I realize that many Kossacks have reservations about Robert Rubin and globalization. I hope to assuage those concerns in the hope that more Kossacks embrace his message.
There are two fundamental ways of looking at the role of government in our economic system: (a) a belief in laissez-faire economics which entails almost blind allegiance to the invisible hand, or (b) a belief that markets can effectively allocate capital, but that this often results in social and economic imbalances which must be rectified through government intervention.
Indeed, former Treasury Chief Snow laid it out best in a speech last year at the University of Mississippi, when he attacked the center-left economic policies of Robert Rubin, while extolling the supply-side economics of his boss.
http://blogs.wsj.com/...
"On the one hand are those who believe that the future of our economy is best served by a larger role for government in the economy," Snow said. " On the other side are those, like myself, who maintain that while the role of government is to create the conditions for prosperity, the citizens and taxpayers are the best judge of how to spend their own money, not the government. One view necessitates higher taxes, a more expansive role for government, and more government spending. The other holds that low tax rates, a reduced role for government and a vibrant private sector is the best path to prosperity for all Americans."
Making clear precisely who he was targeting, Snow needled Rubin, former deputy Treasury secretary Roger Altman and other former Clinton officials for styling their new effort the Hamilton Project, after the nation’s first Treasury secretary.
Make no mistake, Robert Rubin IS on our side. He is a staunch Democrat who believes in the power of government to accomplish great things.
The New York Times published a must-read story last week that describes the policies that Rubin's Hamilton Project has offered to make globalization more just.
http://www.nytimes.com/...
The goal of the Hamilton Project is to put together economic policies aimed at influencing the Democratic Party’s platform. When it comes to trade, Mr. Rubin and his followers want to push ahead with further trade openings, disagreeing with Mr. Rodrik on this point. But to soften the backlash they, too, propose a safety net that goes beyond the education and retraining that was Mr. Clinton’s principal response in the 1990s to the damage from trade.
"My argument is that we need to have a new social contract," said Jacob Hacker, a political scientist at Yale who is working on a plan for health insurance modeled on Medicare and a program to provide subsidized 401(k) accounts. "This new social contract won’t be as extensive as those in Europe," he added, "but it will move a lot of the responsibility for providing economic security off the backs of employers."
Mr. Furman (director of the Hamilton Project), for his part, singled out two priorities: a law that would maintain health insurance for laid-off workers and another that would provide wage insurance for American workers, paid out when a worker loses a job and finds another but at lower pay. The wage insurance would make up some of the lost pay during the first two years in the new job.
"People are more likely to support free trade," Mr. Furman said, "if it does not have the intense personal downside that it so often has today."
Democrats must do everything they can to ensure that lower- and middle-income Americans, those most likely to negatively impacted by globalization, are relatively protected from its excesses.
How? Through a combination of education and wage insurance. If you have a Whirlpool worker in his 50s lose a US$ 30 an hour job, we must (a) train this worker so that he can add value to the global economy AND (b) guarantee that the worker would receive at least 80% of his former wages for at least 2.5 years. I believe that this must part of the Democratic message in 2008. Education + Wage Insurance.
Globalization is here to stay. It is irreversible. It is impossible for us to become an island, isolated from the economic dynamics that drive the world. For example, if we were we to raise tariffs, so would our trading partners. Where would that leave not only our manufacturing base or our purveyors of intellectual property? Moreover, if we stop buying goods from the rest of the world, those countries will no longer have to recycle dollars back into our country by way of Treasury purchases. Some investment banks believe that our long-term Treasury rate, currently at 4.75%, would be 6.75%, were it not for China and oil-exporting countries buying US government debt. Can you imagine the negative impact that would have on the housing and automobile markets?
Also, please note that while the US still represents the largest consumer market, this is rapidly changing. China will soon have more broadband connections than the US, and it already has far more cell phone subscribers. If we decide to close our market to the world, the world will simply shift more resources to China.
I realize that many Americans, especially middle-class factory workers, were negatively impacted by NAFTA. But keep in mind that President Clinton and his team extracted MANY concessions from their Mexican counterparts that were not originally in the original agreement drafted by George H. W. Bush. In fact, many Mexicans believe that Pedro Aspe, Mexico's chief NAFTA negotiator, made so many concessions to Clinton's team that he sold out his people in exchange for future personal enrichment. NAFTA has been FAR more pernicious to the Mexican lower- and middle-classes, than it has been for their US counterparts. Far more.
The economic and social policies espoused by President Clinton and Robert Rubin are not remotely close to those promulgated by the GOP. President Clinton and Rubin believe that government has a role to play in setting the terms for globalization, while the GOP does not. The Hamilton Project believes in wage insurance, while the GOP doesn't even believe in increasing the minimum wage. Heck, if Robert Rubin went down to Mexico and talked about wage insurance and an increased role for government in the economy, the current government would brand him a socialist or communist fanatic.
Robert Rubin and his Hamilton Project are our friend. He believes that with the right policies, America can maintain its role as the global economic nexus. I believe that we should give him and his policies the benefit of the doubt.