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March 3, 2008
Trade denial
One of the amusing sideshows to the Presidential debates has been the rush of commentators who in their zeal to "correct" the candidates make outrageous claims of their own. Case in point has been the critiques of the Clinton and Obama statements on trade. Take these two as an example: Zakaria: Dems vs. Free Trade | Newsweek Voices - Fareed Zakaria | Newsweek.com: "There are no serious economists or experts who believe that low wages in Mexico or China or India is the fundamental reason that American factories close down," and Sebastian Mallaby - Democrats, Off Course On Trade - washingtonpost.com: "Manufacturing employment has fallen not because of trade but because of technological progress."
Interesting. These distinguished commentators have apparently not kept up with the economic literature, where there is an ongoing debate over the effects of trade versus technology. From what I can tell, only the hard-core set of economists would deny that trade and low wage competition has had an impact.
I think Pearlstein got it right in his column Mobilization for Globalization:
I have no doubt that Americans overstate the degree to which globalization is responsible for this economic malaise, just as I have no doubt that economists and business executives understate it. We could probably spend the next decade figuring out whether it is free trade or changing technology or the decline of unions or simply the herd instincts of corporate executives that are most to blame for decisions to move production to Mexico or outsource to Lithuania.
But as Matthew Slaughter, a Dartmouth economist and one-time Bush economic adviser has written recently, it doesn't much matter how the responsibility is apportioned. As long as trade and globalization are factors, which they clearly are, then whether they account for 25 percent of the problem of 65 percent, the public will be against them.
Bashing NAFTA may not be the best trade strategy, but denying that we are in a global wage competition is even worse. Simply repeating the panglossian line that trade is a pure positive is a sure way to undermine the credibility of the argument. This head-in-the-sand ostrich tactic on trade policy does the nation and the world a great disservice by making solutions to the problem that much more difficult to find. If the pro-free trade columnists really want to advance the debate, they need to get serious about their own comments. Flaying rhetoric these commentators is as useless as rhetoric from the candidates which the commentators seen to decry.
If we are to set policy for the I-Cubed economy, we need to avoid the Scylla and Charybdis of the “trade-causes-no-harm” and “trade-is-bad” camps. Maybe some of our distinguished commentators could lead the way?
Posted by Ken Jarboe at March 3, 2008 8:49 AM
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