robert reich speaks the truth on trade March 5, 2008Posted by KG in 2008 Elections, berkeley, econ, international, op-ed, politics, tech.
Tags: economy, free trade, nafta, robert reich
to sum it up: trade=good, not having safety net for the short term costs=bad
yet the democrats can’t articulate this properly. they could become the party of pro-growth/free-trade + robust safety net…add in an emphasis on “good governance”/competence/anti-corruption/anti-special interests + middle-class tax cuts, environmentalism, and they might actually win elections by more than 2% points.
that would leave the republicans with the social conservatives and military hawks. the democrats really have an opportunity to get the fiscal conservatives and tax cutters if they’re able to articulate middle-class tax cuts and trade in a way that appeals to liberals and conservatives.
While the overall benefits from free trade far exceed the costs, and the winners from trade (including all of us consumers who get cheaper goods and services because of it) far exceed the losers, there’s a big problem: The costs fall disproportionately on the losers — mostly blue-collar workers who get dumped because their jobs can be done more cheaply by someone abroad who’ll do it for a fraction of the American wage. The losers usually get new jobs eventually but the new jobs are typically in the local service economy and they pay far less than the ones lost.
Even though the winners from free trade could theoretically compensate the losers and still come out ahead, they don’t. America doesn’t have a system for helping job losers find new jobs that pay about the same as the ones they’ve lost – regardless of whether the loss was because of trade or automation. There’s no national retraining system. Unemployment insurance reaches fewer than 40 percent of people who lose their jobs – a smaller percentage than when the unemployment system was designed seventy years ago. We have no national health care system to cover job losers and their families. There’s no wage insurance. Nothing. And unless or until America finds a way to help the losers, the backlash against trade is only going to grow.
Get me? The Dems shouldn’t be redebating NAFTA. They should be debating how to help Americans adapt to a new economy in which no job is safe.