Thursday, July 19, 2007

previous entry | main | next entry | TrackBack (0)


Clive Crook vs. economic populism

Clive Crook's Financial Times column today ($$) plows a familar road -- the Democratic turn towards economic populism:

Whoever wins their party’s presidential nomination, the Democrats are preparing to fight the next election on a platform of left-leaning populism. The contrast with Bill Clinton is evident. He was a centrist, pro-trade, pro-enterprise president – an avowed “New Democrat”. The next Democratic occupant of the White House, if the candidates’ campaigns are to be believed, will be old-school.

Mr Clinton campaigned against the odds to secure passage of the North American Free Trade Agreement. Today the party is against such deals. Mr Clinton worked hard to get China into the World Trade Organisation. Hillary Clinton and Barack Obama are Senate co-sponsors of a new China-bashing law. And the move to the populist left is not confined to trade. All the Democratic contenders are turning up the volume on stagnating middle-class wages, soaring profits, swindling bosses, dwindling union membership (Mrs Clinton and Mr Obama back the abolition of secret ballots on union representation), tax loopholes for the super-rich, oil company gouging, insurance company gouging, drug company gouging and every other kind of gouging....

Mr Clinton’s conviction that globalisation was good for America owed a lot to the experts – including economists of the highest professional standing – who surrounded him. Recently, eminent economists such as Alan Blinder, Paul Krugman, Larry Summers (who served as Mr Clinton’s Treasury secretary) and Brad DeLong have all expressed new doubts about the benefits of globalisation for the US. It is all more complicated than we thought, they say. It was hard enough for Mr Clinton to fight for freer trade when every highly regarded economist in the country said it was good for the US. Now that their message has changed to “We might have been wrong about this. We’ll get back to you”, the prospects for liberal trade have dimmed.

Economic populism traditionally marries scepticism on trade with fear of big business: “It’s all about profit.” A striking feature of many Democratic proposals is the belief that cheaper petrol, cheaper drugs, universal health insurance, higher wages, more generous employment benefits, almost any good thing you can think of, can be achieved by demanding them, in one way or another, from companies, or else by raising taxes on the super-rich.

The perverse results of the tax-subsidised healthcare mandate on American businesses show where this approach leads. In the end, the burden falls back on workers and consumers as lower wages and higher prices. The dispiriting wedge between growth in productivity and growth in earnings, the organising principle of the Democratic party’s current economic thinking, gets even bigger.

There is no question that the Democratic contenders are talking about the issues that concern most Americans. There is an excellent centrist case to be made for tax reform, to lift the burden of income and payroll taxes from the low-paid and to increase the burden on the better-off. Universal healthcare is long overdue, a shameful state of affairs in so rich a country. Americans pay more than they should for their medicines. More generous and more imaginative assistance for Americans who lose their jobs because of trade – or because of changing tastes and technology – is needed.

The present administration has little to offer on any of these questions. But the costs of reform cannot be confined to foreigners and plutocrats.

posted by Dan on 07.19.07 at 10:55 AM




Comments:

Like almost everyone else, Clive Crook leaves off the progressive agenda the one thing that can make the other improvements possible: re-unionization of American -- this time with the sector-wide/nation-wide bargaining setup they have in well fed-labor countries.

Until the power is reset in the labor market -- which will automatically reset it in the political realm (David Broder says that when he started out 50 years ago, all the lobbyists in D.C. were union) the core cause of all the other inequalities will not have been removed.

posted by: Denis Drew on 07.19.07 at 10:55 AM [permalink]



I am of the impression that Clinton's campaign was of a much more populist vein; his governance was centrist to be sure, but after the initial two years brought disillusionment and failure.

posted by: Nick Kaufman on 07.19.07 at 10:55 AM [permalink]



I am of the impression that Clinton's campaign was of a much more populist vein; his governance was centrist to be sure, but after the initial two years brought disillusionment and failure.

posted by: Nick Kaufman on 07.19.07 at 10:55 AM [permalink]




Isn't the excellent centrist case Crook refers to in the final paragraph the platform of most Democrats? Read Obama's, Richardson's and HRC's websites...

It is the GOP that is resisting all of those 'centrist' points: tax reform, universal health care, assistance for displaced workers.... FoxNews (Pravda-GOP) conflates universal health care with Terrorism all the time (using the Glasgow bombings and the NHS). John Boehner decries the estate tax as confiscatory.

Yes, most Dems are now anti-free trade, but that is because the 'free trade' lobby is so rabid and ideological that there is no common ground with them. The free trade lobby goes crazy at the mention of even basic environmental and labor protections in FTAs. It balks at some form of redistribution to ensure that free trade's benefits accrue to more than just shareholders (or in the form of cheap Wal mart socks). So why should the Dems advance their agenda?

The free trade agenda is dead for at least a decade or more, unless its advocates can come up with some sort of compromise that doesn't completely screw working-class people. The piece in the current FA is a start, but simply readjusting payroll taxes is not enough.

posted by: SteveinVT on 07.19.07 at 10:55 AM [permalink]



As my handle would suggest, I am generally in favor of free-trade, but with assurances that our trade partners respect the environment and workers rights to the same extent we do. Without these provisions, it's not really free trade. As a result, workers in both countries get screwed and we are basically paying other countries to pollute the air and water while we pat ourselves on the back for our wonderful environmental laws . As SteveinVT points out, many free trade advocates, including our esteemed blog host, are blissfully unaware of the costs of this "un-free" trade. I have given up trying to persuade him. But I appreciate the opportunity to discuss these issues with other bloggers.

posted by: OpenBorderMan on 07.19.07 at 10:55 AM [permalink]



Free trade is free regardless of the environmental trading practices of one's partners. That's just a definitional matter.

But is it a good thing? That depends on four main considerations: How much foreign workers/consumers/citizens care about environment vs. other goods on the margin, how much we care about the well-being of foreigners, whether foreign pollution spills over onto our shores, and how much we gain from the greater efficiciency of specialized trade.

These are not independent points--if, for example, foreigners would prefer more environmental protection than their government delivers but we don't care about them, then increases in polluting production abroad would be okay with us. My sense is that most of our foreign trading partners with weaker environmental regulations are reflecting the mainstream of their citizens' preferences--getting your first refrigerator is worth browner skies to a lot of people.

Given that belief, and given our selfish reasons for pursuing a dynamic internatioanl division of labor, I don't see any reason to cram our rich-nation eco-tastes on our trading partners. The spillovers point should be addressed separately from the trade question; I don't think Chinese soot floating over North America is a good reason to impose tariffs on Chinese goods, if only because I don't think it would actually reduce the problem.

posted by: srp on 07.19.07 at 10:55 AM [permalink]



SRP, You seem to support my point without saying so. US workers do not have a free market in which to sell their labor. Chinese workers are even more constrained. Only the multinational businesses have anything close to a free market, although barriers still abound. A factory in Chicago must comply with US law, or close or move to Asia at considerable cost. The fact that so many of them do move is evidence of the advantage in doing business in a less eco-aware and worker-rights-aware country. Your point about the first refrigerator is well taken. But with global warming the number 1 environmental issue, and China being the number 1 greenhouse gas emiter, how can you say that it doesn't matter?

posted by: OpenBorderMan on 07.19.07 at 10:55 AM [permalink]






Post a Comment:

Name:


Email Address:


URL:




Comments:


Remember your info?





Politics, economics, globalization, academia, pop culture... all from a untenured tenured perspective

Main home page
Main blog page
About Me
Search My Blog
Favorite Blogs
Book Recommendations
Books of the Month (Summer 2008)






Reviews of DanielDrezner.com:

"Sharp but informal commentary on politics and foreign policy." -- The New Republic

"Dan Drezner is terrific.... Excellent blog." -- Andrew Sullivan

"Dan's stuff is always worth reading." -- Eugene Volokh

"One of the essential weblogs." -- Gawker.com

"Old battle horse of the blogosphere." -- Jewcy.com

"Soft porn." -- Amitai Etzioni

"Spawned grave atrocities and vast destruction." -- Glenn Greenwald

"Monday morning quarterback... conservative robot... the very foundation of troubles in this country." -- not-so-random readers


Contact me at:
ddrezner@gmail.com
(But click here to read my e-mail policy)









Search the Site


Try advanced site search









Favorite Blogs

TNR's Open University
Jacob Levy
Glenn Reynolds
Andrew Sullivan
Mickey Kaus
Virginia Postrel
The Volokh Conspiracy
Josh Marshall
Crooked Timber
OxBlog
Real Clear Politics
Kevin Drum
Across the Aisle
Economist's Free Exchange
TNR's The Plank
NRO's The Corner
TAP's Tapped
America Abroad
Duck of Minerva
Opinio Juris
Brad DeLong

Jeff Jarvis
Mystery Pollster
Mark Kleiman
Meryl Yourish
Megan McArdle
Marginal Revolution
Michael Munger
Chris Lawrence
Matthew Yglesias
Hit and Run
Cold Spring Shops
Stephen Green
Outside the Beltway
Pejman Yousefzadeh
Laura McKenna (11D)
Elected Swineherd
Phil Carter
Joe Gandelman
Winds of Change
Andrew Samwick
Greg Mankiw
Dani Rodrik
Roger L. Simon
Tom Maguire
Greg Djerejian
The American Scene
Post Global
Democracy Arsenal




Recent articles online

"Foreign Policy Goes Glam."
The National Interest, November/December 2007

"Rise of the Hipster Statesmen."
Newsweek International, November 1, 2007

"The New New World Order."
Foreign Affairs, March/April 2007

"Mind the Gap."
The National Interest, January/February 2007

"The Grandest Strategy Of Them All."
Washington Post, December 17, 2006

U.S. Trade Strategy: Free Versus Fair
Council on Foreign Relations Press, September 2006.

Complete online article archive




Blog Archives

June 2008
May 2008
April 2008
March 2008
February 2008
January 2008
December 2007
November 2007
October 2007
September 2007
August 2007
July 2007
June 2007
May 2007
April 2007
March 2007
February 2007
January 2007
December 2006
November 2006
October 2006
September 2006
August 2006
July 2006
June 2006
May 2006
April 2006
March 2006
February 2006
January 2006
December 2005
November 2005
October 2005
September 2005
August 2005
July 2005
June 2005
May 2005
April 2005
March 2005
February 2005
January 2005
December 2004
November 2004
October 2004
September 2004
August 2004
July 2004
June 2004
May 2004
April 2004
March 2004
February 2004
January 2004
December 2003
November 2003
October 2003
September 2003
August 2003
July 2003
June 2003
May 2003
April 2003
March 2003
February 2003
January 2003
December 2002
November 2002
October 2002
September 2002

Academia
Area studies
Book club
culture
economics
fence-sitting
from Blogger
globalization
homeland security
international relations
law
Mediasphere
My very important posts
New Republic
outsourcing
personal
politics
Sports
The blog paper
the blogosphere
thesis ideas
Trade and Development
U.S. foreign policy
website maintenance

See full archives listing




Recent Entries

Someone keep Fleet Street away from Bill Clinton
It rivals Buckley vs. Vidal, I tell you
So.... are the Clintons morons?
The New York Times didn't ask me, but then again, that's why I have this blog
Monica Crowley's jet black pot
Al Qaeda is losing
Speaking of karma....
The blog post that writes itself
What made me laugh today
Where should Hillary go?




Site Credits