thinking about trade in the US.

FIGURE 1.1. Extent to Which Trade Is Mentioned in Conjunction with Competition and Cooperation in Major US Newspapers, 2000–2018

Note: Lines represent the rolling average of the number of mentions of trade within the same article as either the word competition or the word cooperation, or their variants. Numbers are based on a batch download of all articles mentioning trade in major US newspapers included in the Nexis database, after extracting those articles that use this term in other contexts.

The tendency to emphasize a competitive framing of trade may be responsible for many of trade’s negative connotations for Americans. Whereas cooperation sounds highly moral and laudatory, and implies a win-win situation, a policy rooted in competition sounds to many like a dog-eat-dog, cut-throat situation that results in one group dominating another.³² A policy that creates winners and losers is inherently more dangerous than one rooted in cooperation.

What is ironic about this characterization is that when economists refer to trade as a policy that creates winners and losers, they are referring to the distributional consequences of trade, that is, winners and losers in different lines of work within the home country. For example, in the US, businesses and industries that export products generally benefit, as do employees in those lines of work. But industries that cannot compete in the global marketplace may go out of business, thus creating losers and unemployment among people in those industries. In contrast, when the public at large thinks about winners and losers due to trade, they are more likely to think of a competition involving the US and a trading partner country, one in which