Krugman's Back of the Napkin - 1.4 million U.S. jobs lost due to Chinese Mercantilism

Paul Krugman has done a rough, on the back of a napkin calculation on the cost of jobs due to Chinese Mercantilism alone.

if we think of the United States as bearing a proportionate share, and also use the rule of thumb that one point of GDP = 1 million jobs, we’re looking at 1.4 million U.S. jobs lost due to Chinese mercantilism.

Bear in mind this is not a formal result, simply a very rough estimate put forth on his blog for discussion, not a formal research paper.

A couple of IMF researchers estimated China accounts for 0.9% of GWP (gross world product).

Since China's GDP is heavily export driven, Krugman asserts one can look at this as a negative impact on world exports., which in turn, negatively impacts purchases of goods and services from U.S. providers and this is a multiplier effect.

Then, Krugman notes the target consumer market for China is the United States and it's true, 83% of the U.S. non-oil trade deficit can be attributed to China. Krugman then gives the very rough, wet thumb in the air to measure the wind multiplier of 1% U.S. GDP equates to 1 million jobs.

So, due to China, very roughly, the U.S. has lost 1.4 million jobs.

I'm thrilled to see any major mainstream economist start examining the real statistics and negative impact of China trade policy. I sure hope Krugman gets serious and writes a full-bore research paper and analysis.

Did you know India's offshore outsourcing industry employed 800,000 workers in 2007? Once again, the United States is a huge target for India to capture our jobs. Now how many jobs have been lost due to offshore outsourcing? This is direct wage arbitrage. If you noticed, few mainstream economists even mention the words offshore outsourcing. It's like some hidden, secret taboo and folks, hey, results are results, statistics are statistics and the negative impact of global labor arbitrage needs to be examined, not only for it's affect on the U.S. middle class, but also it's negative impact on the long term economic national health.

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Krugman and the American tax base

God, I hate Krugman!

And why? Because he has long been a strong supporter of corporatization (formerly known as globalization) and for the offshoring of as many American jobs as possible. He has done this both through various economic jobs and positions and his membership with the Group of Thirty (

Lately, Krugman has been posturing as a "progressive economist" -- which means he has suddenly discovered that maybe...just maybe...offshoring all these American jobs might just be adding to the dismantling of the American tax base!

What a concept, Krugface!

Now why would I, or anyone else, never take Krugman seriously as an economist?

So if corporate america offshores all the jobs, and refuses to pay taxes.....hmmm...whatever became of the American tax base?

good math is why

;) In watching Krugman over time what I would say is he will mention economic realities but almost as a side comment. I was quite surprised to see this on his blog.

I think he knows full well trade policies have hurt the U.S. economy, as implemented and I suspect he knows he really screwed up in discounting the negative consequences for localities and disruptions while coming into equilibrium on trade.

But his math is good and when one reads the details of his work, these effects are in there..

it's not like he's written some fiction anywhere.

I don't think he's been a huge proponent of offshore outsourcing, it's Mankiw who is in denial on the real statistics and overall results.

So, while I can see your anger and this sort of politically correct tap dance around a host of these issues which were often promoted in the 1990's...
is very irritating...

I would not blast him now for writing something that is pointing out China esp. is a real threat to the U.S. economy and worker due to biased trade practices.