Steel furnace in the U.K., 1954. Photo: Maurice Broomfield/SSPL/Getty

New data have persuaded many economists that Chinese trade, and not robots, is at fault for vanished manufacturing jobs across the Ohio and Mississippi river belts, but a key expert is disputing the finding.

Why it matters: Within the answer may lie the answer to resurrecting at least some of the hollowed out manufacturing heartland, or at least not making the same mistakes again. And it may also help explain the rise of populist leaders like President Trump.

  • A growing consensus is that trade deals such as China's 2001 entry to the WTO are far more to blame for manufacturing job losses than automation.
  • But some economists continue to dissent and seek a larger explanation.

The background: In a long piece earlier this month, Quartz's Gwynn Guilford profiled the work of Susan Houseman, an economist with the Upjohn Institute. In a 2011 paper and subsequent followup work, Houseman found that, when you strip away productivity gains by the computer sector, the rest of the manufacturing economy had super-slow growth starting in the late 1970s, and almost no growth starting about 2000, approximately the time of China's WTO accession.

  • That was puzzling, since a productivity bump should have been present if manufacturing was automating in spades, as was claimed.
  • Therefore something else was responsible for the wipeout of jobs.

David Autor, an MIT economist who pioneered research into China's 2001 entry to the WTO, told me that automation has been "overblown and the importance of trade under-appreciated" in grasping the U.S. manufacturing implosion. From his own work, Autor had already intuited that China's WTO membership was primarily to blame, but Houseman provided the final pieces of data that proved it. "She has cracked a big puzzle," he said.

Other economists said the same thing: At the McKinsey Global Institute, for instance, Sree Ramaswamy added pharmaceuticals as an industry that, along with computing, accounted for almost all the real rise in productivity.

  • The big job hit, he said, was to medium and small manufacturers who, in the cutthroat global competition that erupted after big trade agreements, failed to compete.
  • Karen Harris, director of Bain Macro Trends, said it's now clear that trade was "the key channel" that drove down wages across sectors, leading to the rising income inequality that has dogged the U.S. economy.
  • The suggestion in these conclusions is that, from labor unions to Trump, trade critics have been right to all-but ignore automation and blame pacts like NAFTA.

But but but: In so doing, they challenge the work of Carl Frey, an Oxford economist and co-author of a 2013 paper that is the baseline for the study of the impact of automation on jobs.

  • In October, Frey posted a draft of a new paper in which he linked automation anxiety and Trump's 2016 election: Support for Trump was greater in areas of relatively high robot adoption. Lower adoption, he said, would have swung Michigan, Pennsylvania or Wisconsin to Hillary Clinton.
  • Frey told me that his work had taken account of Chinese trade. "We control ... for Chinese import competition in our study. Doing so, robots still have a significant impact," he said.

In addition, in terms of the populist wave, a new study by University of Pennsylvania political scientist Diana Mutz found a completely separate explanation from job destruction: people have reacted not to lost income, but to a perceived threat to their local status. In other words, it has been tribalism.

  • If Metz is right, no amount of righted trade deals will turn the populism.

Go deeper

Scoop: Instacart raises another $100 million

Illustration: Sarah Grillo/Axios Visuals

Grocery delivery company Instacart has raised $100 million in new funding, on top of the $225 million it announced last month, the company tells Axios. This brings its valuation to $13.8 billion.

Why it matters: This funding comes at what could be an inflection point for Instacart, as customers it acquired during coronavirus lockdowns decide whether they want to continue with the service or resume in-person grocery shopping.

Updated 21 mins ago - Politics & Policy

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Global: Total confirmed cases as of 10 a.m. ET: 10,902,347 — Total deaths: 521,940 — Total recoveries — 5,777,662Map.
  2. U.S.: Total confirmed cases as of 10 a.m. ET: 2,739,879 — Total deaths: 128,740 — Total recoveries: 781,970 — Total tested: 33,462,181Map.
  3. Public health: The states where face coverings are mandatory Regeneron stops trial after drug fails to help patientsWhat we know about the coronavirus immune response — Fauci says it has been a "very disturbing week" for the spread of the coronavirus in the U.S.
  4. Business: Top business leaders urge the White House to develop mandatory mask guidelines.
  5. Politics: Herman Cain hospitalized for COVID-19 after attending Trump Tulsa rally — Biden downplays jobs number, rebukes Trump for ignoring health crisis.
  6. Economy: The economy may recover just quickly enough to kill political interest in more stimulus.
  7. States: Texas mandates face masks in public spaces Florida reports more than 10,000 new coronavirus cases, and its most-infected county issues curfew.

Markets swell as the economy shrinks

Illustration: Eniola Odetunde/Axios

The economy is sputtering, but the markets are thriving — a highly unusual event that shows how the coronavirus has thrown all bets off.

Why it matters: The disconnect adds to the wealth gap. The richest 10% of households — who own 84% of stocks — are getting richer, while millions of out-of-work Americans cross their fingers that pandemic unemployment benefits will be extended.