I’m an unabashed fan of globalization, at least in concept. At the same time I try to keep an open mind regarding how well it’s being executed.
The point being, of course, that in striving for a more intelligent mode of managing Planet Earth, nothing will really be possible if both peace and prosperity cannot be promoted.
Many ordinary Americans have long been suspicious of free trade, seeing it as a destroyer of good-paying jobs. American economists, though, have told a different story. Economists are, however, noting that their ideas can’t explain the disturbing stagnation in income that much of the middle class is experiencing. According to estimates by the Peterson Institute and others, trade and investment liberalization over the past decades have added $500 billion to $1 trillion to annual income in the U.S.
Yet concern is rising that the gains from free trade may increasingly be going to a small group at the top. Inflation-adjusted earnings have fallen in every educational category other than the 4% who hold doctorates or professional degrees.
What to do? Blinder argues for a big expansion of unemployment insurance and a major overhaul of the poorly performing Trade Adjustment Assistance program (TAA), which retrains manufacturing workers whose jobs disappeared. More vocational training and wage insurance, which would partially reimburse displaced workers who take new jobs at lower pay, also figure in his proposals. Both Clinton and Obama—and even Republican Senator John McCain—have similar ideas.
That’s not enough, says Slaughter. He sees a need for some form of income redistribution to spread the gains from free trade to more workers. In a controversial article Slaughter co-wrote last summer for Foreign Affairs, he proposed “A New Deal for Globalization” in which payroll taxes for all workers earning below the national median income level would be eliminated. Slaughter has talked with campaign advisers in both parties. So far, he has no takers. But it’s one more sign of how far the trade debate has moved.
Prosperity has to consist of something other than just creating a situation where the rich get richer. On the other hand, the coming together of the global economy has made great strides in helping literally billions to leave abject poverty. Clearly this is an experiment that we have no choice but to keep tinkering with until we get it right.