I just read an article about globalization that had me air-punching, which doesn’t happen very often. James K. Galbraith, writing in The American Prospect
Let's ... stop scapegoating the Mexicans and the Chinese, and accept that they must have their role, which they will largely determine by their own actions, in the world in which we all live. [...] Let's concentrate, instead, on getting things right for workers right here.
Galbraith doesn’t only identify a problem, he offers a solution.
I’ll try to summarise his arguments in a moment, but first I want to have a go at what I perceive as a harmful, ill-thought out, anti-progressive stance taken by many US progressives when it comes to international trade and the US economy. I don’t have the economic smarts but Galbraith does, so if you disagree with the detail I recommend that you go read the article in case I’ve muddied the arguments.
I tried to diary on this a little while ago, one day when we had rec-list meltdown as people fell over themselves to to prove their progressive, populist credentials by attacking globalization. That day, I learned that globalization seems to mean something different in the US progressive lexicon than it does everywhere else.
Globalization is nothing more than economic interdependence. There are upsides and there are downsides for everyone. For some progressives however, globalization seems to refer to cunning, dastardly foreigners taking unfair economic advantage of the good old honest US of A in the global marketplace, by refusing to pay their workers the same as Americans, and by refusing to buy American products. Add some references to Mexican immigration, and you have a nice populist stew with the tasty, wholesome aroma of right-wing xenophobia (How’s that fence coming along, by the way?).
The standard response to the "threat" of globalization is a call to slap trade tariffs on any country that has the sheer fucking impudence to have low-cost labour, and that can produce goods cheaper than the US can. And this is not an exaggeration: "slap a tariff on their imports until they capitulate" was the exact phrase in one recommended diary.
And it’s not just us at DKos. An essay from Byron Dorgan and Sherrod Brown in WaPo last year expressed the same views; and John Edwards is in on the act too:
I believe in trade deals that make sense for American workers. But that does not include a trade deal with a country that refuses to open its market to American cars. We buy 100 times more cars from South Korea than they buy from us.
Yes! The American middle class is under threat and it’s all the South Koreans’ fault. The largest economy in the world is being squeezed because workers in an economy one-fifteenth the size of ours won’t buy our SUVs.
All these progressive commentaries follow the same narrative - it's the foreigners' fault. And something that frankly scares me is this notion that imposing trade restrictions on small - and often poor - countries halfway around the globe is somehow:
a) going to help protect US jobs and wages
b) a progressive idea in any way, shape or form.
Here’s where Mr Galbraith needs to step in and take over the argument. His main point is that the interdependence of the global economy means that any attempt to impose trade restrictions on someone else ends up either failing or hurting you. My very clumsy summary would be:
- A big, big chunk of America’s trade is still with Europe, Japan and Canada. Translation: your jobs are not going to be outsourced to London any day soon (but please pop round for tea if they are).
- The trading partners which do potentially threaten American jobs and industries are not going to go away, even if restrictions are enforced – i.e. tariffs won’t work where they need to work.
- US protectionism and trade tariffs often hurt some of the poorest countries in the world, and restrict their development – i.e. tariffs will work where they don’t need to work. (Case study: see Oxfam's Make Trade Fair site.
- US trade tariffs will lead to retaliatory trade tariffs, cancelling out any positive effects.
- Imposing labor and environmental standards on other countries, while worthy, will not have a significant impact on trade.
- The whole focus on global trade as a threat to wages is fundamentally flawed.
- The trade deficit is less of a problem than it seems as long as other governments hold US Treasury bonds.
Please, please read the article, as he backs up his arguments and there are a number of other issues that he raises.
So: we just have to sit here and get screwed, right? Sit and watch the American middle class plummet like a small child from a tall rollercoaster? Nope. As Galbraith says in the quote at the top of the diary,
Let's concentrate, instead, on getting things right for workers right here.
He argues that by raising the minimum wage, strengthening the unions and preventing employers from going after cut-price labour, companies will be forced to find ways to compete other than by suppressing their payroll, and the American middle classes can be rebuilt.
Here’s the money quote from Galbraith:
As Dorgan and Brown correctly state in their essay, this is how the American middle class got built in the first place. It was done through unions, laws, regulations and, yes, standards. But the standards weren't imposed on other people. They were imposed at home, where they can be enforced -- and the rest of the world adjusted to what we did here. The problem, in short, is not foreigners and trade. The big problem is simply that unions, laws, regulations, and standards have been undercut by conservative policymakers, right here at home.
A final thought: there’s a danger that after 9/11 and Iraq, even the most progressive Democrats will want to pull the US back into its shell, and to throw up the barriers against the rest of the world. I think it’s vitally important for America that her next chapter will be one in which she remains fully and openly engaged with the rest of the world, and that means both politically and economically.
Cheers