Let’s Talk About Free Trade
Thank goodness Jared Bernstein wrote this op-ed in the New York Times so I didn’t have to. An excerpt:
The defense of globalization rests on viewing Americans primarily as consumers, not workers, based on the assumption that we care more about low prices than about low wages.
When you hear someone talk about free trade, you can count on them to talk about cheaper products but to sidestep all the American jobs that have been lost through free trade agreements, and more generally the loss of power of workers and unions, which leads to worse jobs, fewer hours, shittier benefits, and lower salaries.
This topic is obviously a huge part of what appeals to Trump supporters (as well as Bernie supporters), and the faster we understand, discuss, and address this the better.
In other words, free trade agreements don’t only talk about taxing goods on their way to other places. Just that, alone, would likely be net bad for the world’s economies, although there are obvious exceptions, for example agricultural industries in poor countries that cannot compete with Monsanto.
Free trade agreements also relate directly to jobs being moved over borders. And that’s where America, by being a rich nation relative to others, will lose out, while countries like China and Bangladesh gain. Because if you’re a t-shirt company in the US, it’s cheaper to have your products made in Bangladesh than in the US, so that’s what happens when there are free trade agreements allowing it.
It’s also not true that this off-shoring is necessarily bad overall. It’s clearly true that the Chinese people working to make iPads are thankful for their jobs overall. But in this case it’s not a win-win situation; it’s more of a win-lose, where Chinese workers win huge and American workers lose medium.
Say it another way: imagine that the rest of the world consisted of a bunch of countries like Sweden, where the minimum wage is high and working conditions are good. In that case free trade agreements would attract jobs to the US, and American workers would be psyched, and would demand better conditions. That’s not the world we live in, though. Free trade means we enrich other countries with opportunities that they’d hungry for and are willing to do for less.
To be clear, I’m not saying this aspect of free trade is something we should necessarily stop altogether. I care about poor Chinese people as well as poor Americans. But I do think it’s time for people – especially economists – to acknowledge that the people who have been damaged or threatened by free trade in this country are many; possibly a majority.
They have a real gripe, and they don’t see, and possibly don’t care about the benefits to Chinese workers that their suffering represents, and they’re super pissed off. We need to start coming up with ways to mitigate the problems before Trump or someone like him becomes president.