Commentary
Page 12
Street Roots • Dec. 29. 2017-Jan. 4, 2018
We can fix global trade and create social, worker benefits
BY ROBIN HAHNEL
C O N T R IB U T IN G C O L U M N IS T
Robin H ahnel is a
professor o f economics
em eritus at Am erican
ow do we change U.S. trade policy to
University in Washington,
better serve the interests of the vast
D .C ., faculty affiliate at
majority both here and abroad? How
Portland State University
and co-director o f
do we manage trade in the national interest?
economics fo r E quity and
The choice is not between managed trade
the Environm ent.
and free trade. The choice is about who will
manage trade. The problem is that
corporations have been allowed to manage
trade policy in the U.S., which they have
done very much to their advantage. Instead
we need the U.S. government to step in and
manage trade to orchestrate changes in
Street Sm art Econom ics is a periodic series written
trade patterns to maximize increases in
fo r Street Roots by professors em eriti in economics.
labor productivity in the U.S. and ensure
R ead related colum ns a t news.streetroots.org
that “losers” due to increased imports are
fully compensated from the gains of
reasons the U.S. government needs to
“winners” due to increased exports.
manage trade in this way: 1) Other
Moreover, when all countries take this
countries will continue to manage trade, and
approach the result is a positive sum game
any country which fails to do so will lose out
where productivity rises more quickly
to those who do. 2) Protectionism leads to
everywhere.
destructive trade wars which reduces global
GDP, but when all countries manage trade
to shift resources into industries where
In the long run
productivity is rising fastest, global GDP is
The U.S. needs to develop the kind of
increased.
strategic industrial/trade policy pioneered
H
by Japan and copied by other “Asian Tigers”
like South Korea. After World War II the
In the here and now
Japanese Ministry of Trade and Industry
Unfortunately the transition from
used differential tax rates and terms of
managing trade in the national interest, not
credit so that companies in “traditional”
corporate interests, will take some time,
lower productivity industries like textiles
and working class families who have been
and toys would be those who moved
the victims of corporate-managed, neoliberal
operations abroad, but only after firms in
trade policies championed by the
higher productivity “industries of the future” establishment wing of both the Republican
like steel, automobiles, and electronics had
and Democratic parties are right to demand
developed sufficiently to absorb employees
immediate redress.
who lost their jobs in traditional industries.
One can quibble about whether U.S.
The U.S. needs to implement a strategic
exports are more labor-intensive than
industrial/trade policy which orchestrates a
imports on average, but there is little
transition from industries where wages and
enough difference to matter. So, if we
increases in productivity are low to
exported as much as we imported there
industries where wages and increases in
would be little, if any, loss of jobs. This
productivity are higher. And it needs to
means it is not trade, per se, which costs
c o m p e n s a te and retrain
w o r k e r s d u rin g th e
O f v t x ls s i s m c k e i s c i e n c e ,
and there are many examples in other
countries we can emulate. There are two
o
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l o b s . b l f t f i - n r l í i d é v f í e i+ a F Tin F C A c t I a L c
P vorv
U.S. ran a trade
surplus and our exports created more jobs
y ea r fro m l o o o to 1 9 7 0 th e
popular audience tuned into this subject,
than our imports lost.
and the battle over who will successfully
Every year from 1976 through 2016 the
attract their attention and allegiance will go
U.S. has run a trade deficit and our exports
a long way toward determining how the
have created fewer jobs than our imports
world evolves over the next few critical
have lost.
decades.
There are many measures the
Criticism of neoliberal globalization and
government could and should take to
xenophobic protectionism is important. But
generate employment to make up for job
critique alone is not
losses caused by trade
sufficient. Without a
deficits. But the fact
coherent alternative we
remains that 40 years
will lose because you
of chronic trade
can’t beat something
deficits make it more
Forty years of obroale trade
with nothing.
difficult to provide
deficits
wtafee
it
»
o
re
d
iffic
u
lt
However, for
jobs for everyone who
I® provide jobs for ©wry«
economic globalization
is able and willing to
©»© who Is able and w illin g
to be beneficial
work, which in turn
governments will have
puts downward
I® worfejr which 1st ta rn pats
pressure on wages.
downward pressure oa wages. to play a more active
role. Center-left
The most effective
political parties in
way to reduce trade
deficits in the short-
Europe and the U.S.
run is to allow the
made a huge mistake
dollar to depreciate,
acquiescing to
i.e. fall in value
neoliberal changes in
relative to other currencies. This is a far
the global economy championed by banks
better way to reduce our trade deficit than
and multinational corporations, for which
to raise tariffs as right wing populists
establishment political parties have recently
propose, which is not only a regressive form
paid a steep price at the polls. Instead,
of taxation but more likely to invite
revitalized, progressive political parties
retaliation, as President Trump has already
must redesign treaties and institutions like
discovered. The negative consequence of
the International Monetary Fund, World
devaluing the dollar is that U.S. consumers
Trade Organization and World Bank to help
will pay more for imports. But there is no
regulate and manage international trade and
better time to take this hit than when
investment in the interests of citizens not
inflation has been historically low for going
corporations. And the U.S. government
on a decade. Additional policies will be
must adopt policies, many of which have
needed to ensure that wage increases in the
been pioneered elsewhere, to orchestrate
U.S. keep pace with increases in labor
socially beneficial changes in trade and
productivity. But eliminating chronic trade
investment patterns, and most importantly,
deficits will help since it keeps labor
guarantee workers in declining industries an
markets tighter.
easy transition to work in industries of the
future through retraining, relocation, and
income support during their transition.
Conclusion
Developing a coherent approach to
international economic issues that is
cl i t f e i e n t i i c i i i
b o t li n e o lib e r a liS I I l d lltl
xenophobic protectionism is a crucial task
for progressives today. There is a massive
The World
by Ron Sanford
What is wrong with the world is plain to see
What is right with the world is much tougher.
A good question deserves a good answer
So why not try to look at the bright side
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This is the third in a series of of articles in
d e fe n s e o f g lo b a liz a tio n . T h e f i r s t tw o
installments are available at news.
streetroots.org. Next to comet Part 4:
Globalization and a Green New Deal.
Untitled
by Juliet Taliaferro
His eyes shine. Like copper orbs that
were set on fire. He was born with
black Egyptian-style liner
Every time we go out walking
People stop to say what a beautiful dog
I say thank you, but really
I didn’t make him, maybe I should
just say “I know.”
The top of his head is soft and round,
His ears are like velvet a darker shade of red
His little black nose is cold and wet.
Thick black whiskers
more like antenna. His jaw is striped
in white and gold with razor-sharp
teeth and a quick pink tongue.
He smiles a lot and uses his eyes
They amaze me still
How pure and bright, copper orbs
That are filled with light.