Questions on Globalization and Trade Part One
Mark points us to this very fun and persuasive article by Radley Balko on the wonders of free trade and markets which warns, quite astutely, of the dangers of central planning and too much government intervention in the economy. I’d just like to lay out a few of my beliefs on free trade, protectionism, government intervention and all that nonsense because I think on more levels than not I agree with much of what Mark believes. This is Part One in a (tentatively) four part series.
Free Trade vs. Protectionism
I share the larger, long-term goal of free trade with my libertarian counterparts. I think that a world highly interconnected by trade will be a more peaceful and prosperous world, so long as we can also determine ways to adequately protect our environment and find sustainable resources and energy to continue to drive the economy forward. However, I am more cynical as to the implementation of such widespread trade. I think that the reality is, with capitalism comes pain. The formula requires failure, because competition dictates that there be losers and winners. This is fine when it comes to corporations – a failed corporation, theoretically at least, will be replaced with a better competitor and that’s good for consumers, workers, and investors alike. However, failure does not stop at the company level, it also effects the human beings who work for these belly-up companies.
This leads to the necessity of social safety nets (discussed more in part 2) but also to the need for some sort of, for lack of a better word, pacing. I don’t believe in protection as an end in and of itself, but rather as a means to an end. Protection of national industry should be about maintaining a safe trade balance, a stable employment rate, etc. And it should be implemented in a temporary fashion, not ensuring the protection of one industry indefinitely, but rather promoting economic stability here at home while we achieve, gradually, freer trade globally.
So if we plan on depleting our blue collar jobs in steel or manufacturing we need to find ways to provide other good blue collar (or better) jobs for the thousands or millions of displaced workers resulting from the demise of those industries; or we need to find ways to protect those industries from foreign competition. The service economy we’ve begun erecting now has not met the need, and our new service jobs not meet the same standards and wages as the lost jobs in manufacturing and nor are they necessarily jobs that post-manufacturing laborers would be necessarily able to fill. Perhaps some combination of these efforts needs to happen. The alternative is a lot of pain for the working class especially as we shift from one industry to another, and that’s simply not an acceptable pill for most Americans to swallow.
So my question to the free-trade advocates is how do we do this? Do we make the U.S. a better nation to do business in by lowering corporate taxes as some suggest? Can lower taxes make us more competitive, or do low labor costs trump even that? Does the government play some role in developing new technologies that we can build here and export, thus providing new jobs or is this too much interference? And isn’t this a case for high investment in education and in broadening education to include public trade school options for high school students? In other words, as we move toward free trade and thus inevitably let some major industries die off, do we play any sort of role in providing for those displaced by this transition? And in the mean time, do we strengthen our own hand by implementing some form of protection – as many of our neighbors overseas and south of the border are almost guaranteed to do? And finally, what about the trade deficit? It keeps growing and there is no end in sight….
Next up: Safety Nets vs. Central Planning