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Speaker 1: Global business news twenty four hours a day at Bloomberg

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Speaker 1: dot Com, the radio, plus Globo lapt and on your radio.

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Speaker 1: This is a Bloomberg Business Flash from Bloomberg World Headquarters.

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Speaker 1: I'm Katherine Cowdery. The stock market is extending at sixth

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Speaker 1: weekly advance and two months pushing the SMP five hundred

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Speaker 1: toward a fresh record. US equities are seeing a resurgence

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Speaker 1: in popularity among a few notable constituencies. Bank of America

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Speaker 1: says asset managers are favoring stocks over US treasuries, while

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Speaker 1: active equity funds are the most bullet since two thousand

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Speaker 1: and eight, and that marks a shift in tone from

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Speaker 1: the start of the year. We talk the markets every

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Speaker 1: fifteen minutes throughout the trading day. Dow Industrial leverages up

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Speaker 1: seventy nine points four tens of a percent, trading at

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Speaker 1: eighteen thousand, six hundred fifty six. SMP five funded up

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Speaker 1: nine points four tens of a percent. Then AzaC is

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Speaker 1: up thirty five points two thirds of a percent, trading

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Speaker 1: at fifty two sixty seven. West Texas intermediate crude oil

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Speaker 1: up a dollar twenty four a barrel two point eight percent.

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Speaker 1: Spot called up two dollars fifty announced at and the

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Speaker 1: tenure treasury down eleven thirty seconds with the yield of

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Speaker 1: one point. And that's a Bloomberg business flash. You're listening

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Speaker 1: to taking stock Box and Kathleen Hayes on Bloomberg Radio Trade,

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Speaker 1: the Trans Pacific partnership and building individual economies around the

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Speaker 1: world or is it just one global economy. Here to

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Speaker 1: tell us more about trade and politics is Dennis Quinn.

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Speaker 1: He is a professor professor of International Political economy for

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Speaker 1: Georgetown University's McDonough School of Business, and he joins us

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Speaker 1: from Washington, d C. Professor Quinn, thank you very much

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Speaker 1: for being with us. You've recently co authored a study

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Speaker 1: entitled Winners and Losers in International Trade Effects on US

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Speaker 1: presidential voting. Tell us what this research examines and what

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Speaker 1: are some of the conclusions. Well, first of all, thank

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Speaker 1: you so much for having me on the program. I'm

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Speaker 1: a family of Bloomberg Radio, so this is very nice

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Speaker 1: to actually be on the program. Thank you. My co

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Speaker 1: authors and I Bradgens and Steve Weymouth have been interested

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Speaker 1: in a while and what really is an interesting paradox

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Speaker 1: if you pull the American public on balance it varies

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Speaker 1: on the question, but on balance most citizens have a

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Speaker 1: pretty favorable view of free trade. But if you look

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Speaker 1: at the current election cycle you wouldn't know that. So

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Speaker 1: there's there's sort of this almost visceral hostility toward trade.

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Speaker 1: What we tried to do was go in some sense

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Speaker 1: under the hood of modern trade politics and look at

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Speaker 1: which sectors, which counties, which industries, which firm level establishments

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Speaker 1: were gaining from trade, especially in international services, which is

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Speaker 1: part of the topic covered in the Trans Pacific Partnership,

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Speaker 1: as well as in manufacturing. And our results are pretty

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Speaker 1: straightforward and I think potentially striking. It turns out that

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Speaker 1: counties with high concentrations of low wage manufacturing, low skills

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Speaker 1: manufacturing have tended to systematically vote against incumbent presidents. It's

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Speaker 1: clear that trade liberalization is not something that they've been

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Speaker 1: supportive of. In contrast, in those counties with high levels

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Speaker 1: of professional services tradeable services, you've tended to see much

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Speaker 1: more support for the incumbent. Well, if you think that's,

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Speaker 1: explain why that is, because it's pretty clear why for

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Speaker 1: one reason why a lot of those will manufacturing jobs

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Speaker 1: are low wage. Now, it's because we allowed a lot

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Speaker 1: of competition. It's because we allowed China to peg their

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Speaker 1: currency to the dollar for many many years. They took

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Speaker 1: advantage of it and they helped all about US manufacturing.

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Speaker 1: Few will dispute that. Uh So, on this on the

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Speaker 1: services side, what kind of jobs are benefiting and is

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Speaker 1: it partly because some of those services jobs can only

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Speaker 1: be done locally regionally because you can't really do them

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Speaker 1: over in another country. Well, that's a great question, and

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Speaker 1: there really are three parts to this answer. The first

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Speaker 1: is the United States simply has compared to advantage in

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Speaker 1: highly skilled labor, both in manufacturing but especially in services.

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Speaker 1: Is a practical matter. We have the kinds of capital

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Speaker 1: and capability, firm capability and skill levels that other countries

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Speaker 1: find difficults compete with, and the kinds of jobs that

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Speaker 1: those are in our things like architectural services, for instance,

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Speaker 1: or educational services. Think about university education. United States sets

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Speaker 1: up a lot of international campuses at this point. The

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Speaker 1: United States is excellence in business and professional services and investment, banking,

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Speaker 1: um journalism. We uh, a lot of you folks are

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Speaker 1: in internationally traded service and you're very good at what

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Speaker 1: you do. Other countries have a harder time because of

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Speaker 1: freedom of rest restrictions in competing with you. So there

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Speaker 1: are a lot of things that make the United States

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Speaker 1: extremely good in services, but a piece of this which

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Speaker 1: I have to stress is that there's also an uneven

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Speaker 1: concentration of this. The services are disproportionately in urban areas,

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Speaker 1: if you will, Blue states, and on balance, many of

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Speaker 1: the people who have gained most from trade are in

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Speaker 1: non swing states, whereas many of the people who have

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Speaker 1: lost most from trade are located in swing states. And

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Speaker 1: so part of what's happened is is that it's particularly

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Speaker 1: the coastal areas, university towns, and other more cosmopolitan places

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Speaker 1: that have gained so much from from trade, partly because

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Speaker 1: dance states just as excellent at this, and it's often

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Speaker 1: the rural areas think apparel in the American South, or

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Speaker 1: various autopart manufacturers in Ohio that are really, as you say,

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Speaker 1: competing hard against China and sometimes losing. Professor Quinn Alexander

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Speaker 1: Hamilton's More Than Just a Star on Broadway he wrote

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Speaker 1: about trade, and one of the things that he came

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Speaker 1: to the conclusion was that in order to help an

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Speaker 1: infant industry, what you need our basic cheap raw materials

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Speaker 1: and protection from foreign competition. Is there any platform in

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Speaker 1: either of the Democrat or the Republican party that speaks

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Speaker 1: to that issue? You know, the truth is no. Uh.

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Speaker 1: The United States at this point is a very mature economy,

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Speaker 1: and in these so called infant industries behind States actually

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Speaker 1: is in nascent emergent technology world class. So you wouldn't

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Speaker 1: be trying to seal off some of our comparative advantage industries,

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Speaker 1: these high tech emergent industries, because they'll be retaliation against

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Speaker 1: us for sure. So Hamilton's writing at a time when

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Speaker 1: the United States is an agricultural country and a laggered

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Speaker 1: in manufacturing, a laggered in terms of intellectual property. That

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Speaker 1: was a very long time ago. We're now world class

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Speaker 1: in all sorts of industries. And on balance, the infant

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Speaker 1: industry argument is sound, but it's sound in particular for

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Speaker 1: poorer countries. Your research has found that international trade directly

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Speaker 1: influences presidential elections in the United States, especially in the

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Speaker 1: crucial swing states. Uh, and you are saying this is

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Speaker 1: going to help create a closer election. My first question

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Speaker 1: part of this would be, Uh, what did you find exactly?

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Speaker 1: What is just you know, distill it down. What is it?

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Speaker 1: The research shows, so one way to think about this

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Speaker 1: is there's something very human feature called attribution bias. So

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Speaker 1: something good happens to me, it's my fault. If something

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Speaker 1: bad happens to you, it's somebody else's fault, not yours.

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Speaker 1: So on balance, what sort of is at play is

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Speaker 1: that people tend to support or blame the incumbent based

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Speaker 1: upon performance of the economy. And to a large extent,

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Speaker 1: what has begun to emerge is that the people who

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Speaker 1: have lost from trade have been losing for quite a

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Speaker 1: long time and are quite angry and pretty politically mobilized

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Speaker 1: about this. And so I think you can reasonably expect

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Speaker 1: a fairly close election and a lot of this wing

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Speaker 1: of states because President Obama and hence former Secretary of

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Speaker 1: State Hillary Clinton are essentially being held accountable for people's

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Speaker 1: perceptions that their economic circumstances have been adversely affected from trade.

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Speaker 1: And while people do tend to credit the president and

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Speaker 1: the president's party for good economic times, there seems to

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Speaker 1: be quite a bit of evidence that people are much

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Speaker 1: more angry about downturns than they are about upturns. Did

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Speaker 1: that answer your question? Sure? Sure? Sure. I bet Pam

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Speaker 1: has another one himself. Well, I was just gonna follow

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Speaker 1: up with you talking about the electoral college because as

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Speaker 1: part of your conclusion, you say that it provides it's

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Speaker 1: an incentive to protect the sector of the economy that

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Speaker 1: would be focused on most skilled manufacturing. That's right. Is

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Speaker 1: that likely to happen? Well, I mean, it's one thing

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Speaker 1: to say it. It's another thing in the real world

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Speaker 1: to implement policies to get you there. Well, can I

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Speaker 1: give two levels of answer to please? The first is

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Speaker 1: when we're talking swing states, think Iowa, Wisconsin, some of

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Speaker 1: the closely fought battleground states. Those are among the states

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Speaker 1: that have have suffered. There are other states South Carolina

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Speaker 1: comes to mind that are unlikely to be close, but

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Speaker 1: they've also suffered. I guess I would distinguish between campaign

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Speaker 1: promises and post election actions. I think it's extremely unlikely

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Speaker 1: that former Secretary of State Clinton thanks that she's in

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Speaker 1: a position and a close election to take a more

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Speaker 1: pro trade position. What happens after the election is an

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Speaker 1: entirely different matter. I think the second level to your

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Speaker 1: question really is can much be done to help the

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Speaker 1: people who were in the low skilled manufacturing, and as

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Speaker 1: a practical matter, I think that those jobs are under

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Speaker 1: enormous pressure, and no, I don't think that those jobs

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Speaker 1: are ever coming back. Professor Quinn, to what extent, then

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Speaker 1: you've got about thirty seconds to answer. This does Donald

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Speaker 1: Trump's position he was early out against trade, questioning at

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Speaker 1: the trade deals and everything. To what extent that that

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Speaker 1: give him a boost and maybe still have a shot

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Speaker 1: at the White House, even with the pole seeming to

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Speaker 1: move against him in so many states. I think you're right.

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Speaker 1: I think that still does give him a boost because

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Speaker 1: it gives people who were very disappointed about the evolution

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Speaker 1: of economy in the last twenty years, at a minimum

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Speaker 1: a protest vote. So I think a lot of people

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Speaker 1: will forgive some of the things that he's saying. Dennis Quinn,

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Speaker 1: thank you so very much. Uh. We want to recommend

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Speaker 1: his study, Winners and Losers in International Trade Effects on

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Speaker 1: US Presidential votings. Professor of International Politically con me at

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Speaker 1: Georgetown University's I've done a school of business. This is

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Speaker 1: taking stock on Bloomberg Radio. I'm Kathleen Hayes. My co

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Speaker 1: host is Pim Fox. Movers and Shakers coming up soon.

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Speaker 1: This is Bloomberg