From Barack Obama's The Audacity of Hope:
We can try to slow globalization, but we can't stop it. The U.S. economy is now so integrated with the rest of the world, and digital commerce so widespread, that it's hard to even imagine, much less enforce, an effective regime of protectionism. A tariff on imported steel may give temporary relief to U.S. steel producers, but it will make every U.S. manufacturer that uses steel in its products less competitive on the world market. It's tough to "buy American" when a video game sold by a U.S. company has been developed by Japanese software engineers and packaged in Mexico. U.S. Border Patrol agents can't interdict the services of a call center in India, or stop an electrical engineer in Prague from sending his work via email to a company in Dubuque. When it comes to trade, there are few borders left.
This doesn't mean, however, that we should just throw up our hands and tell workers to fend for themselves. I would make this point to President Bush toward the end of the CAFTA debate, when I and a group of other senators were invited to the White House for discussions. I told the President that I believed in the benefits of trade, and that I had no doubt the White House could squeeze out the votes for this particular agreement. But I said that resistance to CAFTA had less to do with the specifics of the agreement and more to dod with the growing insecurities of the American worker. Unless we found strategies to allay those fears, and sent a a strong signal to American workers that the federal government was on their side, protectionist sentiment would only grow.
The President listened politely and said that he's be interested in hearing my ideas. In the meantime, he said, he hoped he could count on my vote.
He couldn't. I ended up voting against CAFTA, which passed the Senate by a vote of 55 to 45. My vote gave me no satisfaction, but I felt it was the only way to register a protest against what I considered to be the White House's inattention to the losers from free trade. Like Bob Rubin, I am optimistic about the long-term prospects for the U.S. economy and the ability of U.S. workers to compete in a free trade environment - but only if we distribute the costs and benefits of globalization more fairly across the population.
Americans win when their jobs are outsourced; lower prices compensate for the lost wages. This is pretty well accepted among economists (Greg Mankiw, Mike Boyer, Blake Hounshell). Those who win are able to compensate the losers. They shouldn't have to, though--how can one rebel against the economic system that has benefited them (and all those they care about) from the day they were born? What did they compensate the world when job specialization was a US exclusive?
This idea that the losers in the game of free trade ought be compensated for their job that just went to India for a third the cost of their wages and none of the benefits is nonsensical. When you've been buying a product from the same vendor for many years, then suddenly find out that you can get it somewhere else for a lower price, do you compensate the original provider of the commodity? If you do, you've got a hyperactive superego and need to go rob a bank or something. Years of protectionist policy have sheltered the working American from the realities of free-market capitalism in an increasingly globalized world.
Steven E. Landburg (professor of economics at the University of Rochester) writes:
Bullying and protectionism have a lot in common. They both use force (either directly or through the power of the law) to enrich someone else at your involuntary expense. If you’re forced to pay $20 an hour to an American for goods you could have bought from a Mexican for $5 an hour, you’re being extorted.
Oh, by the way if any of y'all are at all interested in any of my other worldviews, check out my blog.
