Tag Archives: Free trade

Trump has failed on trade (that’s good), but the economic damage is already done

By Joseph Stiglitz – Trump exploited understandable grievances among a large swath of American society, whose standard of living has stagnated for almost half a century. Defenders of globalization say that Trump has unfairly blamed globalization, when the real culprit is technology. Of course, Trump like so many demagogues prefers to blame others.

Though even without globalization, technological advances would have meant workers without a college education would be hard pressed, the reality is that globalization has played a central role: even without changes in technology, especially unskilled workers would have seen wages depressed. Globalization was oversold: the increase in output was less than hoped, and there were costs—especially the lowering of wages as the bargaining power of workers weakened.

The problem though is not so much with globalization itself, but with the way it’s been managed. It’s been managed to benefit those at the top.

For three quarters of a century, the US led the way in creating an international economic system in which borders were becoming increasingly unimportant. Now, Trump has reminded everyone that borders do matter.

The world won’t be the same: the efficient supply chains that were created ignoring borders will have to be reconstructed for this new world. more>

America Needs the World

The U.S. is heading toward a trade war it cannot win.
By Tavis Jules – President Donald Trump ended his address to a joint session of Congress by saying “My job is not to represent the world. My job is to represent the United States of America.”

Trump’s job as de facto representative of the world is a byproduct of post-World War II era restructuring that ushered in over seventy years of American dominance and greatness while allowing America to significantly influence and shape educational development priorities, agendas and directives of global institutions such as the World Bank, the International Monetary Fund and World Trade Organization.

Since the 1980s, the mantra of open markets has equated to open educational systems in the name of democratic governance and transition. In line with Washington Consensus principles of deregulated labor markets, privatization of nationalized industries, and openness to trade under the banner of ‘saving’ national education and preparing a new generation of global workers to exploit their untapped capital, governments have been slowly opening their educational markets to all forms of trade and services.

These neoliberal policies crystallized in 1995 when the U.S.-led WTO in its General Agreement on Trade in Services identified education as one of 12 tradable services, under the movement of natural persons. Thus, education became subjected to global trade and commercial rules.

Trump’s congressional message of not knowing the full scope of what his job is or should be, highlights the narrowness which is fed through his policy advisers, who too often apply established models to current circumstances, rather than considering the radical reinterpretations of the issues.

In today’s overly interconnected world, the U.S. is heading towards a trade war it cannot win; America needs the world, but the world does not need America when the emerging and frontier markets show such promise. more> https://goo.gl/6Tyf03

Free Trade With China Wasn’t Such a Great Idea for the U.S.

By Noah Smith – Economists are also stubbornly unwilling to question their benchmark theories, even when the evidence presents a challenge to these theories.

The fact that Autor et al. find total national employment declining in response to trade with China should be cause for concern.

Standard trade models, especially the simple ones taught in Econ 101, predict that this shouldn’t have happened. Autor et al. sternly rebuke the economics profession for relying too much on theory, and not enough on evidence, when it comes to the issue of trade:

We argue that having failed to anticipate how significant the dislocations from trade might be, it is incumbent on the economics literature to more convincingly estimate gains from trade, such that the case for free trade is not based on theory alone, but on a foundation of evidence.

The authors suggest that real-world economies may simply be much worse at adjusting to big changes than most economic models assume. more> http://goo.gl/nRrVhw

Free Trade Is No Longer a No-Brainer

By Noah Smith – It’s an old truism that economists can never agree on anything. But if you ask economists about this embarrassing fact, they will often point out that on one issue, the profession is in almost complete agreement.

Interestingly, free trade is also one of the issues where economists most vehemently disagree with the general public.

Economists are also questioning free trade from another angle. We’ve known since the time of David Ricardo [2, 3, 4] that even if free trade makes a country richer overall, many of the people within that country can be left worse off. more> http://tinyurl.com/p6chkru


R.I.P., Free-Trade Treaties?

By John Cassidy – The bigger story is that, so far, free trade and globalization have failed to deliver the material benefits to ordinary Americans, and particularly to American workers, that were advertised. Over time, Democratic politicians and economists have been forced to acknowledge this fact.

In 2012, a long survey article in the Journal of Economic Perspectives concluded: “Our analysis sheds new light on the sobering fact of pervasive real-income declines for the large majority of Americans in the past decade. These real-income declines may be part of the same globalization and innovation forces shaping returns to superstars and to capital.”

In case that last line went over your head, I’ll translate it into plain English:

It could well be that globalization is making the rich richer and most of the U.S. population poorer. more> http://tinyurl.com/qfmulby

8 Ways Washington Could Really Help Small Business

By Geoffrey James –

If politicians really wanted to help small business, they’d do the following:

  1. Stop making ‘small business’ meaningless.
  2. Punish large companies that defect elsewhere.
  3. Be honest about ‘free trade.’
  4. Create a progressive business tax.
  5. Make corporate campaign contributions public.
  6. Legalize (and tax) the drug trade.
  7. Implement size-neutral health insurance.
  8. Educate more engineers.

Sometimes it seems like the higher education system in the United States is geared exclusively towards the creation of MBAs. With all due respect, small businesses don’t need more MBAs-but they do need more engineers. more> http://tinyurl.com/cn8vkrx