To require some scientific analysis, counterfactuals are needed. If X didn’t occur, then and will have. But counterfactuals, by definition, can never be known. They never happened, so you can’t really know if a counterfactual happened or not. For example, during World War II, the Truman administration and the US military had a lot of debate about whether to drop an atomic bomb on Japan. Sub argued that bombing was necessary to end the war. Traditional wars have significantly increased the lives of America and Japan, and have continued to drag them into war. Others argued that the Japanese were approaching surrender and that the bombing would cost more innocent lives.[1] The discussion continues to this day. However, the US military dropped bombs, killing more than 200,000 people. What we can’t know for certain is what would have happened if the US military hadn’t dropped those bombs once.
Of course, just because counterfactuals are never known does not mean that even counterfactuals are rational. Counterfacts must be justified. Good theories and models can help you justify counterfactuals. “Without dropping the atomic bomb, the Japanese army unleashed Godzilla on our soldiers, destroyed our troops and invaded San Francisco,” I was rightly laughed at from the room. It’s a goofy b and doesn’t prove that Godzilla is a Japanese tool.
In international trade debates, daily focuses often focus on counterfactuals… at least after protectionists make empirical claims that are easily exposed by data. The famous counterfactual revolves around a Chinese shocking paper (cited OPH). If China is not part of the WTO, protectionists argue that the United States will now become a place of prosperity rather than a devastated hell.
Jeremy Holepodir, an economist at the University of Arkansas, recently explored the heaviest subway region in China’s shock (as identified in the original Chinese shock paper).
[A]MSA’s LL has hit China hard and has been able to achieve significant and positive real wage growth across distributions since 2001… In fact, wage improvements in some of these places are actually better than national trends.
And excludes the North Carolina MSA hickory.[2]All MSAs have more work than before the Chinese shock. Austin, Texas You have twice the number of jobs. The overall economic change in these sectors is the rise in all income levels, more employment, and real wages in the growing economy. These changes suggest that trade is suitable for the region. Newer, higher pay jobs compensate for lost lower pay jobs (as trade theory predicts). If trade is limited, these better, higher paying jobs could be lost.
But what about the individuals who have been laid off? Do they like well-paid factory jobs and need to take away the low-wage service employment sector? The evidence shows “no”. In his 2025 book crushed capitalism, Cato Institute economist Norbert Michel provides evidence that displaced workers did not get worse. Using data from BLS, Michelle found that between 2001 and 2003, around 43% of the world acquired more jobs than their previous jobs. Between 2015 and 2017, that figure was 51% (page 70 of the Kindle Edition). During the Chinese shock, workers on display felt it would be easier to find new jobs that paid the same or even more. Going back further, from 1991 to 1992, only about a third of the alternative workers paid more than their previous work (ibid.). Moreover, more than two-thirds of the evacuated were quickly finding jobs (within a year) but once again, those jobs paid more than their previous wages. Since the Gasoline and the WTO, scholarships have been easier for evacuated workers to find employment than their previous jobs.
Thus, counterfactual liberation to compare it to increased trade is not the case for the United States with a prosperous economy and protectionism. The inserted data show that higher pay jobs are lost in favor of low-paid lens productive jobs.
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[1] There are other debates, such as the rewards for the heinous war crimes Japan committed during the war, but I will not address those arguments as this post is about counterfactuals rather than rewards.
[2] Hickory Coud has fewer jobs as the town is becoming a retirement hotspot. People retract not to work.
