Thursday, February 19, 2004
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A party flip-flop on trade?
I have no idea where Yglesias is getting his numbers, but let's assume they're accurate. [UPDATE: Matt reveals his source] I'm still not sure he's right. I'll leave the debate to commenters [You're slagging off on your own analysis--ed. Sorry, I'm crashing on a few projects and leaving soon to give a talk at Notre Dame.]posted by Dan on 02.19.04 at 10:33 AM
The numbers are from appendix B of Stanley Greenberg's The Two Americas based on eighteen months worth of polling by Greenberg Quinlan Rosner research between November 2001 and May 2003.posted by: Matthew Yglesias on 02.19.04 at 10:33 AM [permalink]
My only thought is that this ties in to what I feel is Dan's overblown reliance on campaign rhetoric about trade in terms of picking a candidate. I think Dems are running on protectionist rhetoric, but there's virtually no danger of them governing in any more protectionist a manner than the Republicans. In fact, given the Dems desire to create more harmonious relations with other countries, chances are better that the Dems will make domestic sacrifices via trade concessions in the name of international comity.
But I'm too damn busy to flesh this out any more.posted by: a on 02.19.04 at 10:33 AM [permalink]
Remember - Clinton in 1992 ran as a protectionist.posted by: Brian Ulrich on 02.19.04 at 10:33 AM [permalink]
Rather like the Abortion issue, I consider support or non-support for NAFTA nigh on impossible to slice along party lines. On that basis, I'm not sure I want to make too much of the varience between the numbers Dan's noted, and the popular political conceptions on the issue.
You mention the unions, Dan.There is a disconnect when speaking of the union movement in this regard.
While it's true that the public sector unions won't be much affected by NAFTA I think it fair to suggest that the union movement as a whole will be against Nafta... it's the union wages and therefore the union movement itself that suffers with NAFTA. (And the fact that the country and the world benefits from it, be damned, I suppose them to think) This is why the unions are screaming about 'loss of jobs'. What they're REALLY on about is loss of UNION jobs... which are being replaced by NON-union jobs.
As to the comments about campaign rethoric:
The Democrat leaders are smart enough to see the benefits in NAFTA and the trade that results, but understand that their political power is bought with union dues and during the election cycle will campaign accoringly.posted by: Bithead on 02.19.04 at 10:33 AM [permalink]
For what it's worth, union members in my family and such actually think trade is bad for the country. They believe in the "race to the bottom" concept in which eventually everything non-service will be outsourced or wages in this country will be completely depressed. I think they're wrong, but you have to keep in mind a lot of the pro-free trade sentiment gets publicly expressed by economists like Dr. Drezner, and the U.S. has a long tradition of being suspicious of intellectuals, as David Thompson has pointed out before.posted by: Brian Ulrich on 02.19.04 at 10:33 AM [permalink]
OK, so we're to vote for the Dem because on some issues he's lying?
I can understand a "can't get it through Congress so don't worry about it" argument. But I don't see how anyone could criticize someone for taking a candidate at his word, and busting him on those statements. That argument reminds me of all evil bosses and husbands who plagues their spouses and employees with comments like "I know that's what I said, but you should have known I didn't really mena it!"posted by: Appalled Moderate on 02.19.04 at 10:33 AM [permalink]
This new found protectionism is extremely worrisome. If I was European or Asian, id be even more worried. The only good thing is that this debate is happening at last. The reality is that the era of a guaranteed job for life at the factory down the road is over, if indeed it ever really existed anywhere outside of legend. In a healthy economy, you need to continue learning skills for life and be prepared to switch jobs, your reward is not digging ditches for 30 years and dying of heart failure at 47, as well as making a lot more money. Our other option is to follow the European model and live with 12% unemployment and no growth. Thats the reality, no use whining about it.posted by: Mark Buehner on 02.19.04 at 10:33 AM [permalink]
Seems a little unfair that government jobs are somehow protected from outsourcing. Maybe this is the comparative advantage that the theory talks about. Our comparative advantage is our ability to sit around and get government checks while running a $600 billion trade deficit.
"The only good thing is that this debate is happening at last."
Say what? I seem to recall there being a lot of discussion about the "giant sucking sound" some time ago. And then there was that Smoot Hawley thing. And A. Hamilton's Report on Manufacturing. I'd say protectionism is American as apple pie or Chevrolet.
And Matt, few government jobs are protected from outsourcing except when they are protected by strong unions like AFSCME or NEA, which is most of the time.posted by: Richard A. Heddleson on 02.19.04 at 10:33 AM [permalink]
Hey Dan, what's the topic of the talk you'll be giving?posted by: sam on 02.19.04 at 10:33 AM [permalink]
I agree it's kind of ridiculous when you think of it in terms of being comforted by the fact that a politician is lying about something, AP, but hey, that's politics. You always have to read between the lines to figure out what a particular politician really thinks or really intends to do.
"Remember - Clinton in 1992 ran as a protectionist."
Correct. At the time, when everybody was in "we need to do everything like Japan" mode, Clinton was for "managed trade" and "industrial policy" which means protectionism. How he got to the other side in a short period of time is up for debate, but he ended up pushing NAFTA through the Congress with hardly a single Democratic vote.
Given his flip-flop it's hard to tell what he beleives or doesn't believe. But he was most definitely a Free Trade Butter, as in "I'm for free trade, but......"
The real question here is: Who is going to be the party of small government, low taxes, and less regulation? The Democrats haven't been that since the 19th century and the Republicans abandoned that position about 5 years ago. I don't see a compelling argument for either party being in favor of free trade. It's simply a choice about who do you think will actually go through with it. I'm betting on whomever is owned by the most Union dollars.
Am I the only one to notice that the Democratic primary candidates actually used the word "free trader" as a disdainful label? All of them tried to acuse each other of being "free taders" and distance themselves form even being associated with the concept.posted by: DSpears on 02.19.04 at 10:33 AM [permalink]
Yglesias neglects to mention the strong Democratic support for both steel tariffs and the last farm bill. Indeed, the strongest Democratic criticism of the farm bill came from farm state Congressmen who said it wasn't generous enough.
The larger point he and Dan are missing, though, is that politically speaking the connection between NAFTA and other trade issues is not as strong as the connection between NAFTA and immigration. It's true that outside of union members most voters aren't too upset with more liberal trade arrangements -- certainly not those with Canada. A great many voters are starting to resent the competition for jobs that they can see, exactly as one would expect during a time of economic difficulties. Much of this competition is Mexican, and for many reasons this is a problem for both political parties. NAFTA's connection with Mexico is probably a bigger reason for its relative unpopularity than its visible impact on employment.posted by: Zathras on 02.19.04 at 10:33 AM [permalink]
I will win... I will be President of the United States of Americaposted by: John Edwards on 02.19.04 at 10:33 AM [permalink]
Zathras is right. Immigration is a much bigger problem than is being talked about. NAFTA would have worked entirely different as a dynamic treaty if we'd been able to deal with immigration. This is the cowpie Bush stepped into with his what one could call at best naive immigration party.
Professor Drezner is wrong though. It's not about whether or not the Dem's are gonna turn protectionist, it's about whether or not the political viability of free trade is going to be so damaged that the Republicans have to turn on it.
Zathras does get one thing wrong. By implying that it's only natural to resent immigrant competition for jobs during tough economic times, he fails to recognize the extraordinary and unusual nature of this "jobless recovery" and the role that immigration and the trade deficit are playing into it.posted by: Oldman on 02.19.04 at 10:33 AM [permalink]
I wonder why no one is questioning the use of "NAFTA" as a substitute for "free trade." After all, Mexico isn't really the problem anymore--it's all those jobs migrating to Asia that have people panicking.
Second point, Yglesias' numbers look old and outdated. This stuff changes on a weekly basis, as news trickles out about offshoring present and future. As a "highly educated female" I question whether so many of my friends are so gung ho on free trade, at least insofar as it threatens in any way the livelihoods of ourselves and every family member (nurturing souls that we are!).
Third point, all you pure-hearted free traders had better decide whether you want to bend a little to appease the restless, unenlightened masses on this issue, or want to see real protectionism stage a comeback. Remember, whatever sins American politicians have committed against the Invisible Hand are as nothing compared to those committed by EVERY OTHER NATION on Earth. US voters are just a little sick of being the only ones to go to the wall for the sake of Adam Smith's good name.posted by: Kelli on 02.19.04 at 10:33 AM [permalink]
This shouldn't come as a surprise, as Steve Chapman wrote two years ago in Slate:
More broadly, it's the finale to the partisan realignment of 1972.posted by: praktike on 02.19.04 at 10:33 AM [permalink]
Bush has been given free trade authority and has signed free trade agreements with Singapore, Jordan, Australia and Chile. There is an agreement with Central America in the works and I believe that USTR Zoellick will continue in this vein while the administration pushes ahead with WTO and FTAA. The reality of the situation is that no matter who is elected, free trade will be supported to one degree or another. The pressure from the business world will ensure that, as was shown by Clinton's "surprise" support for NAFTA. Unions have always been, and will always continue to be, against all free trade agreements. As the Democrats continue to be owned by a fragmented group of special interests, the power of the unions will assure that they will remain rhetorically anti-free trade, though they will support them once in office. The anti-trade wing of the Republicans has been shunted off into the Pat Buchanan camp which has thankfully left the party. Republicans and Democrats will both support free trade while in office, but only Republicans will tell you that while they are running for office.posted by: Paolo on 02.19.04 at 10:33 AM [permalink]
Rolling back the free trade agreements may appear to be politcally opportunisitic, but consequential reactions would be far worse than the present fear of exporting America. I like to flip back and forth between CNBC and CNN when Lou Dobbs is on. Lou is sitting there with his fist in the air doing the rope-a-dope on any of his free trade guests then I flip over to CNBC and the hosts are doing the same thing to the protectionist guests.
The fact of the matter is Kelli is right that the US continues to inflates our Adam Smith ballon while trying to control market gravitational pull. NAFTA may send some manufacturing jobs into Mexico, but predominantly it is for the reasons that the resources can be procured at a lower cost. Sugar for instance is apporximately 21c in the US and only 7c in Mexico. It's a no brainer for a manufacturer to take advantage of NAFTA to either get back into the black or potentially triple their profits.
Asking if someone supports free trade can only pass by assuming that the target of the question supports free markets. Is anyone going to tell me that the AFL-CIO or the NEA supports free markets?posted by: Brennan Stout on 02.19.04 at 10:33 AM [permalink]
Paolo's point goes to the negotiation of trade agreements rather than the politics. The constraint laid on USTR Zoellick by the campaign-obsessed White House is that he may make no concessions in trade negotiations that might create domestic political problems for Bush. That means, for example, giving up America's traditional position on reforming Europe's Common Agricultural Policy -- this has to happen for developing countries to agree to liberalization in other areas, but Europe won't reduce subsidies unless we do, and because doing so would cost Bush votes in farm states, we won't.
That constraint kills the prospect for effective American support for general trade liberalization (which, to be fair, has many other obstacles as well). However, subject to that constraint Zoellick does have some flexibility, and he is a genuine free trader. His view is that trade liberalization can advance through the bilateral agreements that he does have the authority to negotiate if it cannot through the multilateral agreements he is not able to, and so that is how he is proceeding.
I don't really agree with his view, and think frankly that he is merely making the best of a bad situation, reasoning that any replacement Bush might name as USTR wouldn't even go that far. In any event, what we're talking about here is how much free trade activity Bush, or Karl Rove, is prepared to let go on in this administration rather than Bush's own views. Half a dozen people on this board can discuss the implications of trade issues with more understanding than Bush can.
With respect to Clinton and the Democrats, note two things: first, there has always been a strong free-trade faction within the Democratic Party (just read the editorial pages of the Washington Post and New York Times. Or anything written about Cordell Hull). Second, in Clinton's first term the protectionist pull on his administration had been lessened dramatically by Ross Perot's openly protectionist 1992 candidacy. Unions and other opponents of trade liberalization still had influence among Democrats in Congress, but Clinton himself had little reason to let Perot appear to be dictating his administration's trade policy.posted by: Zathras on 02.19.04 at 10:33 AM [permalink]
“....and the U.S. has a long tradition of being suspicious of intellectuals, as David Thompson has pointed out before.”
The irony is that I just left the WSJ opinion journal page which highlighted the article how a 23 year old fellow conned a number of people with advanced degrees behind their names:
“The Power of Faking It
There is a damn good reason why one should take “elite” credentialled folks with a huge grain of salt. It is often the rational thing to do!
Yglesias neglects to mention the strong Democratic support for both steel tariffs and the last farm bill. Indeed, the strongest Democratic criticism of the farm bill came from farm state Congressmen who said it wasn't generous enough.
Especially since the farm bill was the product of a Democratic-controlled Senate. Also the opposition to “fast track” legislation under both Presidents Clinton and Bush 43 was pretty much a Democratic thing.posted by: Thorley Winston on 02.19.04 at 10:33 AM [permalink]
“Half a dozen people on this board can discuss the implications of trade issues with more understanding than Bush can.”
President Bush does indeed seem to lack a clear understanding why free trade is mandatory for a vital economy. Also, I suspect that he doesn’t spend much time worrying about it---other than the impact this issue has on his reelection chances. The President is mostly focussed upon the war on terrorism. Everything else, arguably rightfully so, is of secondary importance. He is the War President! Now you are left with the unavoidable question: how seriously do take the war?posted by: David Thomson on 02.19.04 at 10:33 AM [permalink]
Free trade has nothing to do with politics. It will happen regardless. Outsourcing and job losses have nothing to do with Bush. It is the economic era we live in that's to blame. For years the US and Europe were more prosperous than other nations, because they made products other nations could not make. Either because of the advanced technology or because of the closed markets in the West, which took away export prospects and profitability for other nations. It took a long time, but Korean engineers can now build a technologically advanced ship as well as American engineers. With the difference in wages, this means a whole industry moves out of the country. How do you stop outsourcing? By stopping other nations from gaining advanced technology? This is impossible. By protecting our market, so foreign companies can not hope to export and regain their investments and therefore will not invest in certain industries? This is impossible. If we do not go with the time and buy the best you can get, other countries like China might get an advantage over us. Foreigners are not stupid. American power is sustained by staying on top. If you discard advancement, we will wake up one morning and find "communist Russians being the first to put a man in space", or an equivalent of that. The only thing you could do to stop outsourcing is to pay American workers less money. But how low can you go? A chinese worker gets a dollar an hour. Economists know that a country like China could manufacture all goods all the 6 billion people on Earth need. With their low wages. This might happen. What should American, European and other workers do? Nothing. Kapitalism is by it's nature, the best economic system, but also a suicidal system. Kapitalism dictates that all manufacturing jobs go to China. Other countries better start a 1 child a family population reduction policy, because not too long from now there will be a lot of unneeded workers everywhere. It's either population reduction or poverty on a massive African scale. And poverty in the US will lead to a Weimar like Republic and we know what follows after that. An American Third Reich.
It's simply not true that "free trade is inevitable". How many years have free trade advocates been kvetching about ag subsidies? And yet the only thing that happens is that the subsidies increase year after year. And as Kelli points out the American commitment to free trade is the exception. Surely we cannot expect that such exceptional commitment to imply an irreversibility of trends!
Historically yes, there has been strong support - bipartisan even - for free trade in America. However Kelli is absolutely right. The oldman is 100% against protectionism, but he's sick and tired of "free market" advocates who are seemingly incapable of coming up with intelligent ways of addressing the massive flaws in their reasoning. The political viability of free trade is coming to an end. The real question as Kelli puts it is that can free traders admit that their solutions are not perfect and address the flaws, or will they swear on the unadulterated purity of their cause until the American public get's sick enough of their textbook thumping to turn to protectionism.posted by: Oldman on 02.19.04 at 10:33 AM [permalink]
Why does anything have to be "done" at all?
Let's not mince words, you're talking about having the government use more of the productive economy's resources (taxing or borrowing, it doesn't matter) in order to redistribute income from one group to another, right?
That would make the problem worse, not better. The US government is already redistributing a greater percentage of the national than at any time in history. That's the real problem, not the solution.posted by: DSpears on 02.19.04 at 10:33 AM [permalink]
“The real question as Kelli puts it is that can free traders admit that their solutions are not perfect and address the flaws, or will they swear on the unadulterated purity of their cause until the American public gets sick enough of their textbook thumping to turn to protectionism.”
No free trader that I’m aware of says that the solution is perfect. Quite the contrary, people like myself have repeated said the very opposite! Utopian wishful thinking is dumb.
Let me try this one more time so that everybody gets it. Heck, I’m going to even repeat myself five times (I’m truly getting desperate!):
1.) Every single increase in productivity inevitably endangers somebody’s job!
2.) Every single increase in productivity inevitably endangers somebody’s job!
3.) Every single increase in productivity inevitably endangers somebody’s job!
4.) Every single increase in productivity inevitably endangers somebody’s job!
5.) Every single increase in productivity inevitably endangers somebody’s job!
We must be a nation of job hoppers if we are to be affluent. It’s as simple as that. Job security and a growing economy are antithetical to each other.
Ask yourself; Are the Democrats really prepared to kill the jobs that backing out of NAFTA wuld cause?
Or are they simply giving the issue enough Monica to get Union endorsements?
"A chinese worker gets a dollar an hour."
Yeah, right now they do. But it's not a permanent situation. Their standard of living will rise, as they become more prosperous as they benefit from free trade. Their wages will increase and so then will the cost of the products they produce. Suddenly their advantage isn't so great.
Companies will then look around for country populated by ill educated folk capable of only menial labor, and judging by our current education system (lacking in principles of free trade such as CHOICE) they'll set up here.posted by: ERA on 02.19.04 at 10:33 AM [permalink]
ERA: "Yeah, right now they do. But it's not a permanent situation."
It is a permanent situation because anyone who tries to form a union or agitate for higher wages will be shot or run over with tanks. This is CHINA, a totalitarian, mercantilist dictatorship that uses slave labor. How anyone can support trading with this monstrous entity and then extol the virtues of "CHOICE" in the next sentence is beyond me.posted by: Firebug on 02.19.04 at 10:33 AM [permalink]
David Thomson: "We must be a nation of job hoppers if we are to be affluent."
Why? Our parents and grandparents didn't have to. Instead they fought for job security and good working conditions and pay. Why should we accept less? We are a richer and more prosperous nation now than then, but average pay has stagnated since the 1970s. None of us are seeing the benefits of free trade. We are the ones who pay the bills for it.posted by: Firebug on 02.19.04 at 10:33 AM [permalink]
It is a permanent situation because anyone who tries to form a union or agitate for higher wages will be shot or run over with tanks.
They don't need to "form a union or agitate for higher wages." They simply need to not take the jobs out there until the salaries rise. There are tens of millions of Americans who make more than minimum wage, without "forming a union or agitating for higher wages." They simply let market forces -- which China is not immune to -- work. (Of course, true slave labor is an exception -- but are there really a lot of computer programmer-slave laborers? Not to mention that when you say, "This is CHINA," you ignore the fact that the debate lately has been as much about India as China. India is not a "totalitarian , mercantilist dictatorship that uses slave labor.")
And all of us are seeing the benefits of free trade.posted by: David Nieporent on 02.19.04 at 10:33 AM [permalink]
"It is a permanent situation because anyone who tries to form a union or agitate for higher wages will be shot or run over with tanks."
Forming Unions and agitating for higher wages results in inflation, not icreases in Real wages. Supply and demand determines wages. Right now there is more supply of labor than demand.
The myth that there ws ever such a thing as "lifetime employment" is just that , a myth. I think the uidea of being a nation of job hoppers is a little overblown, but nobody should expect to or even want to stay in the same job with the same employer for 30 or 40 years. Unless you are living in the shakles of a union imposed seniority system, there is absolutely no advantage to that. You're probebly costing yourself dollars.posted by: DSpears on 02.19.04 at 10:33 AM [permalink]
“David Thomson: "We must be a nation of job hoppers if we are to be affluent."
Why? Our parents and grandparents didn't have to. Instead they fought for job security and good working conditions and pay. Why should we accept less? We are a richer and more prosperous nation now than then, but average pay has stagnated since the 1970s. None of us are seeing the benefits of free trade. We are the ones who pay the bills for it.”
The odds are that you will live to be at least eighty years old. Those born at the turn of the previous century were lucky to see fifty. You also risk becoming overweight---because food prices have become so ridiculously low. Chicken, for instance, is a low cost item. A four pound bird at Wal-Mart should set you back less than three dollars. In pre-inflation dollars, I suspect your grandparents spent well over twenty dollars for the same chicken! I encourage everyone to find a copy of David Gelernter’s splendid, -1939-The Lost World of the Fair.- He writes, “It is too easily forgotten that, not many decades ago, you could hold down a full-time job and go hungry.” A typical family considered a chicken or a simple pot roast as something far too expensive to enjoy every Sunday.
It is simply false to say that the average pay has stagnated since the 1970s. We are able to purchase far more goods for fewer dollars since that time. I recently purchased a 25 inch TV for a grand total, tax included, of one hundred and sixty one dollars! A similar TV in 1970 would have probably set me back around (my guess) three thousand bucks. Do I need to refer to the constantly decreasing computer prices---or are you starting to get the point? Only a nation that encourages the never ending creation and destruction of jobs will be affluent. This is the unavoidable price that must be paid.posted by: David Thomson on 02.19.04 at 10:33 AM [permalink]
How anyone can support trading with this monstrous entity and then extol the virtues of "CHOICE" in the next sentence is beyond me.
Perhaps a look at campaign funding would deepen your confusion?
"Forming unions and agitating for higher wages results in inflation, not increases in real wages."
This is just flat out wrong. Historically speaking, the reason Marx's vision did not work out (at all in the US, with uneven results in Europe) is BECAUSE of unionization. Collective bargaining provided a much-needed counterweight to the power of business cartels and industrialists--it forced employers to do the "right thing" not only for workers, but for society as a whole. Better than starvation wages led to a virtuous cycle of consumption, higher standards of living, better education, industrial and commercial progress. And so on and so on, etc. etc.
The excesses of powerful unions (I'm thinking Gene Orza here! May he rot in Hell for all eternity) have obscured the real benefits they brought at the end of the 19th and beginning of the 20th centuries. I defy you to find me a responsible economic historian (right or left) who will say otherwise.
There needs to be a balance of power between capital and labor--it is a delicate tension, always arbitrated with more or less skill by and between governments. It is, in short, a dangerous myth that the "invisible hand" of the market alone has guided modern western history and delivered to us the unprecedented wealth we now enjoy.
The point is, no one should bash workers for attempting to better themselves or to protect what they've got; likewise, I have contempt for those who fail to appreciate the very real demands placed on business leaders by international market pressures; lastly, I am EVEN sympathetic to the plight of government leaders and bureaucrats who try to keep the pot simmering nicely without boiling over and making too much of a mess for everyone. Now, the question is, do we have the wisdom to recognize when this system is out of whack and agree upon steps to address the imbalance? This is not just an economic OR a political issue, it is both.posted by: Kelli on 02.19.04 at 10:33 AM [permalink]
There's no question that free trade generates more wealth. The political problem is that the wealth generated isn't making its way into the hands of the public in general.
My opinion only, but if you're a true believer in free trade, the increasing income disparity in the US ought to be of some concern.posted by: JKC on 02.19.04 at 10:33 AM [permalink]
“Collective bargaining provided a much-needed counterweight to the power of business cartels and industrialists--it forced employers to do the "right thing" not only for workers, but for society as a whole. Better than starvation wages led to a virtuous cycle of consumption, higher standards of living, better education, industrial and commercial progress. And so on and so on, etc. etc.”
“It is, in short, a dangerous myth that the "invisible hand" of the market alone has guided modern western history and delivered to us the unprecedented wealth we now enjoy. “
I totally agree. Today, however, the unions have mostly outlived their usefulness. They now usually do more harm than good. I even believe that long ago protectionism might have been a rational option! What changed? The immediacy and transparency of information and the fact that global shipping takes only a very short period of time.
“My opinion only, but if you're a true believer in free trade, the increasing income disparity in the US ought to be of some concern.”
It doesn’t bother me in the least bit. We should only care whether the pie is getting bigger for everyone. Our poor people are wealthier than probably 99% of those human beings who ever lived.posted by: David Thomson on 02.19.04 at 10:33 AM [permalink]
A party flip-flop on trade? Why not, they have flip-flopped on so many other issues: foreign policy isolationism, deficit spending, civil rights, education, restrictions on free speech, etc.posted by: dave on 02.19.04 at 10:33 AM [permalink]
kelli...you talk about the importance of unions...I am not opposed to unions although I think liberals sometimes overrate their importance (all the unions in the world would not have given us the 8-hour day unless mechanical & organizational improvements had been improving productivity at the same time) But I do think there is an important question:
To what extent can it be said that we have free trade with country "X" to the extent that workers in country "X" are prevented from organizing unions, speaking out against abuses, etc? The whole libertarian case for free trade is based on the notion that trade is a relationship between freely-contracting individuals. What happens to this case when the people representing one side of the relationship are *not* freely contracting?posted by: david foster on 02.19.04 at 10:33 AM [permalink]
The problem is that the rate of "pie expansion," as it were, isn't equal amongst all sectors of the population. The minimum wage hasn't risen in years, and companies like Wal-Mart have kept wages for retail workers stagnant or worse. Most blue-collar workers have lived with job-insecurity for years; now it's creeping into the professional sphere. Right now the biggest benficiaries of free trade seem to be multinational corporations and their senior executives, along with Wall Street- not Main Street.
As Bob Herbert said in his NYT column today...
"What happens when the combination of corporate indifference and the globalized pressure on jobs and wages becomes so intense it weakens the very foundations of the American standard of living?"
That question isn't going away.posted by: JKC on 02.19.04 at 10:33 AM [permalink]
Too many Daves!
But you each raise good points (even you, DT!). Yeah, there's little doubt that organized labor is a flaccid force, long past its sell-by date (except, alas, in pro sports). And yeah, the 8 hour workday also owes something to independently innovating industrialists (A+ in assonance!). However, one might just as readily argue that the greater force for innovation was sparked BY the 8 hour work day (and war-induced labor shortages, yadda yadda yadda).
Where does that leave us? With US workers rather voiceless, I'm afraid. Thus when things are going swimmingly, free trade looks great and no one minds going with the perk-rich flow. When there's trouble, however, everyone reaches for their congressman's phone number and BITCHES. If they can't find it, they jump on an anti-trade bandwagon, with results we see today.
I don't think it is desirable or feasible to artificially resuscitate organized labor--that dog don't hunt no more. So the next best thing would be a revitalized Dept of Labor that actually did more than shunt around papers denying that repetitive stress syndrome exists and such like. Elaine Chao would seem to be the invisible secretary--is she in Cheney's old "undisclosed location" now that he's out and about more?
A public-private partnership to retrain displaced workers is the very least we need to do (one suggestion I've heard: charge corporations that offshore jobs 1% of the money saved, put it toward retraining newly unemployed workers).
I'm open to other ideas. The point is: recognize the legitimacy of the anger, address it constructively, defuse it. If not, free trade is as good as dead.posted by: Kelli on 02.19.04 at 10:33 AM [permalink]
The numbers from Greenberg's book should be taken with a grain of salt in that they reflect a lengthy time series of polls over the last few years and do not reflect the current snapshot of public sentiment that may exist today.
Purely a hunch, but I'd think the numbers might still be in line with Greenberg's depiction, but with an overall decline in support across the board. Then again, being a free trader, I would hope that I'm dead wrong.posted by: Greg Wythe on 02.19.04 at 10:33 AM [permalink]
Rock on, Kelli!posted by: Brian Ulrich on 02.19.04 at 10:33 AM [permalink]
You said: Third point, all you pure-hearted free traders had better decide whether you want to bend a little to appease the restless, unenlightened masses on this issue, or want to see real protectionism stage a comeback. Remember, whatever sins American politicians have committed against the Invisible Hand are as nothing compared to those committed by EVERY OTHER NATION on Earth. US voters are just a little sick of being the only ones to go to the wall for the sake of Adam Smith's good name.
These countries have received their reward for their foolishness as well. Stagnant economies, high unemployment, low growth. It isn't an accident that America has 5% of the world population but produces 25% of world GDP. Free market policies are responsible for this and if we abandon them we will get what we asked for: Eurosclerosis.posted by: Robert Prather on 02.19.04 at 10:33 AM [permalink]
"There's no question that free trade generates more wealth. The political problem is that the wealth generated isn't making its way into the hands of the public in general."
This is absurd on its face. Look at how the average americans wealth has increased in the last hundred years. Better than that look at the percentage of Americans with money in the stock market compared to any time in history. 401ks? The problem with the redistributionists is that they believe the wealth gap is a bad thing in and of itself, instead of seeing the real growth of wealth for every level, the legendary rising tide. If you become more interested in making sure the rich dont get richer you have to realize nobody else will get richer either. And you have Europe.posted by: Mark Buehner on 02.19.04 at 10:33 AM [permalink]
I have nothing at all against seeing the "rich" do well. Or seeing them do better than they already are.
The notion that it's OK for the top 1-20% (depending on whose statistics you read) to prosper when no-one else is, though, is absurd, and is not sustainable.
Just ask the Russian Tsars, Marie Antoinette, or even Herbert Hoover.posted by: JKC on 02.19.04 at 10:33 AM [permalink]
As long as I'm being argumentative, let me point out that (a) the only sports union that is effective is the MLBPA (baseball) one, and the others are pretty much pushovers for their leagues; (b) Gene Orza is just the legal counsel for the MLBPA; Don Fehr is the head, and (c) the MLBPA is the only good union in the United States.
Why? Because the MLBPA, unlike other unions, does stand up for the market. The MLBPA, unlike other unions, doesn't negotiate for makework jobs. It doesn't have arcane work rules with ridiculously specialized job classifications to protect useless workers. It doesn't force employers to hire or pay or fire based on seniority rather than quality. Rather, it does what one would wish any union would do: negotiate only the basic terms and conditions of employment, and then let the individual workers stand or fail on their own merits.posted by: David Nieporent on 02.19.04 at 10:33 AM [permalink]
"The notion that it's OK for the top 1-20% (depending on whose statistics you read) to prosper when no-one else is, though, is absurd, and is not sustainable."
I agree. The day this begins to happen I'll take notice.posted by: Mark Buehner on 02.19.04 at 10:33 AM [permalink]
I LOVE how you defend the MLB Players' Union on market principles. This is especially amusing since the structure of which it is a part operates in an ultra-protectionist universe of its own. When Congress removes the anti-trust protection that currently cocoons these theives and steroid-taking cheats, THEN and only then will I accept that Gene Orza and friends represent "the only good union in the United States." Nice try, though.posted by: Kelli on 02.19.04 at 10:33 AM [permalink]
What you're writing is ridiculous. This is because specialization has increased markedly the investment needed for high quality jobs. Personally, the oldman has changed his career several times and is in the process of doing it again - voluntarily.
However, not everyone is going to have knowledge of the law, economics, physics, engineering, industrial production, financial investing, sales, etc. like the oldman. He's always been a bit of a prodigy.
It takes time for people to change from one career to another, and there must be a jobs market for those people to switch into, and it takes time and investment to learn the new skills. On average it takes a person about 4-5 years to transition into a new career. If the jobs market is depressed, it will take longer.
The only kind of job hopping you describe which is possible is low-value-added service jobs or unskilled manufacturing and the latter is already going overseas.
Don't you see Dave? The kind of suggestions you are making - continuous reducation, continuous turnover, continuous job hopping are not only unrealistic but they would be unproductive in the economy and would require a very much stronger job market. If there aren't jobs, people can't hop to them.
It's just like a shell game, only there is no pea. Frankly, the oldman could survive and thrive in just about any environment. However, the vast majority of people simply will not be able to make a major career shift (i.e. law to medicine, etc.) every five years or so especially with the reducation and relocation involved which is what you seem to be suggesting. It just won't happen. The population on a systematic basis just isn't that flexible and capable. I doubt any population of human beings is that capable.posted by: Oldman on 02.19.04 at 10:33 AM [permalink]
"A public-private partnership to retrain displaced workers is the very least we need to do (one suggestion I've heard: charge corporations that offshore jobs 1% of the money saved, put it toward retraining newly unemployed workers)."
So you want to make companies LESS profitable and you think this would INCREASE employment?
Assuming this had any economic merit whatsoever, how would you enforce such a thing? Are we talking a national commission on job outsourcing that would try to determine the exact origin (if there is such a thing) of each job in America and whether or not is was "outsourced"? How do you prove a "job" that appears somewhere else is really the same "job" as the one that disappeared? I would hope the courts would at least require that the government prove that a specific job was actually "moved", not just raw statistics. Are we also outlawing laying-off people?
It's absurd. This reminds me of the dreaded "Blue Eagle" during the depression. In true fascist fashion (which is where the drunken General Hugh Johnson got the idea, from Mussolini's "fasces"), the "Blue Eagle" emblem on a business front or on a product meant that the company was in active collusion with the government to fix prices under the National Recovery Act. It was the worst kind of government/private partnership, meant to intimidate anyone who didn't participate in this unconstitutional act (which the Supreme court declared it in 1935) to be ostracized and run out of business.
This act resulted in things like dry-cleaners being thrown in jail for charging 5 cents less than the official price or or fining milk producers for not destroying some of their "excess" milk supply instead of selling it at a discount. I don't know if anybody was thrown in jail for "outsourcing" or not.
A truely shameful, and not much talked about, period in our history.posted by: DSpears on 02.19.04 at 10:33 AM [permalink]
Currently, corporations get a tax CREDIT when they move jobs overseas. Presumably, therefore, the Government (I'm guessing the IRS) has a way of keeping tabs on such things. Why should the US taxpayers subsidize these actions? What I am proposing (and the source of the idea is Robert Reich, by the way, who you may not like personally but whose credentials as an economist and policy expert probably exceed those of you or me) is that, in addition to eliminating this tax credit, we tack a surcharge onto the companies following this path.
If, as these companies are so fond of stating, the savings from moving low-level service jobs offshore will be plowed back into creating higher-value jobs here at home, why wouldn't those companies wish to invest in the retraining of their cast-off workers to fill those NEW great jobs? Unless of course, this part of the equation is a bright and shining lie...
But that could NEVER happen, could it?posted by: Kelli on 02.19.04 at 10:33 AM [permalink]
I believe companies get some sort of tax credit for opening operations in US territories like Puerto Rico, but you are just plain misinformed that they get tax breaks for "moving jobs overseas". If you can site the law and it's wording and show me the part where the number of jobs sent overseas are counted and a tax credit is given for each, I will stand corrected.
I have no problem with elimiating the tax credit, but you've made no arguments about how any of my concerns would be solved. I have little doubt that your Harvard academic peddling this idea hasn't either. He doesn't have to because 1) it probably will never be implemeted (which he knows) and 2) if it were he would not have to deal with the details of implementing it.
I've never met Robert Reich so I don't know if I would like him personally or not. But in my many years of listening to his economic prescriptions, let's just say that the 1970's proved his government-centered Keynsian theories wrong. Because Robert Reich says so isn't an argument that is going to hold much weight with me.posted by: DSpears on 02.19.04 at 10:33 AM [permalink]
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