Well, well, the Church of Free Trade is splintering and finally the silent stewards of economics are breaking ranks with the court doctrine and speaking truth.
A crack in the armor is starting to show....
Alan S. Blinder:
is saying loudly that a new industrial revolution --communication technology that allows services to be delivered electronically from afar --
will put as many as 40 million American jobs at risk of being shipped out of the country in the next decade or two.
After all it only takes massive job losses and a growing trade deficit to get even a squeak of acknowledgment that something is grossly wrong?
Blinder continues:
A college diploma, he warns, may lose its exalted 'silver
bullet' status. It isn't how many years one spends in school that will matter, he says, it's choosing to learn the skills for jobs that cannot easily be delivered electronically from afar.
From Congressional Testimony, Ralph Gomory says:
In its simplest form the pattern we see is this: if the wage differential between two trading countries is sufficiently large, the loss of industries from the higher wage developed county to the low wage underdeveloped country may well benefit both countries at the national level. However as the under-developed country develops and starts to look more like the developed one, we reach a turning point: further loss of industries, becomes harmful to the overall welfare of the more developed nation. although it continues to benefit the developing one.
...
In the cases of India and China, which are rapidly evolving countries having vast underdeveloped areas and poorly educated populations as well as significant and growing sectors that are industrialized and productive, our best guess, based on very simple models is that they are approaching that turning point.
In GLOBAL TRADE AND CONFLICTING NATIONAL INTERESTS Ralph E. Gomory, and William J. Baumol show that even in bi-lateral trade models, there can be multiple outcomes for trade policy and again Gomory states:
The theory described in our book indicates that government actions, if successful, and if justified by the position of the country in the pattern of possible trade outcomes, can do more than serve the interests of the industry in question. Our analysis suggests there can be circumstances where the development or preservation of a particular industry can be in the national interest
.
So, what are the solutions being offered? Adjustments in corporate tax code to stop incentives to offshore outsource jobs, retraining, which so far simply does not work and doesn't put the power, money in the hands of the displaced workers.... Yes, these policy changes add up but will it really turn around such a massive trade deficit?
Few are taking the bull by the horns, running the math and coming up with a strategic trade policy just like China and India are doing now. We need to go way beyond simply stopping Fast Track Authority What we need is a completely revamped trade policy.
Strategic trade is implied by the theory itself so why are we not getting more dynamic and multi-variable trade models and projections and negotiating trade agreements on those theoretical results for the national interest?
Congressman Peter DeFazio (D-OR, 4th) has introduced a bill to create a Congressional Trade Office.
The duties of the CTO include:
- Providing committees of Congress with information and analyses that will assist in the discharge of matters within their jurisdiction. This assistance is available to all committees with oversight of issues impacted by trade agreements.
- Monitoring compliance of other countries with major bilateral, regional, and multilateral trade agreements, including annual assessments on the extent to which those agreements comply with labor and environmental goals.
- Analyzing the president's annual National Trade Policy Agenda, the National Trade Estimate report (which documents trade barriers of other countries), and the overall trade balances of the U.S. with trading partners.
- Participating as observers in dispute settlement deliberations at the World Trade Organization, under the North American Free Trade Agreement, and subsequent agreements, and report to Congress on such deliberations.
- Participating as observers in bilateral, regional, and multinational trade negotiations, and report to Congress on such negotiations.
This would go a long way to craft trade policy based on strategic trade and also assist in democratizing such an important economic policy which affects every American in areas of environmental regulations, economic security, worker rights, and even foreign policy.
Perhaps we will start getting momentum for strategic trade. After all one of the career areas most vulnerable to offshore outsourcing according to Blinder is Economics.