Trade has enriched humanity, continuously providing cheaper and better goods while dramaticallydecreasing global poverty. Extreme poverty’s end is now in sight. A Gallup poll released recently shows that 58% of Americans view trade as an opportunity rather than a threat, and this belief has been rising. Yet we seldom hear of the incredible benefits of exchange. The 2016 presidential election has brought with it an increased interest in U.S. trade with China, with political figures like Donald Trump prominently focusing on the alleged “harm” done by China to the United States. Here are the three main arguments that trade-skeptics use regarding China and reasons why those arguments are wrong.
1) Trade-skeptics often claim that trade with China is “taking American jobs.” However, in most cases American and Chinese workers are not competing for the same jobs because they do different kinds of work.
Comparative advantage and specialization play an important role in every trade relationship. China has the comparative advantage in light manufacturing and heavy industry, while the U.S. has an advantage in areas involving a high degree of human capital like technology, education, and precision industrial manufacturing.
Fewer and fewer Americans work in grueling areas like traditional manufacturing and agriculture—still common in China. The fall in traditional manufacturing and agriculture employment has been more than offset by a rise in the caring professions and in creative and knowledge-intensive careers, which are safer, more intellectually stimulating, and help improve the standard of living in the United States.
For example, the number of physicians per person has risen in the United States, and there are also more teachers per student. The graph below shows that, while manufacturing employment has decreased, total non-agricultural employment has soared.
2) Second, many people are concerned about China’s so-called currency manipulation. China, they claim, is keeping the value of the yuan artificially low relative to the U.S. dollar. That means that Americans pay less for Chinese goods. As HumanProgress.org board member Mark J. Perry puts it,
[T]he “manipulation” of China’s currency is actually to the distinct advantage of millions of American consumers (especially low-income Americans) and U.S. businesses buying products and inputs made in China. Those two groups certainly aren’t complaining about low-priced Chinese products, and in fact would be made worse off if China were forced to revalue its currency and in the process make its products more expensive for Americans.
So if neither American consumers nor U.S. import-buying businesses would benefit from a stronger yuan and a reduction in China’s “foreign aid” to America, who would really benefit? The same group that always benefits from protectionist, mercantilist trade policies: domestic producers who compete against foreign rivals in China and elsewhere … Unfortunately, the costs to consumers from protectionism are greater than the benefits to producers, resulting in a net economic loss for the country and a reduction in its standard of living.
In other words, while a few industries would benefit, the vast majority of Americans would be made poorer by America’s imposition of protectionist policies or penalties on China.
3) Finally, China trade-skeptics often claim that trade leads to the exploitation of Chinese laborers and makes them worse off. However, as Cato’s Johan Norberg wrote,
“Western activists rail against ‘sweatshops,’ but among researchers and economists from left to right there is a consensus that these jobs are the stepping stones out of poverty.”
Lest we forget, the United States and Europe had their own sweatshops during the Industrial Revolution. Work was often dangerous and difficult—though not as much as the drudgery of agricultural subsistence. Yet, as a result of the industrial revolution, life expectancy and GDP per capita shot up while poverty fell rapidly. Since economic liberalization, life expectancy in China has skyrocketed, nearing the U.S. level, and hundreds of millions of Chinese have escaped from extreme poverty. That represents the greatest reduction in poverty the world has ever seen.
As prosperity has increased, gender inequality has diminished, and a smaller share of the population suffers from food inadequacy. If the trade-skeptics genuinely care about the wellbeing of the poor in China, they should support the most successful anti-poverty program of all time: economic freedom, including freedom to trade internationally.
America Is in the Midst of an Extraordinary Startup Boom
“Last year applications to form businesses reached 5.5m, a record. Although they have slowed a touch this year, the monthly average is still about 80% higher than during the decade prior to covid, compared with just a 20% rise in Europe. Startups normally play an outsized role in creating employment in America, as elsewhere. By definition, every startup job counts as new, whereas mature companies have more churn. That difference has become even starker. In the four years before the pandemic, established firms added one net job for every four created by startups; in the four years since the pandemic, established firms have actually lost one job for every four created by startups.”
Perhaps even more important than the numbers is the kind of ventures that are being created. In 2020 and 2021 many startups catered to the working-from-home revolution. These included online retailers, small trucking firms and landscapers. Since mid-2022, however, the baton has been passed to technology firms, according to Ryan Decker of the Fed and John Haltiwanger of the University of Maryland. A paper published in March by the Census Bureau found a particularly sharp increase last year in business applications based around artificial intelligence. For researchers, this carries echoes of the 1990s, when computers and the internet took off.”
Formula E Electric Vehicles Could Spark Widespread Innovation
“The batteries in the current generation of Formula E cars deliver up to 350kW of power, and can propel a driver to a maximum top speed of 320km/h (199mph), approaching the top speed of traditional F1 cars. And while the racing series may not have the pedigree – or budget – of F1, it does provide a unique and important testing ground for new battery technology that could benefit the entire EV industry.”
AI Is a Great Equalizer That Will Change the World
A positive revolution from AI is already unfolding in the global East and South.
Zion Lights —
Summary: Concerns over potential negative impacts of AI have dominated headlines, particularly regarding its threat to employment. However, a closer examination reveals AI’s immense potential to revolutionize equal and high quality access to necessities such as education and healthcare, particularly in regions with limited access to resources. From India’s agricultural advancements to Kenya’s educational support, AI initiatives are already transforming lives and addressing societal needs.
The latest technology panic is over artificial intelligence (AI). The media is focused on the negatives of AI, making many assumptions about how AI will doom us all. One concern is that AI tools will replace workers and cause mass unemployment. This is likely overblown—although some jobs will be lost to AI, if history is any guide, new jobs will be created. Furthermore, AI’s ability to replace skilled labor is also one of its greatest potential benefits.
Think of all the regions of the world where children lack access to education, where schoolteachers are scarce and opportunities for adult learning are scant.
Think of the preventable diseases that are untreated due to a lack of information, the dearth of health care providers, and how many lives could be improved and saved by overcoming these challenges.
In many ways, AI will be a revolutionary equalizer for poorer countries where education and health care have historically faced many challenges. In fact, a positive revolution from AI is already unfolding in the global East and South.
Improving Equality through Education and Health Care
In India, agricultural technology startup Saagu Baagu is already improving lives. This initiative allows farmers to increase crop yield through AI-based solutions. A chatbot provides farmers with the information they need to farm more effectively (e.g., through mapping the maturity stages of their crops and testing soil so that AI can make recommendations on which fertilizers to use depending on the type of soil). Saagu Baagu has been successful in the trial region and is now being expanded. This AI initiative is likely to revolutionize agriculture globally.
Combining large language models with speech-recognition software is helping Indian farmers in other ways. For example, Indian global impact initiative Karya is working on helping rural Indians, who speak many different languages, to overcome language barriers. Karya is collecting data on tuberculosis, which is a mostly curable and preventable disease that kills roughly 200,000 Indians every year. By collecting voice recordings of 10 different dialects of Kannada, an AI speech model is being trained to communicate with local people. Tuberculosis carries much stigma in India, so people are often reluctant to ask for help. AI will allow Indians to reduce the spread of the disease and give them access to reliable information.
In Kenya, where students are leading in AI use, the technology is aiding the spread of information by allowing pupils to ask a chatbot questions about their homework.
Throughout the world, there are many challenges pertaining to health care, including increasing costs and staff shortages. As developed economies now have rapidly growing elderly populations and shrinking workforces, the problem is set to worsen. In Japan, AI is helping with the aging population issue, where a shortage of care workers is remedied by using robots to patrol care homes to monitor patients and alert care workers when something is wrong. These bots use AI to detect abnormalities, assist in infection countermeasures by disinfecting commonly touched places, provide conversation, and carry people from wheelchairs to beds and bathing areas, which means less physical exertion and fewer injuries for staff members.
In Brazil, researchers used AI models capable of predicting HER2 subtype breast cancer in imaging scans of 311 women and the patients’ response to treatment. In addition, AI can also help make health resource allocations more efficient and support tasks such as preparing for public health crises, such as pandemics. At the individual level, the use of this technology in wearables, such as smartwatches, can encourage patient adherence to treatments, help prevent illnesses, and collect data more frequently.
Biometric data gathered from wearable devices could also be a game-changer. This technology can detect cancers early, monitor infectious diseases and general health issues, and give patients more agency over their health where access to health care is limited or expensive.
Education and health care in the West could also benefit from AI. In the United States, text synthesis machines could help to address the lack of teachers in K–12 education and the inaccessibility of health care for low-income people.
Predicting the Future
AI is already playing a role in helping humanity tackle natural disasters (e.g., by predicting how many earthquake aftershocks will strike and their strength). These models, which have been trained on large data sets of seismic events, have been found to estimate the number of aftershocks better than conventional (non-AI) models do.
Forecasting models can also help to predict other natural disasters like severe storms, floods, hurricanes, and wildfires. Machine learning uses algorithms to reduce the time required to make forecasts and increase model accuracy, which again is superior to the non-AI models that are used for this purpose. These improvements could have a massive impact on people in poor countries, who currently lack access to reliable forecasts and tend to be employed in agriculture, which is highly dependent on the weather.
A Case for Optimism
Much of the fear regarding AI in the West concerns the rapid speed at which it is being implemented, but for many countries, this speed is a boon.
Take the mobile phone. In 2000, only 4 percent of people in developing countries had access to mobile phones. By 2015, 94 percent of the population had such access, including in sub-Saharan Africa.
The benefits were enormous, as billions gained access to online banking, educational opportunities, and more reliable communication. One study found that almost 1 in 10 Kenyan families living in extreme poverty were able to lift their incomes above the poverty line by using the banking app M-Pesa. In rural Peru, household consumption rose by 11 percent with access to phones, while extreme poverty fell 5.4 percent. Some 24 percent of people in developing countries now use the mobile internet for educational purposes, compared with only 12 percent in the richest countries. In lower-income countries, access to mobile phones and apps is life-changing.
AI, which only requires access to a mobile phone to use, is likely to spread even faster in the countries that need the technology the most.
This is what we should be talking about: not a technology panic but a technology revolution for greater equality in well-being.
Women’s Financial Inclusion Boosted in Sub-Saharan Africa
“In the 10 years leading up to 2021, the share of women in sub-Saharan Africa who owned a financial account more than doubled to reach 49%, according to data from the Global Findex.
Since 2017 alone, account ownership rates for women in the region increased 12 percentage points, driven entirely by increased adoption of mobile money accounts.”
