Friday, December 28, 2007

Let's talk trade:

Paul Krugman has a column in the NYTimes today which is generally favorably towards free trade (with important qualifiers). The concluding lines are:
As I said, I’m not a protectionist. For the sake of the world as a whole, I hope that we respond to the trouble with trade not by shutting trade down, but by doing things like strengthening the social safety net. But those who are worried about trade have a point, and deserve some respect.
This is naïve in the extreme. The best way to insure that people are given economic security is to integrate that security into the economy, say through protectionism. The notion that, at the end of the year, the government will give compensatory money to the "free trade losers" is a technocrat's dream, but only that. Such recipients would be seen as undeserving since they hadn't been working that year. And what capable worker wants to be stuck in a safety net anyway?

For those who say protectionism is bad, it's useful to note what Krugman said earlier this week in an interview on the Charlie Rose show: (emp add)
CR: Trade.

PK: I was afraid you were going to ask me about that. I'm a big free trader, but not for the reasons that people would say. If you ask me, if the United States turns somewhat protectionist, would that have devastating effects on the U.S. economy? The answer is, no, it would not. It would have devastating effects on the economy of Bangladesh. Devastating effects on the economy of Paraguay. The open trading system is really important for the poor countries. Are there problems, does it cause some problems in the United States? Yes, but not as much as people think.

CR: On the basic issue of trade, you're saying "I'm for free trade because it's in the best interest of people in poor countries."

PK: That's right.
Which is the Brad DeLong argument. Free trade helps the rest of the world. This blog dissents strongly from that position and is admittedly nationalist-selfish in wanting to preserve economic status for the middle class and improve it for the poor by avoiding the global labor arbitrage (aka "free trade") that depresses wages and outsources jobs.


The inequality between countries has gone DOWN as free trade has increased, while the inequlaity within countries has gone UP. No rational observer of such a correlation could claim that globalization and the toppling of trade barriers isn't good for the world overall.

To summarize: you can't have your cake and eat it too. Economic inequality within our country is a serious concern (which can be addressed through safety nets), but if you view all humans as equal, growing economic equality throughout the whole world is incompatible with the protectionism you espouse.

By Anonymous ben g, at 12/29/2007 12:00 AM  

So globalization and trade are acceptable while the US benefits but when the scales tip it is then time for US protectionist measures?

By Blogger Shag from Brookline, at 12/29/2007 3:38 AM  

Shorter Ben G: When inequality is inevitable, relax and enjoy it.

Um, Ben, ever hear of Alexander Hamilton or the New Deal in terms of how nations develop? Why do you believe development is a zero-sum game? Ever have an inkling that nations like the US, Taiwan, South Korea and other nations have continued to develop better with domestic content and other protectionist measures--and that what holds them back from further development is their failure to raise the wages of their workers so they can build what they buy and buy what they build?

Shorter Shag: I'm alright, Jack. I don't give a rat's ass about America.

Um, Shag, protectionist measures continue to exist, under misnamed "free trade" deals, for lawyers, doctors, and accountants, and a host of others. Patent, copyright and trademark laws protect wealthy companies more than individual artists--just try to enforce your rights in a court of law and you'll know how expensive it is. And since you obviously don't care whether the US maintains any manufacturing capacity or redevelops itself for its people and land, you obviously need to track down your Brookline neighbor, Noam Chomsky, to help explain why redevelopment of the US and holding on to manufacturing capabilities is vital. Chomsky knows how nations develop and knows that globalization and trade are being developed for the benefits of a small elite, not the mass in any of the nations affected by such globalization and trade. That's the issue, not your Wolf Blitzer formulation of "Are you for free trade or for protectionism?"

The saddest thing to me is that both of you think you are "liberal Democrats." You don't get it and likely never will, until you lose your job or livelihood where you can connect it to globalization--which makes you fundamentally "conservative." You have no empathy for others as you sit in your self-created ivory tower of Ricardian theory.

By Blogger Mitchell J. Freedman, at 12/29/2007 7:02 AM  

Mitchell sounds a lot like one of my favorite commenters (typically found at Beat the Press) Ponzi Q. Globalization.

By Blogger Quiddity, at 12/29/2007 3:37 PM  

"Shorter Ben G: When inequality is inevitable, relax and enjoy it."

Freedman, please avoid attacking a straw man. My view is that globalization reduces inequality over all, and this view is backed up by the fact that overall inequality has gone down as globalization has increased.

Your long comment is merely a series of witticisms and complaints, devoid of any actual support for views, conlcuding with how supporters of globalization "don't get it." While this type of preaching to the crowd might make people who already agree with you more enthusiastic at the next anti-globalization rally, it won't actually change the mind of anyone who decides what they believe in based on rational argument.

By Anonymous ben g, at 12/29/2007 10:45 PM  

"Um, Ben, ever hear of Alexander Hamilton"

Isn't that the guy who argued that US steel needed to be protected so that it could grow? Oh yeah, and it was still being protected hundreds of years later. Yes, I've heard of him.

By Anonymous Alexander Hamilton, at 12/29/2007 11:01 PM  

I thought Noam Chomsky lived in Newton. But I'm sure he doesn't believe that might makes right, which seems to be the "Shorter Freedman." I merely raised a question about balancing the scales of globalization and trade relative to justice. I do give a rat's ass about America. But is it in America's long term interests to treat globalization and trade as a zero sum economic game? I well recognize that there is no free trade.

With respect to the loss of manufacturing in America, I think back to 1939-40 when I was a pre-teen and how America mobilized with production to address the Axis. Perhaps America may not have to mobilize to the same extent if another major war breaks out, but if we have to, how long might it take to mobilize? Or is it that our technology is so great that we can zap our enemies from space?

So is there something wrong about balanced globalization and trade that will benefit all nations and perhaps make this a better world for all Freed-men?

By Blogger Shag from Brookline, at 12/31/2007 5:09 AM  

Ben G and Shag,

Glad to have your attention.

First, to Shag, I don't believe in a zero sum game or that might makes right as policies we should pursue. That is why I also don't support the "race to the bottom" that is the STRUCTURE of the current trade deals for too many Americans and people in these third world nations.

And to Ben G: The straw man that Ben G talks about is not in my own comments, but in Ben G's initial comment. His point about narrowing inequality among nations is the straw factoid because, apart from whether it is actually true, the vast majority of growth of wealth in the developing nations goes to multinational or transnational corporations--and the political structures inside those nations are reenforced by the trade treaties our leaders endorse.

Ben G's admission in his initial post that inequality is growing inside each of the affected nations) is the most important fact and that is again a function of not merely internal politics in the affected nations, but the structure of things like the NAFTA and WTO.

I would invite Shag and Ben G to read the works of Lori Wallach at Public Citizen, John Cavanaugh at IPS, and Thea Lee over at the AFL-CIO.

Two final comments: Just in case anyone wonders, I am not Ponzi Q. Globalization, though I did laugh that he used the phrase "Ricardian" in a recent comment that I only saw after Quiddity's comment in this thread.

And Shag G, one last comment: From here in CA, I would say that Newton, Brookline and Cambridge are pretty close to each other so that my point about checking in with the "neighbor," Noam C. would not be a bad idea, either.

Still, I apologize to both Ben G and Shag for flaming. I realize I should have more, not less patience, when arguing the perniciousness of the current trade deals with those with whom I'm likely to agree with on a host of other issues.

By Blogger Mitchell J. Freedman, at 12/31/2007 2:47 PM  

Sorry, Freedman, but I'm not interested in discussing this with you at this point in time.

My impression of you is that you're basically an idealistic, good guy, who has empathy for poor people. However, you assume that people who disagree with you about the benefits of globalization and free trade are necessarily "conservatives" who lack empathy. (Never mind the fact that plenty of conservatives such as Pat Buchanan openly view protectionism as a form of conservative patriotism. Anything for some hostile, short-sighted rhetorical flourish, I guess?)

The fact is that I have the same ideals as you, but believe that our approach will actually achieve these ideals more successfully than yours. Instead of confronting my core claims, you shorten them into straw men so that you can ridicule them in a witty way and tell me to read Chomsky.

Now, I wouldn't mind a spirited argument with a protectionist who has read up on the basic data and statistics... but that's not you! You're not even sure whether the most basic of the claims I make are valid or not ("His point about narrowing inequality among nations is the straw factoid because, apart from whether it is actually true..."). The inequality within nations is DWARFED by the economic inequality between. Poor Americans are living the high life in comparison to most of the world's citizens who survive on dollars a day, often starving. (And you tell me I don't have empathy?)

Freedman, read up on the data and the statistics. Get a good idea of the facts. Then go around flaming people.

By Anonymous ben g, at 12/31/2007 4:36 PM  

Beg G: I read your second comment to say you wanted to know where you could find information that backed up what I said. I give it to you and apologize for flaming--but then you decide it is time for you to flame. How pathetic.

Also, I know far more than you on this subject and know that the basis of your statement that inequality is going down is that you don't understand that the stat you love (inequality among nations going down) is a misnomer because you assume the nations growing in wealth are getting the benefit of that wealth, when in fact that most of the wealth is going into the pockets of the wealthy transnational companies located there.

Make up your mind whether you are concern troll (your second comment), a flamer (third comment) or ignorant of how trade agreements are actually operating (first comment).

But I forgot, you don't really want to engage, as I realize even from your first post.

By Blogger Mitchell J. Freedman, at 1/01/2008 7:33 AM  

One more response for others to Ben G:

The poor Americans often live in areas of the US where the infant mortality rate is equal to Bangladesh. Being poor in America is much worse than being poor in most nations in Europe. Ben G may be sanguine about comparing the poor of third world nations to ours, but I'm not.

And readers of this thread may want to read Paul Krugman's blog post against The Economist magazine, which is making Ben G's argument about the poor.

By Blogger Mitchell J. Freedman, at 1/01/2008 7:44 AM  

And to be clear, Krugman's post is about comparing the poor in America to the rich in America. One can fill in the lines about why it is a dodge and not, practically speaking, useful to compare the poor in the US to third world poor.

By Blogger Mitchell J. Freedman, at 1/01/2008 7:47 AM  

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