How an average American might view globalization
An average voter in Cleveland sees his manufacturing job outsourced to Asia. When his kids are ready for college he finds that decent education has become a prerogative of affluence. He reads that American kids are falling behind the rest of the world. He shares the struggles of his neighbor’s family unable to get health care while she serves in a silent draft in Iraq. He suspects that by relying on a steady flow of low wage immigrant workers employers keep the remaining job base jobs that can’t be outsourced such as those in the construction and service sectors poorly paid.
Meanwhile, the US government makes sure that American investors and knowledge workers the top of the social pyramid get what they need from trade treaties, have access to elite educations, avoid military service and have access to cheap agricultural, service and construction labor.
This is not, I would suggest, a formula that makes it easy for that voter to embrace a multi-polar world, to accept America’s leadership responsibilities, or to cope with the need to rethink our relationship with the global community.
It is not surprising that a late winter poll showed that Americans had turned resoundingly sour on globalization.
If global engagement offers this kind of outcomes for most Americans, they will take refuge in various forms of isolationism and withdrawal, and no amount of editorial hectoring from the Washington Post will change this.
In the last thirty years American trade negotiators have pursued a strategy that prioritized economic advantages for American investors, financial service companies, drug manufacturers, agribusiness giants; and Hollywood “Free trade” agreements are actually complex “trade compromises” in which each nation pursues its own interests. There is nothing wrong with this. But the American trade negotiating posture has consistently presumed no future for high-wage manufacturing jobs as if America’s only interest lay in “knowledge” workers, and corporate profits. This strategy was the fundamental priority for Bush’s father in launching NAFTA. It was often and explicitly articulated by Robert Reich, Clinton’s Secretary of Labor. It continues today under W.
The conventional response to this concern is that we simply can’t expect to preserve manufacturing jobs here our wages are too high. High wages are, indeed, one factor in the decline of manufacturing jobs in the US. But the underlying economics are not nearly as simple as Americans are told, or our trade negotiators seem to assume. Take Korean steel, for example. Back in 1999, with a strong dollar, Korean steel on the average cost $130 a ton less than US steel but labor costs amounted to less than 25% of that differential. But the conventional media wisdom was that the loss of American steel was simply the result of high wages.
And, to the extent that wage competition makes it hard to keep manufacturing jobs in the US, then higher manufacturing wages in places like Mexico and China should be a very high priority for US negotiators. Instead, America’s trade negotiators have fought bitterly to keep labor and wage issues out of trade agreements as irrelevant “side” issues while insisting that American foreign investors garner unprecedented rights to challenge any and all government regulations limiting their operations overseas, making it even more attractive for them to move their factories somewhere else.
This trade policy has been enabled by the media’s willingness to parrot a series of demonstrable untruths. One of the standard defenses of American trade policy in the press has been to admit that trade agreements were hurting manufacturing, but nonetheless were creating far more jobs than they destroyed overall. But in 2006 the New York Times quietly reported that 2005 was the first year in a decade in which trade actually contributed positively to American economic growth. But even this did not cause the Times to reflect this reality in its frequent editorials decrying declining public and political support for trade.
So what do trade liberalization advocates suggest we should do to cope with what US trade policy is doing to blue-collar workers? Simple we need for Americans to be better educated to compete in a globalized world. This is undoubtedly and unquestionably true. Even if we changed our trade negotiating priorities, only better educated Americans can continue to realize the American dream.