America This is Quite Serious: Rough Trade

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Yesterday, the New York Times declared that “The phase of globalization that began with the ending of World War II is essentially over.”

At one time, interest in a story bearing this news would have been limited to a small circle of wonks and activists, people who use terms like “hegemony” and have strong feelings about the G8. Over the years there has been the occasional meaningful populist uproar over NAFTA, and I spent a brief period in college refusing to buy certain brands because of their overseas factory conditions, but for the most part, most Americans have had little to no opinion on globalization over the past 30 years. It’s not that anyone really loves it, but most people seem pretty ¯_(ツ)_/¯ about where their stuff is made. Consumers have not indicated on a large scale that they will pay more for U.S. made goods when they can pay less for the same gear made in China, Mexico, Bangladesh, Taiwan, Vietnam, etc. and so on.

But that was all before the 2016 presidential election. Saturday’s Times story was made possible by the elevation of globalization into the mainstream discussion, where byzantine trade deals are the bane of fired-up populists from across the political spectrum. Bernie Sanders’ most passionate backers disdain NAFTA and have probably doomed the Trans-Pacific Partnership. Donald Trump’s supporters repeat their guy’s claims about Mexico and China stealing our jobs, often while wearing offensive t-shirts and other swag that I’d bet comes from somewhere other than a U.S. factory paying a living wage to its workers. Across the Atlantic, Brexiters certainly weren’t concerned about losing access to the EU market when they voted Leave. And, as the Times also reported, seven years of trade negotiations between Canada and the EU — representing a deal that would affect hundreds of millions of people — have come undone because some percentage of 3.5 million people living in one region of Belgium don’t like the deal. And they’re not waffling. Sorry.

Broadly speaking, opponents of global trade are wrong. Angry people urging a withdrawal from the global economy and higher tariffs are almost as bad as laissez-faire ideologues advocating for completely unregulated open markets. This is true even though many of those angry people have reasons to be upset. It is painfully clear that we haven’t done nearly enough to help low-skilled workers adjust to changes we knew trade would bring. Nor have we ensured that the benefits are shared broadly across the American population. The problems with trade are real, but the reason it’s not good fodder for populist barnstorming is because the outcomes people blame on trade are complications within complications. Automation has played a huge role in eliminating factory jobs. China’s presence is a bigger factor than any trade deal the U.S. has entered. Since the year 2000 we’ve had eight years of Bush economic policy that only exacerbated economic woes for the poor and middle class, followed by the worst global economic crisis since the Depression, followed by eight years of gridlock because Republicans in Congress refused to help Americans on the off-chance it might reflect positively on the Democratic president. In other words, for 16 of the last 30 years, there hasn’t been a real effort to deal with the biggest negative impacts of global trade. It’s like taking a road trip in a car with no shocks, and then claiming that driving itself is bad.

Even the positive aspects of trade are nuanced: Over the last 25 years, the number of people living on less than $1.90 a day has dropped from 1.9 billion to about 700 million, according to the World Bank. Pulling people out of poverty is a straightforward good thing. But hitting $2.00 a day ain’t exactly champagne wishes and caviar dreams, especially when it comes along with brutal working conditions and environmental destruction.

Nevertheless, the fact is that global trade was meant to do good. To return to the Times story, note that the era of globalization supposedly ending today began after World War II. That’s because the leaders of the time reckoned that countries with strong economic ties — and all that comes with those ties — have a lot of reasons not to shoot at each other. Or as one smug but satisfying explanation goes:

I believe it still can do good, if we “figure out a way to fix the rest.” To that end, there’s been a lot written this year that’s worth reading.

The first step is to not do anything that Donald Trump is proposing. Thomas Edsall in “Global Trade War, Trump Edition” looks at Trump’s proposals and brings in some experts to offer commentary. One of them explains that “Trump’s proposal is only slightly less drastic than the Smoot-Hawley Tariff — a law passed over the objection of more than 1,000 economists and signed by Herbert Hoover in June 1930. Smoot-Hawley is largely acknowledged as one of the principle causes of the subsequent worldwide economic catastrophe.” Not good company to be in.

For a good critique of the other side of the debate, Jeffrey Sachs’ “The truth about trade” in The Boston Globe gives a nice explanation of why you don’t have to be a Trumpkin or a Marxist to oppose the current state of global trade. Sachs has been a prominent voice on global economic development for years, and I was surprised to see him railing against trade on Twitter in recent months. His piece in the Globe helps explain why he remains “a believer in expanded international trade, but…an opponent of TPP and TTIP.”

And then there are the prescriptions for where we can go. Writing in The Nation, Mike Konczal offers some broad strokes in “Here’s the Trade Policy That Progressives Should Get Behind.” For more details, check out Jared Bernstein and Lori Wallach’s “The New Rules of the Road: A Progressive Approach to Globalization” in The American Prospect.

These ideas may not all be great. Trade is complicated, and there are inevitably winners and losers. This inherent complexity is part of why it’s been difficult to see the issue so maligned in 2016, standing in as a scapegoat for a host of major problems. The good thing is that people are now thinking and writing about how we tackle those problems.

America, this is quite serious, and it’s worth learning more about trade than you’re going to hear from the candidates this year.

Read more from our election year series “America This is Quite Serious.”

-Michael Moats

 

 

 

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