Stopping currency manipulation by other nations and reducing the trade deficit would create between 94,000 and nearly 200,000 jobs in Ohio, according to a new study of the state’s economy.
The study is to be released Thursday by the Economic Policy Institute, a labor-business sponsored think tank that advocates for domestic manufacturing. It said ending currency manipulation by other nations would reduce the U.S. goods trade deficit by $190 billion to $400 billion over three years.
It would also create a manufacturing-based recovery for Ohio, said EPI’s Director of Trade and Manufacturing Policy Research Robert Scott, creating between 2.2 million and 4.7 million U.S. jobs and between 94,900 to 199,700 jobs in Ohio, one of the nation’s top manufacturing states. Scott said the calculation is based on a model including Gross Domestic Product, employment by industry and how the deficit hits revenues and spending.
EPI said that between February 2010, when manufacturing employment fell to its lowest point, and October 2012, manufacturing has added 504,000 jobs, constituting 11.1 percent of U.S. jobs created in that period, including about 50,000 in Ohio. But between March 1998 and October 2012, the U. S. lost 5.7 million manufacturing jobs, mostly due to the growing U.S. trade deficit created by importing goods from abroad.
“By artificially lowering the cost of U.S. imports and raising the cost of U.S. exports, currency manipulation distorts international trade flows, which leads to goods trade deficits that displace U.S. jobs, particularly in the manufacturing sector,” EPI said. “Because currency manipulation is the largest single cause of U.S. trade deficits, halting global currency manipulation by making it illegal for China and other currency manipulators to purchase U.S. Treasury bills and other government assets is the best way to reduce the U.S. trade deficit, create jobs and rebuild the economy.”
Ending currency rigging would create jobs, but to keep momentum going, EPI recommends expanding investments in manufacturing R&D and technology, public financial support to small and medium-sized manufacturers, and developing school-to-work job training for non-college educated workers like apprenticeship programs found in Germany.
A similar study was released in December by C . Fred Bergsten and Joseph E. Gagnon, both former high level federal officials now with the Peterson Institute for International Economics. They said the U.S. has lost up to five million jobs by failing to respond to currency manipulation, particularly from China, Denmark, Korea, Malaysia, Singapore, Switzerland, and Taiwan, with China the largest.
They recommend the U.S. and its allies seek voluntary agreement from the manipulators. But if that doesn’t work, the U.S. should take countermeasures including restricting purchases of U.S. assets by China and making a case before the World Trade Organization.
Late Wednesday, Ohio Sen. Sherrod Brown said the federal government should act on the reports. “Our nation’s record trade deficit is more than just a statistic: it affects real jobs in important industries. When industry and the government get tough on cheaters and enforce our trade laws, America wins. That’s why we need to act now on the recommendations published in this new report—and stand up for Ohio’s workers and businesses,” Brown said.