It should come as no shock to either Republicans or Democrats that the aggressively liberalizing trade agenda of the last 30 years have fallen on rocky shores. Free trade without social safety nets to protect the “losers” has created strong backlashes against trade liberalization, and strong political backlashes in affected regions. As Joseph Stiglitz notes in his recent post at Project-Syndicate, only the top 10% of the US population has seen improvements in income during the last 30 odd years, and median income for full time male workers is lower than it was 42 years ago. Job losses due to liberalized trade with China between 2000-2011 is estimated at somewhere between 2-2.4 million jobs.
Stiglitz doesn’t discuss at length other economic benefits of trade liberalization, such as the increased buying power of consumers. In fact, at least some research suggests that the poor and middle class significantly benefit from liberalized trade, who spend far more proportionately on goods that are imported, versus wealthier consumers who purchase relatively more on services. But as real incomes fall, it might be little consolation that the prices of LED TVs are rapidly decreasing, as well.
Apart from the economic debates, which I have little to contribute to, I have always believed that some of the most compelling arguments for trade are non-economic. That is, that liberalized trade and investment regimes that facilitate economic integration can lead to greater social and political integration and rights. Montesquieu famously argued that greater trade liberalization leads to more peace. This thesis is largely born out in academic research, although it only takes one demagogic populist leader, such as a Donald Trump, or hyper-nationalistic regime to create some scary counter examples.
Writing about and advocating for labor rights provisions in free trade agreements, for example, has been part of that vision. It is one way of integrating the economic benefits of FTAs with human and labor rights protections. Of ensuring not only that trade liberalization will not undermine labor, but in fact provide tools for strengthening workers’ collective power and a voice at work.
But it has become increasingly clear to me that liberalized trade without other mediating institutions is insufficient to achieve the social integration and political integration that is the ideal. Trade is likely more of a straw man than it is a cause of so many people’s economic distress. Social safety nets and redistributive tax policies would surely have gone a long way towards blunting the anti-trade swell.
But the promise of trade and globalization as a means of fostering greater social solidarity, less xenophobia, and more compassion has proven to be something of a pipe dream. Part of the problem, I think, has to do with the lack of bridge institutions that can humanize the people who are in fact the real trading partners. In some of my projects going forward I seek to explore this conflict. To examine how various “bridge” institutions can help mediate the gap between producers and consumers in supply chains and the global economy, and to create stronger and more stable human bonds.
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