Trade, Labor, and Politics by Paul Krugman

[applegrove]

Trade, Labor, and Politics

by Paul Krugman at the NY Times

http://www.nytimes.com/2016/03/28/opinion/trade-labor-and-politics.html?smid=pl-share&_r=0

"SNIP............


Serious economic analysis has never supported the Panglossian view of trade as win-win for everyone that is popular in elite circles: growing trade can indeed hurt many people, and for the past few decades globalization has probably been, on net, a depressing force for the majority of U.S. workers.

But protectionism isn’t the only way to fight that downward pressure. In fact, many of the bad things we associate with globalization in America were political choices, not necessary consequences — and they didn’t happen in other advanced countries, even though those countries faced the same global forces we did.

Consider, for example, the case of Denmark, which Bernie Sanders famously held up as a role model. As a member of the European Union, Denmark is subject to the same global trade agreements as we are — and while it doesn’t have a free-trade agreement with Mexico, there are plenty of low-wage workers in eastern and southern Europe. Yet Denmark has much lower inequality than we do. Why?

Part of the answer is that workers in Denmark, two-thirds of whom are unionized, still have a lot of bargaining power. If U.S. corporations were able to use the threat of imports to smash unions, it was only because our political environment supported union-busting. Even Canada, right next door, has seen nothing like the union collapse that took place here.

And the rest of the answer is that Denmark (and, to a lesser extent, Canada) has a much stronger social safety net than we do. In America, we’re constantly told that global competition means that we can’t even afford even the safety net we have; strange to say, other rich countries don’t seem to have that problem.





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[Hoyt]

1. Excellent article. Last paragraph emphasizes how important trade is poor countries.

[hollowdweller]

2. I think at this point tarriffs and canceling trade agreements are a faster way than unions

The GOP has enacted right to work and other noxious BS at the state level and a lot of the population that would benefit from unions are republican and have been brainwashed against them.

I agree with him that unions are the best way because with money in politics if the gov't is the redistributor companies will always push to keep redistribution lower than if workers themselves were bargaining for them.

[1939]

4. Labor surplus

Unions thrive in a condition of labor shortage. Due to demographics, excess immigration, and automation, the U.S. has a labor surplus which makes unionization difficult.

[pampango]

3. "Republicans have been more protectionist than Democrats ... protectionism is all they’ve got."

Rhetorical claims aside, Republicans have long tended in practice to be more protectionist than Democrats. And there’s a reason for that difference. It’s true that globalization puts downward pressure on the wages of many workers — but progressives can offer a variety of responses to that pressure, whereas on the right, protectionism is all they’ve got.

When I say that Republicans have been more protectionist than Democrats, I’m not talking about the distant past, about the high-tariff policies of the Gilded Age; I’m talking about modern Republican presidents, like Ronald Reagan and George W. Bush. Reagan, after all, imposed an import quota on automobiles that ended up costing consumers billions of dollars. And Mr. Bush imposed tariffs on steel that were in clear violation of international agreements, only to back down after the European Union threatened to impose retaliatory sanctions.

Actually, the latter episode should be an object lesson for anyone talking tough about trade. The Bush administration suffered from a bad case of superpower delusion, a belief that America could dictate events throughout the world. The falseness of that belief was most spectacularly demonstrated by the debacle in Iraq. But the reckoning came even sooner on trade, an area where other players, Europe in particular, have just as much power as we do.

Nor is the threat of retaliation the only factor that should deter any hard protectionist turn. There’s also the collateral damage such a turn would inflict on poor countries. It’s probably bad politics to talk right now about what a trade war would do to, say, Bangladesh. But any responsible future president would have to think hard about such matters.

Then again, we might be talking about President Trump.