I love it when Bernie Sanders calls for the USA to be more like social democratic Europe. Unfortunately, that’s not all he is campaigning for.
On his campaign web page, he says:
If corporate America wants us to buy their products they need to manufacture those products in this country, not in China or other low-wage countries.
That statement is very dangerous.
Over the last fifty years, there has been a dramatic fall in world poverty. Not just in China, but across the developing world. This has transformed the lives of hundreds of millions. Have a look at the following chart from https://ourworldindata.org. There is still far too much absolute poverty, but the downward trend is extremely good news.
Click on the graph to see the full size version.
This trend is under threat from protectionism.
There is a debate to be had about environmental standards and exploitation in the developing world, but that’s not what Sanders’ website says. It argues that jobs should go to Americans, rather than poor people in the developing world.
There’s now little chance of Sanders becoming president, but he will campaign until the democratic convention. If he continues to argue for protectionism, he’ll strengthen the hand of others, like Donald Trump who are arguing the same thing.
Of course, protectionism won’t work. It’ll cost many more US jobs than it saves.
But it’s also deeply immoral. Many of Sanders supporters are very idealistic. If they agree that we should let the poor work their way out of poverty, they should pressure Sanders to change his stance of protectionism.
Before we Brits get too smug, we in the UK often make the same kind of mistake.
In politics, it isn’t easy to make the right choices. Let’s commit ourselves to facing up to hard realities, so that the good we do is not outweighed by the unintended harm.
(This is a shorter version of an article published in Middle Vision)
* George Kendall is the acting chair of the Social Democrat Group. He writes in a personal capacity.
55 Comments
That’s a gross mis-interpretation of Senator Sander’s position, it’s taken out of context and should be withdrawn. It’s a straight lift from that friend of Wall Street Hillary Clinton.
Here’s what the Borgen Foundation think “The Borgen Project is an incredible nonprofit organization that is addressing poverty and hunger and working towards ending them.”
– The Huffington Post
BORGEN FOUNDATION REPORT ON BERNIE SANDERS 10 FEBRUARY, 2016.
10 FEB 2016 Bernie Sanders record on Global Poverty
Bernie Sanders, one of the leading democratic candidates in the 2016 Democratic Party primary race, has been praised for his stance on promoting equality. Over the course of his congressional career, he has been an ally for the millions of impoverished around the globe.
In speeches, Sanders has claimed that investing in global poverty has several positive outcomes, such as lessening the instances of terrorism abroad. He has claimed that with a sound foreign aid policy, living conditions abroad are less likely to produce conflict.
Sanders has an impressive track record on global poverty to back up these claims. In 2000, he voted in the Senate to allocate $156 million from the military’s large budget to the International Monetary Fund. This was in support of the Millennium Development Goals.
In 2008, he also supported funding to combat AIDS, malaria and tuberculosis. The bill he supported authorized $48 billion to various countries to combat the further spreading of these diseases.
Sanders has also demonstrated his support for combating global poverty in his statements about global warming. He has described how international conflict is produced when populations become desperate as a result of climate-related hazards, including lack of access to water and food.
Sanders has been vocal about eliminating income inequality and domestic poverty. He has shared his aspirations for putting an end to systemic forces diminishing the middle class, claiming that a more equitable economy can be created through fair taxing of corporations and banks. “America now has more wealth and income inequality than any major developed country on earth,” he said.
The presidential hopeful is devoted to redistributing America’s wealth and alleviating the 22 percent of American children living in poverty. His focus on domestic poverty and inequality is a promising indication of his future foreign aid and global poverty commitments.
Sanders’ vision is probably for aid to solve world-poverty and trade not so much. However the big problem in my eyes with Bernie Sanders is he engages in hate speech and is misleading the public. I have two editorials that also match my opinion:
https://www.washingtonpost.com/opinions/bernie-sanderss-fiction-filled-campaign/2016/01/27/cd1b2866-c478-11e5-9693-933a4d31bcc8_story.html
https://www.washingtonpost.com/opinions/banks-vs-regulators/2016/04/17/f78109c4-0337-11e6-9203-7b8670959b88_story.html
“Preposterous, and a smear, to suggest that every bank’s “business model” is “fraud”
Good post George. It’s time to call out people who engage in dangerous protectionism under the guise of wanting to protect people from “neoliberalism”.
@David Raw
If only this was just what his opponents were saying, but the killer quotes are from his own campaign website. See:
“We have got to end the race to the bottom. We must increase the minimum wage not only in the United States, but in Haiti and throughout the world. That’s exactly what Senator Sanders will fight to achieve as president”
https://berniesanders.com/issues/ending-the-race-to-the-bottom/
That’s protectionism using compassionate language. What it would mean is that poor countries, which have had dramatic reductions in poverty because they have been able to export to wealthy countries, would no longer be able to do so.
It’s the same policy as Trump, with left-wing packaging.
Promises of foreign aid just don’t make up for this deeply regressive campaign theme. The global poor are far better off being able to earn their own living, rather than receiving a bit more development aid.
Originally, my article was inspired by this piece.
http://www.slate.com/blogs/moneybox/2016/04/05/bernie_sanders_is_the_developing_world_s_worst_nightmare.html
But when I went on Bernie Sanders campaign website, his own words were far more specific and damaging.
Politically, what Sanders is saying is effective. Many American workers are hurting, and it’s easy to blame the foreigner and the global corporations that are employing them. But that’s just a liberal-sounding version of what Trump says. And we’ve had the same dangerous rhetoric in this country. “British workers for British jobs”.
While I come from the social democrat tradition, I celebrate the Liberal tradition of opposition to protectionism. Free trade has always been central to our values.
And all the evidence is with us. Free trade makes everyone richer. Protectionism brings disaster.
I don’t wish to get into a defence of Bernie Sanders, but I do want to point out that having minimum wages are liberal and social democratic. In classical economics wages can fall and often did, increasing poverty. With globalisation companies can base their production in any country and economics will drive them to base these in countries with low real wages. This can put downward pressure on wages in other countries to stop this governments need to set minimum wages. I have never heard minimum wages called protection before!
Therefore “We must increase the minimum wage not only in the United States, but in Haiti and throughout the world” makes perfect sense but only if each country sets its own minimum wage and there is not a one fit all for everyone in the world.
As liberals and social democrats we should recognise the natural imbalance in power between employers and employees and take measures to address it, such as having minimum wages in the UK and separate ones in every country in the world set according to their own circumstances and what they consider to be an acceptable standard of living.
Come ON George.
The only thing which is going to elect Hilary Clinton is that she is not Donald Trump.
@Michael BG
Your interpretation of Bernie Sanders might be possible if he hadn’t also said:
“If corporate America wants us to buy their products they need to manufacture those products in this country, not in China or other low-wage countries.”
That’s an explicitly protectionist statement.
As to what level of domestic minimum wage we should have, that’s an important, but entirely separate question, which I may cover in a future article.
If protectionist refers to keeping people employed in our own country, I’m all for it. It is not up to us to raise the standard of living throughout the world. We have 47,000,000 people in the USA living in poverty. 50% poverty for youths in poor neighborhoods. I find that embarrassing and tragic. The only ones who really benefit from low wages in other countries are the corporations, not the people. I am all for helping poor people in other countries but giving them jobs at slave wages is not the answer, nor is driving American workers to the poor house to eye vote CEO’s salaries.
@charlotte scot: “The only ones who really benefit from low wages in other countries are the corporations, not the people.”
That’s empirically false, as demonstrated by China lifting 600,000,000 people out of poverty between 1981 and 2008. China will lift 2.49 million people out of poverty in 2016, nearly all due to the fact that China can do things cheaper than the West can, because their wages are lower.
George – Would Sanders’ ‘buy America’ policy reverse the trend in world poverty as you suggest? Are the gains all (or largely) down to free trade?
Whatever the theory, the US voter’s experience of it is awful and its awfulness is statistically well supported. e.g:
http://www.alternet.org/15-million-american-families-live-2-day-these-authors-spent-years-finding-out-why
That’s why, from left and right, Sanders and Trump have made BIG gains stressing the trade issue. The establishment – warns the sky will fall but for many ordinary Americans it already did.
As for the theory, it’s not so simple as many believe. Except for (a) resource states (e.g. Saudi Arabia) and (b) entrepot city states (e.g. Hong Kong), I know of no example – including the UK incidentally – that got rich through free trade. All used very unfree trade to build up their industrial base. It helps if the ‘free trade’ is highly asymmetrical.
That was case with the UK in the 1840s around the time the old Liberal Party was formed. In the Opium Wars Britain’s greater military power vs. China enabled us to force them to allow our drug pushers in. I really think liberals shouldn’t boast of their free trade history.
The boot is now on the other foot because our business establishment has discovered that they can (in the shortish run of a decade or two) cut costs and increase profits by outsourcing while it helps China et al to have an almost unlimited source of demand. But this doesn’t work for us because, once the credit runs out, we are bankrupt. It doesn’t work too well for China because instead of building a sustainable domestic economy they have become over-dependent on exports. Chinese workers are reduced to production units, useful and important only until the party ends.
For the business establishment here however it works very well. What they are doing amounts to ‘regulatory arbitrage’, allowing them over a period of years to asset strip the economy for private profit.
In a different context the great liberal economist Keynes pointed out that, in certain circumstances, there can be a general failure of demand in the economy and argue that when that happens government should deficit spend until normal conditions are re-established. In other words demand is crucial for the economy to stay healthy. How do you square that with allowing demand that goes way beyond fair exchange to be sucked out of the economy? (Hint: you can’t).
@charlotte scot
Hi Charlotte,
I’ve often heard it said that the only ones who really benefit from low wages in other countries are the corporations, not the people. This has been repeated so often, often unchallenged, that many people assume it must be true. But it’s completely false.
The reason why it’s not reported is because, among all the terrible things that have happened in recent years, it is really good news. And good news doesn’t sell newspapers.
Do have a look at the following slide presentation from Max Roser, Oxford academic. It doesn’t take long to watch, and the facts it shows are staggering:
https://ourworldindata.org/VisualHistoryOf/Poverty.html#/title-slide
Poverty and unemployment in developed countries is a major concern. It’s one of the reasons I call myself a social democrat. But their poverty is as nothing compared to the awful situation of many millions across the world.
To help the relatively poor in rich countries at the expense of the absolutely poor in the developing world is sometimes supported by progressives who haven’t thought the issues through. But, remember, this is exactly what Donald Trump is proposing.
As for helping the relatively poor in rich countries, it won’t help them. We know from the experience of the Great Depression in the 30’s that protectionism will just lead to a vicious trade war which will leave everyone poorer.
Eddie Sammon – You accuse Sanders of “hate speech and misleading the public”.
I don’t read the campaign web page George links to like that at all – rather a level headed fact-based assessment of the desperate situation the US is in.
Don’t forget the Washington Post it is very much the voice of the establishment that both Sanders and Trump seek to overthrow. So hardly an impartial witness!
For instance the first of your links rubbishes Sanders’ “Medicare-for-all” health plan accusing him of not saying how it could be funded. The WP notes that “Getting rid of corporate advertising and overhead would only yield so much” which is narrowly true but unimportant and diverts attention from the real point that the US manages to spend nearly double what other advanced countries spend as a share of GDP yet leaves many (IIRC getting on for 40 million) without cover and many more with illusory cover where the insurers would rat out on the deal on some pretext in the event of a large claim.
The bottom line is that if Sanders could close just half the gap to European averages (never mind the best) health costs would be massively slashed, universal coverage would be established as is the norm in all other developed countries and it would STILL leave a huge savings dividend. But don’t expect to hear that from the WP.
The losers would be a group of powerful insurers and others whose business model is uncomfortably akin to extortion. Of course not all are like that but the point is NONE should be and the country would be better off if that were so.
@George,
I think we all would agree that protectionism is a hindrance to world prosperity and I’m sure Bernie Sanders knows that. If he doesn’t then I know he has at least one adviser on his team who will give him a very hard time on that point. He’s probably doing what all politicians do and looking for votes by saying what he thinks his target audience wants to hear.
But, just what is protectionism? Australia, Canada, UK and USA are naturally inclined to free trade much more than many countries of the world. All have freely floating currencies and that is just as important for free trade as any written rules and the imposition of high tariff barriers, which have largely been outlawed by WTO agreement. Denmark, for example, tethers its currency to the euro at an unrealistically low rate and produces a large surplus as a result. That’s just another form of protectionism. Germany actually uses the euro but the strength of the euro relative to the strength of the German economy is too low. Consequently it too has a huge surplus in its trade. Any country with a large surplus has to be protectionist by nature.
On the other hand, the strength of the UK economy is weaker relative to the pound than it ‘should be’ according to classical economic theory. Therefore the UK, and the other free trade countries too, usually have large deficits in their trade.
If the UK, as a whole, is in deficit then someone in the UK (either govt or the private sector) has to fund that deficit by borrowing. In other words these countries’ debts, both public and private, are just a natural consequence of their commitment to free trade.
Which is fine by me, but not everyone who argues for free trade sees the connection.
@petermartin2001
Hi Peter,
I’m afraid you’re wrong. Not everyone knows protectionism is a hindrance to world prosperity. That’s why I wrote this article. If Bernie Sanders knows it, but is taking a more protectionist stance than Hillary in order to get votes from her, that’s reprehensible cynicism.
When Sanders said that US corporations should make products in the US, not in low-wage countries, it wasn’t an informal, off-the-cuff remark. He didn’t misspeak. It was a carefully crafted set of words on his campaign website.
Sanders no longer has a realistic prospect of being President. I can see that he might want to continue his campaign so he can promote his ideas.
If those ideas will advance social justice, fair enough.
But if he will promote Trump’s agenda of America first, and hang the consequences for those living in absolute poverty in the rest of the world, then I say, the sooner he withdraws from the race the better.
Idealistic Sanders supporters, who care about world development, should be pressing him to drop protectionism, and shouldn’t give him another cent until he does. If his advisor who understands how damaging protectionism would be, can’t get him to drop this protectionist poison, he should resign from Sanders campaign.
Hi Gordon,
I wonder if we’re talking at cross purposes. It might help to read my longer article on Middle Vision, where I talk about the need to tackle poverty in rich Western countries, but tackle it in the developing world as well.
https://middlevision.wordpress.com/2016/05/06/if-youre-poor-bernie-sanders-may-not-sound-so-progressive/
Below are a few extracts of what I say:
“I’ve no great sympathy for corporate America. But what of a Vietnamese worker who is longing for a chance to escape absolute poverty? What of the hundreds of millions who’ve already escaped and don’t want to return to the desperate situation their parents lived with?
…
It must be devastating if you work in a factory that’s about to be moved overseas. But shouldn’t we also think about those in that foreign country, who have far fewer options? Shouldn’t we look for ways to tackle both issues?”
You ask how much trade is responsible for the reduction in global poverty, and say: “I know of no example – including the UK incidentally – that got rich through free trade.” I’m a bit surprised you say that. Just have a look at the slide presentation, and you’ll see huge poverty reduction in many places that are neither resource rich nor trading city-states.
https://ourworldindata.org/VisualHistoryOf/Poverty.html#/title-slide
Japan, China, India, and many other countries, have seen enormous poverty reduction since they were able to start exporting goods to the West. That has, at times, caused serious problems for parts of the UK. But our country has adapted, and now employment is at record levels.
If you’re worried that this growth, for example, has been accompanied by a growth of child labour, have a look at the following:
https://ourworldindata.org/child-labor/
There’s a wealth of other charts which illustrate how poverty has been reduced in recent decades in https://ourworldindata.org.
Max Roser and his team quote Albert Schweitzer:
“The journalism of today worries me. The emphasis on negative events is too strong. Quite often the news about events that represent real progress are overlooked and trivialized. The press tends to create a negative, discouraging atmosphere. There is a danger that people will lose faith in progress when they hear so little, which would support their faith in it. And real progress is closely linked to the faith of a society who considers this progress possible”
Very true.
“I think we all would agree that protectionism is a hindrance to world prosperity”
It doesn’t seem so, there are differences of opinion.
Prosperity shouldn’t be measured in dollars alone and industrialisation and urbanisation are the cause of major social upheaval in China and elsewhere. Free trade encourages a perspective dominated by GDP where quality of life is surely more important – see the Happy Planet Index, HPI. Fair trade not free trade.
George,
Clearly you’re right to argue that many emerging countries have gained economic benefits from being able to sell into Western markets. However, most of these countries would never have developed marketable products in the first place if they hadn’t initially adopted protectionist policies in respect of their home markets, and thereby built up competitive industries. As Gordon says, that’s what we did ourselves, back in the Victorian era and our Industrial Revolution. It’s what China did in the more recent past. It’s what a nation needs to do in order to get off the mark.
Furthermore, if “free trade” means gross imbalances in trade, whereby a rich Western country buys all its manufactures cheap from China using the money it has built up from past glories or is making now from dubious “financial services”, and thus runs a major trading deficit – then its consequnces are harmful. China may have gained from free trade, but now China must wean itself off over-production – if it can – before the imbalances cause a crash. China should stop relying so heavily on Western customers who can’t be trusted to stick around, and should produce more to meet its own internal needs. If a degree of protectionism from Bernie Sanders were to mean a shift back from producing all the West’s toys in China to producing some of them in America, it would make both the US and Chinese economies better balanced and more stable.
George as ever, motive here , no different ,concern for people.And very many responses similarly .
I am going to be my usual radical centre and mainstream centre left oriented self and say the truth lies in the very middle between Georges response to Sanders , and Sanders himself.
George is right on trade.Free trade lifts people out of poverty.Workers and consumers. The latter is forgotten , often.We get cheaper goods .In the USA, even more than here , as consumer expectations are more inclined to be used to it, in a very insecure and competitive country, with worse welfare and longer hours of work, many working in two jobs.They have a greater sense of consumer demand , remember , Ralph Nader was for years , a consumer champion , not just on safety , but value for money.
It goes without saying , as Mark and Eddie etc so well put it , that the worker and small business person also benefit , from free trade, in poor countries,as the products get sold , otherwise , no income !!!
Sanders is not knowledgeable or effective ,on things outside his comfort area, of “bashing.”But , and there is a big but here.Far from the need being individual countries having their own minimum wage , ALL countries need to be raised up , in the developing world especially.The free trade we advocate is fair trade.We support workers rights , encourage partnership approaches , all Liberals and social democrats should.But while the small , individual textile manufacturer may , with a family specialist business , benefit from globalisation as we support it , very often the sweatshop conditions , or horrendous hours , and lack of unionisation, are no Liberalism or social democracy.Not in the hands of some businesses .
Sanders may be many things , some I do not like .Yet completely dim is not one of them.He is saying that people everywhere are people .They must have dignity .Or economics is exploitation.
Mr. Kendall, you omitted the first sentence in the text. “Reversing trade policies like NAFTA, CAFTA, and PNTR with China that have driven down wages and caused the loss of millions of jobs.” Hillary Clinton takes a similar position. See “On the Issues”: [http://www.ontheissues.org/celeb/Hillary_Clinton_Free_Trade.htm] It is not clear to what degree either candidate would be protectionist, but it is certainly speculative to take one sentence from Sanders’ website and decide he would shut down free trade. Surely that is not the only thing he has ever said about trade.
It seems that Sanders would accept free trade provided environmental and labour standards existed. Note that Sanders did not demand an American level of wages for Haiti, and even Hillary Clinton backed a minimum wage. Nor would she challenge minimal standards. One could argue for example that sex tourism directed at children benefits third world economies, yet few mainstream politicians would defend it.
@Stevan Rose
Hi Stevan,
As you say, we aren’t all agreed.
Yes, we want fair trade that improves the life of people in the developing world. But, not if “fair trade” means no trade.
If fair trade means trade agreements which slowly raise the standard of living of the developing world, by edging up their pay, environmental standards and health and safety, then that’s fine.
But if, as the quote from Bernie Sanders above suggests, we insist that the developing world immediately have the same pay, environmental standards and health and safety as us, then that’s no better than Trump. That’s the sort of compassion we’ve seen over the last year from Cameron. Devastate the lives of the poor, but wrap the policy in a liberal veneer, so you can pretend you’re being compassionate. For inward investors, these countries have huge disadvantages. If we insist on exactly the same pay for their workers as here, the inward investors will simply stop investing.
Obama, of his trade agreements, has said: “we better be out there shaping the rules in ways that allow for higher labor standards overseas, or try to export our environmental standards overseas so that we have more of a level playing field”. He’s right.
There’ll be a lot wrong with Obama’s trade agreements, but the principle is sound. Let’s make sure our trade negotiations don’t make it uneconomic for their factories to operate. That’s just pushing people back into destitution.
What makes me angry is that a lot of well-meaning people have been fooled into backing a policy of repatriating jobs to the USA, without understanding the devastating consequences. Instead, I’d like to see idealist progressives insist that their leaders support policies which actually help the developing world. These progressives are intelligent enough to understand the arguments. But they’ve just not been sufficiently challenged to make them stop and think.
They think they are being left-wing and progressive. Instead, they’re supporting Trumpism. And it’s those politicians bravely standing up for free (and “fair”) trade, who are the real progressives, and in effect the more left-wing.
@Lorenzo
Thanks. I suspect we two are in agreement, just that you are using more conciliatory language.
Normally, I’m the same, but Trumpism masquerading as compassion needs to be challenged, and conciliatory words won’t do that.
Most are sincere, and, if challenged and given time to reflect, will change their minds. But we shouldn’t concede that Trumpist protectionism is anything but deeply regressive and morally repellent.
There’s a protectionism you’ve missed George. Investors also indulge in protectionism. But, their form of protectionism seeks profit at the expense of having to pay any wages [minimum or otherwise] at all.
An investor considering closing a factory, in Vietnam or elsewhere, is not motivated by some desire towards benevolence or public service. If an investor can see the profit motive in closing down 5,000 jobs in the East, by opening a better run AI iteration of that enterprise in Britain or the US, by running it with 300 operatives on minimum wage, ..They will go for that.
With the kind of yearly improvements in AI and automation generally, the politics of chasing a minimum wage for all, is not just protectionism, it is as futile as a dog chasing its own tail, because every new iteration of an enterprise, will naturally seek to use less people and thus less wage overhead, even at minimum rates of pay?.
@ Steven Rose,
I agree with you that extreme poverty should be a multidimensional concept. We need to take into account access to clean water, education, access to health care etc.
In my view, the way the World Bank has defined absolute poverty needs to be challenged.
@ George,
Yes I take your point. Perhaps I should have said we all should agree that protectionism is a hindrance.
But, I hope you also took my point that protectionism isn’t simply the imposition of high tariff barriers. It’s nearly always done by using exchange rate manipulation to build up large exports surpluses. Those surpluses cause deficits in the non protectionist countries -like the UK. Everything does have to sum to zero. Someone has to do the borrowing to cover those deficits.
@Nick D
Hi Nick,
I quoted the second sentence and not the first, because it’s the second sentence that’s reprehensible. There might be good reasons for opposing specific trade deals. Assessing whether a trade deal is good or bad is massively complex, and far beyond what I could cover effectively in an article on LDV.
But Sanders statement, that US companies need to manufacture their products in the US, and not low-wage countries, is appalling.
These low-wage counties are low-wage for many reasons, including poor education, poor infrastructure, bad governance and geographical remoteness. The one advantage they have is that their labour is cheap. If they can’t use that one advantage, they will get no inward investment, and their life chances will be cut off.
Bernie Sanders’ website says that their only competitive advantage of low labour costs should be removed, and he makes it clear that the motivation is to give more jobs for Americans.
What makes this line of argument even more reprehensible is that protectionism won’t help the poor in America, it’ll hurt them.
If the US cuts its companies off from the most cost-effective supply chains, US companies will suffer, and the ordinary American will suffer. It’s Trumpist popularism, offering false hope, and, if these politicians have decent economic advisors, they know it’s false hope.
@David Allen
Hi David,
You make a fair point. I’m not sure that protectionism by developing world nations does help them, in that it often means they don’t remove inefficiencies in their local industries. But you’re right that some countries that have developed well, have initially been very protectionist. If they are poor, I think we should cut them some slack.
It’s when protectionism is proposed by populist politicians in rich countries that I get angry. In the long run, they only hurt their own citizens, and in the short term, they really hurt the poor in the developing world.
I also agree about the problem of huge trade imbalances. I worry that these are storing up problems for the future, and that at some point there will be a massive correction, and it’ll be extremely damaging.
I’ve some thoughts about how we might reduce trade imbalances. Those are beyond the scope of this article, but I am certain they shouldn’t include protectionism to stop the global poor being able to work their way out of poverty.
@J Dunn
I very much agree that automation and AI are enormous issues that are often forgotten in this debate. There’s a lot of debate about exactly how significant it already is. I’ve read some argue that it’s automation rather than off-shoring or immigration that has been making life harder for low earners in advanced economies. And even if that’s not true now, it’ll be more true in the future.
But that’s a separate issue, and it makes no difference to the moral force of the argument against the populism of those like Trump and Sanders, who would stop the global poor from earning a living.
@Jayne Mansfield
You make a very good point. Poverty is multidimensional.
If you look at the website, https://ourworldindata.org, Max Roser and his team measure a wide range of measures of poverty, including health, education, violence, and others.
For example: https://ourworldindata.org/human-development-index/
@David Allen,
Furthermore, if “free trade” means gross imbalances in trade, whereby a rich Western country buys all its manufactures cheap from China using the money it has built up from past glories or is making now from dubious “financial services”, and thus runs a major trading deficit
It doesn’t work like this. For a start, the western countries aren’t spending any accumulated money. The PBOC holds some three trillion dollars of US debt for example, and in addition a few hunded million (there’s no published figure AFAIK) of UK debt. China sells more stuff to countries like the US and the UK than it wants to buy in return. It saves the difference by buying government issued debt. This has the effect of lowering the value of the Chinese Yuan relative to the pound and the dollar.
It’s entirely China’s decision to do this. It is easy to keep a currency below its natural value but much harder to keep it above it. A lesson a Tory government once learned the hard way on the infamous Black Wednesday. If China wanted to buy more stuff from the US and the UK it could, just by spending its accumulated dollars and pounds.
Actually we should not be giving China such a hard time by casting them as huge villains in their protectionism. Their surplus is less than 3% of GDP and has fallen significantly from about 10% in 2007. On the other hand Germany has a surplus of 7.5% of GDP and that is rising quickly.
That surplus sucks euros out of the economies of its euro trading partners and causes these countries to become indebted. Is this as a result the the debtor countries’ profligacy , as we are usually told, or does the German government not really understand macroeconomic theory?
Are we talking at cross purposes? To some extent perhaps.
Prof Dani Roderik describes a trilemma; it says that democracy, national sovereignty and global economic integration are mutually incompatible. You can combine any two but never all three, simultaneously and in full. He makes a compelling case.
As he points out the post WW2 Bretton Woods regime delivered the first two compromising with limited global economic integration which in practice worked rather well until it became a victim of its own success.
I would add that it’s not clear that total economic integration would have added much. A little perhaps but at a high price to democracy or sovereignty, the perils of which path the Eurozone is now discovering. Also, as a pragmatic observation, it simply doesn’t deliver economically for most people and it very clearly throws democracy under the bus – see Greece et al.
http://rodrik.typepad.com/dani_rodriks_weblog/2007/06/the-inescapable.html
In practice, international trade is invariably governed by immense amounts of rule-making – even the allegedly ultra-free trade TPP & TTIP run to many thousands of pages of legalese. So really it’s managed trade – but for whose benefit? They say about poker that if you don’t know who is the patsy at the table that’s because it’s you. The same applies here; you can be VERY sure someone is benefitting disproportionately – but who?
History suggests that in each age it’s the dominant power (actually the dominant group in that power) that defines ‘free’ and that they do so in a very self-serving way. In Victorian Britain that was the new industrial and trading elite – hence the Opium Wars. Currently it’s US and allied financial elites that call the shots. Trickle down is not important to their thinking except as PR; really it’s about creating a form of neo-colonialism, extracting wealth via trade rather than occupying countries (although that happens as well).
Thank you, Gordon.
How interesting. A much more nuanced point than I was expecting in this thread.
I’ve not heard of Prof Roderik’s trilemma theory before, but he addresses an issue I’ve long pondered. What I like about his theory is that it acknowledges that there are trade-offs in politics, and that we all need to be careful that compassion for one group of people doesn’t lead to greater suffering for people elsewhere.
I agree that there is a tension between democracy, national sovereignty and global economic integration, but I think it’s more complex than he describes.
Firstly, in practice, nation states who want to thrive in the long term don’t have much choice. Any country that handicaps itself, by not using the most cost-effective suppliers, will suffer in the long term. Even the USA isn’t large enough to be immune to global competition.
If the world is unfortunate enough to have Trump elected as President, he’ll soon have plenty of evidence about how wrong protectionism is. The worrying thing about Trump though, is that his ego might not allow him to accept the evidence 🙁
In my opinion, it is possible to balance between democracy, national sovereignty and global economic integration, but there are tensions, and inevitably there will be compromises. That’s okay, politics is the art of compromise, and it’s what the world has been doing for the last 20 years.
There will be times when democratic/nationalist opposition to global economic integration mean that integration is held back. Hopefully, that will be short-term. If not, there will be economic consequences, and if those lead to a depression, very bad things could follow.
(cont)
If integration continues, then I think it’s likely that the stunning reduction in absolute poverty, which we’ve seen in recent decades, will continue.
Regarding Greece and Europe, I agree. I think including Greece in the Euro was a terrible mistake, for which certain individuals should hang their heads in shame. There were other ways a Euro could have been introduced that would have avoided these severe consequences, but politicians refused to listen to expert advice, they put political objectives over practicalities, and Europe is now dealing with the consequences.
As to whether these free trade agreements are free trade or managed trade, that’s just a matter of semantics. Whatever. They, and other agreements like the WTO rules, are reducing protectionist barriers, and the fall in world poverty has been accelerated by them.
Do those agreements include details that give advantages to the largest economic powers (especially USA, EU and China)? That’s certainly true. But, despite that, they give greater opportunities for poor countries to sell to rich countries, and that’s a very good thing.
If the result is a dramatic fall in absolute poverty around the world, then it’s about far more than “neo-colonialism”.
Even if you are right that the motivation is good PR for the global elites, I’m not interested in motivations, I’m interested in outcomes. And increased options for the developing world has dramatically improved life-chances for many of the poorest in the world.
I am still not convinced at all. Free trade encourages behaviours in developing countries that benefit global corporates whilst generating GDP stats that give the appearance of increased prosperity as we in the West might recognise it. It encourages cash crops over food production. Industrialisation that results in urbanisation and actually creates unemployment and loss of social and cultural cohesion. It leads to slums and rubbish dumps and insanitary conditions. Many improvements such as schools, clinics, wells, are funded by aid and charities not by corporate taxes. You can point to rapid GDP growth but is the sweatshop worker really better off than the subsistence farmer? Only in a spreadsheet. Free trade also gives market access to GM seed producers to control food production. There is fair trade and good ethical trade that should be free trade. There is unfair trade and unethical sweatshop and dumping and corporate profiteering trade which tariffs should punish.
The job of an American President is to govern for the American People, not the rest of the world. Aside from anything else the rest of the world does not get to vote in America. And I assure that Americans will vote for what best suites themselves as a Americans.
The problem with internationalist and globalist philosophies is that they are obsessed with economics and interconnectedness. but tend to ignore the reality that governments are decided nationally on national issues. Whenever anyone votes anywhere in the world they are mostly voting for themselves in context of the society they live in. There is no great global interconnectedness of peoples because people and cultures are not interchangeable.
Wow Glenn,
Perhaps I’ve misread you, but I’m struggling to think of a post I disagree with more. I meet people from other countries all the time, and I feel a great sense of interconnectedness with them. Thankfully, I think many British feel the same.
That’s why there was the political will in this country to raise foreign aid to 0.7%. That’s why our concern for global warming is not just about whether we’ll be affected, but about the potential devastation it may cause the countries with less ability to take countermeasures.
Our intervention in Sierra Leone made a huge difference to improving the stability of West Africa, and I think most UK people celebrate that. Just as I think most in the UK are appalled at the huge suffering in the middle east, that may in part be due to our failed intervention in Iraq.
Yes, there are differences between cultures and peoples, but there is an enormous amount we have in common.
Yes, government’s primary responsibility is firstly to look out for their own people, but not by causing indirect suffering to those living in poverty in the rest of the world.
Thankfully, the interests of our country are not so at odds with the rest of the world. Cheap foreign imports will always cause disruption, just as they did in the nineteenth century after the abolition of the corn laws, which eventually led to the formation of the liberal party.
Preventing foreigners from selling goods and services to us, in the medium and long term, will only empoverish us. But if we think that cutting ourselves off from low cost production abroad will make us richer, we are completely mistaken. It will just make us poorer.
This is one of those rare situations where the morally right thing to do is the practically right thing to do.
If we are concerned for those in our country who suffer from economic change, as we should be, then we should concentrate our resources on improving training and education, to make it easier for them to adapt. Not by harming those overseas, whilst simultaneously harming ourselves.
Three cheers George !!!
Dude, there you go again.
I’m absolutely sure people are concerned , but also pretty certain that they do not actually vote accordingly. It’s like in the Blair Years. Most people were really concerned about our dodgy involvement in military actions. Millions protested. Millions more sat home being appalled by the pointless waste of lives. Tony Blair was elected twice more by most of the same people decrying those military interventions. Why? Because the economy seemed good and they were more worried about what a Conservative government might do to them than what a New Labour government were doing to the people of Iraq. It was an economic crisis that effected the national economy and closed local businesses that undid New Labour, Not moral doubts or being concerned about the Middle East.
As for the economic argument. Capitalism isn’t moral. It moves production to save money. Any good that has been or is done is simply an accidental by-product of trying to keep production cost lower to increase profits. If the same companies found that it was cheaper to produce stuff on Planet Zog they would move their production to Planet Zog. But, more likely, is that when it becomes cheaper to produce goods with less and less people, all those jobs will disappear irrespective of the impact on any local population or its economy. This stuff is nothing to do with interconnectedness except maybe the interconnectedness of bank accounts and share prices.
@ Steven Rose,
What you say strikes a chord based on personal experience.
You might be interested in the Christian Aid briefing paper, ‘The economics of Failure’, and also, ‘Trade: who pays the price’.
It is not surprising that Liberal Democrats are wedded to the orthodoxy of free trade, but if you wish to read work by a heterodox economist, I recommend the work of Ha -Joon Chang.
Hi Glenn,
If you’re saying that most people vote for bread and butter issues that affect them, you’re right.
But your previous post seemed to be saying that we cheer on a US Presidential candidate who’d be prepared to reverse the fall in worldwide absolute poverty, in order to get a few votes.
Maybe I’ve misunderstood you. If what you meant was, “sadly, US voters will vote for someone who helps them, and the suffering of people overseas isn’t a high priority”, then you might be right. Doesn’t mean that, in a forum well away from most US voters, we shouldn’t publicly hope that this kind of disastrous politics won’t win out.
But your tone seems to welcome this kind of populism, which is why I disagree.
Stevan,
Thanks for engaging on this.
You said, “You can point to rapid GDP growth but is the sweatshop worker really better off than the subsistence farmer? Only in a spreadsheet.”
Personally, I think statistics fromacademic sources are the best way to assess what’s happening, that’s why I linked to the University of Oxford’s https://ourworldindata.org/data/
If I gave anecdotal evidence, you’d be right to dismiss it. I’ve met people from the developing world who have benefited from their country’s access to Werstern markets, but I can’t be sure that their experiences are typical.
If I cited an expert, you would be right to be sceptical. After all, you can find an expert to support almost anything. Especially with the internet, which is so full of echo chambers where you can have your existing belief reinforced.
Of course there are people in developing world cities who are exploited and ill-treated. This happened in the UK when we industrialised. But there is also appalling suffering among subsistence farmers as well. The poverty in the cities is much more obvious, because it isn’t spread around the countryside, out of sight of television pictures.
I’d also agree that a generic representation of poverty isn’t the only measure.
If you look at the charts in ourworldindata, you’ll see charts on life expectancy, children’s undernourishment, correlation between income and life satisfaction, the proportion achieving basic education, and many more.
Do you really think all these improvements can be explained by an increase in aid and charities? Aid does vital work, but it can’t hope to tackle poverty on its own.
Here are links to some of these charts:
Life expectancy around the world:
https://ourworldindata.org/wp-content/uploads/2013/05/ourworldindata_life-expectancy-by-world-region-since-1770-1-768×548.png
Change of Childrens’ Undernourishment in Different World Regions since 1990
https://ourworldindata.org/wp-content/uploads/2013/10/explainingprogress_malnutrition-prevalence-1990-2011-by-world-regions-%E2%80%93-world-development-indicators-20130.png
Global data on the correlation between income and life satisfaction from Gallup World Poll – Deaton (2008)
https://ourworldindata.org/wp-content/uploads/2013/05/Each-Doubling-of-GDP-is-Associated-with-a-Constant-Increase-in-Life-Satisfaction-Deaton.png
Population achieving basic education
http://img.prntscr.com/img?url=http://i.imgur.com/7hnSh3c.png
@Jayne Mansfield
I’ve read ‘The economics of Failure’, and while there are things in it that I don’t agree with, it’s addressing a different question.
What makes me angry is protectionism by rich western countries, not protectionism by the developing world. As I said above, if a country is poor, I think we should cut them some slack.
There is momentum behind protectionism in the USA today, particularly with the soon-to-be Republican nominee, Donald Trump. He claims cutting the developing world off from a chance to trade with the USA will help US workers. It won’t. In the long run, it’ll harm everyone. But what makes me angry is the devastating effect this could have on people in the developing world.
Bernie Sanders is supporting this movement. Lots of idealistic people in the states, who care about third world poverty, are supporting Sanders. They should stop doing so until he changes his policy.
This is a massively important moral issue.
Just look at the charts in https://ourworldindata.org. Imagine if those trends showing rising education, rising life expectancy, falling children’s undernourishment, rising income and and rising life satisfaction, are reversed. Think of the consequences.
George’
I do think we’re sort of at cross purposes, but that’s more or less what I’m saying. Having said that if I was an American Democrat and I was offered a choice between Clinton and someone like Sanders I’d probably vote Bernie Sanders. You seem to expect factory workers and the low paid in the US or in the West generally to just accept more job insecurity because allegedly “free” trade benefits poorer nations, but why should they and why would should anyone expect them to just suck it up and keep voting for business as usual. Ghandi, by the way imposed big tariffs on British cloth to protect the livelihoods of a less competitive workforce. The end result was that it became cheaper to produce cloth and clothing in India than in Factories in Britain. Free trade didn’t create the situation it simply exploited it. China doesn’t practice free trade either, it simply benefits from a Western addiction to it. Export dominance and not free trade are the keys to manufacturing success. Free trade is simply a mechanism that allows things to go to the lowest bidder.
My attitude to populism is that ultimately it is part of democracy because the electorate, the populace if you will , decides.
“As to whether these free trade agreements are free trade or managed trade, that’s just a matter of semantics. Whatever.”
No, it sure isn’t. The expression “free trade” sounds much like “freedom” or “liberty”, a principle which is self-evidently noble and good. Whereas once we recognise the validity of the term “managed trade”, we can see that there is nothing inherently superior about one particular way of managing trade. Should we “manage trade” to maximise the benefits to the most powerful countries and/or companies? Or, should we manage trade to protect the interests of a particular group, class or nation?
There are no simple answers. Those who claim that there are simple answers are being dishonest.
The other point is that if you look at the current crop of free trade agreements they are protectionist pacts amongst Western economies. They’re not about free trade or freedom of movement. They are about freedom of movement for Europeans and,free or rather controlled, trade for the established Western economies. It’s really not about helping poorer nations at all. So to me it really comes down to the nation state v a still protectionist larger grouping of states. At which point, I think it’s probably better to protect the more direct democratic accountability of the nation state and national interests above those of a less accountable conglomerate.
@glenn
Wow! Still, at least you’re honest.
One thing that annoys me about this, though, is that those arguing against protectionism are described as right-wing. In my opinion, right-wingers are people who fight for those who are richer, against those who are poorer.
Those who support Western protectionism, like Trump and Sanders, claim it would help low paid American workers. They’re wrong. We know the dire consequences of protectionism through the ages, but that’s what they claim.
If they were right, and they’re not, then what they’re proposing is that we protect the standard of living of the US citizen (currently $54.6k per person, ppp), at a cost a reduced standard of living for the average Haitian ($1.7k per person ppp). If that’s leftwing, then Donald Trump is a progressive liberal!
It’s depressing to read that exactly this argument was going on in 1997, when Paul Krugman made these same points:
http://www.slate.com/articles/business/the_dismal_science/1997/03/in_praise_of_cheap_labor.html
As Krugman said in his final paragraph, his correspondents had “not thought the matter through. And when the hopes of hundreds of millions are at stake, thinking things through is not just good intellectual practice. It is a moral duty.”
@David Allen
I’ll concede that we don’t have “free” trade, maybe free trade will come, but even though tariffs and other barriers have been reduced, they are still there.
What we have is “freer” trade than we would if we prevented people in poor countries from being able to work their way out of poverty.
George,
You quote an article which Paul Krugman wrote almost 20 years ago, when he could declare that:
“The benefits of export-led economic growth to the mass of people in the newly industrializing economies are not a matter of conjecture.”
but also:
“The advantages of established First World industries are still formidable. The only reason developing countries have been able to compete with those industries is their ability to offer employers cheap labor.”
I don’t think he would be able to make that latter point in 2016.
Back in 1997, globalisation worked to redress an imbalance between the rich, dominant West and the poor “developing countries” like China, who at that time were struggling to catch up. Here in 2016, the mass unemployed of Southern Europe and the US rust belt would laugh hoarsely at the idea that they are still the dominant rich, while the Chinese are the starving underdogs.
They will vote for the Sanderses and the Trumps, who are not blind to what is happening to the “forgotten” American poor. They will vote against those patrician politicians who simply ignore their predicament. Sadly, that could include Hillary.
George,
I never said we should care about protecting American wages or jobs. I implied it was odd to think Americans shouldn’t. As for the rest of it ? Well, things like TTIP and the EU ARE Western Protectionism, they’re just pan national business practice protectionism rather than nation state protectionism.
There is nothing unique to the West about protectionism. Even most poor countries don’t really want free trade. They just want to sell the wealthier nations stuff which is an entirely different thing.
Guys,
Did I give the impression we shouldn’t care about the unemployed in the USA and southern Europe, or that I believe the EU and the various trade agreements are paragons of free trade?
If I have, my apologies.
As I said above: “It must be devastating if you work in a factory that’s about to be moved overseas. But shouldn’t we also think about those in that foreign country, who have far fewer options? Shouldn’t we look for ways to tackle both issues?”
And also: “Regarding Greece and Europe, I agree. I think including Greece in the Euro was a terrible mistake, for which certain individuals should hang their heads in shame.”
Regarding whether TTIP is protectionist at all, I’m reserving judgment. I’ve not read it. All I’ve heard are contradictory claims, and I understand the text hasn’t been published. With TPP, I know even less. But as it doesn’t involve the UK, I doubt I’ll spend much time on it. I would agree, however, that the lack of published text is worrying.
Of course, Sanders and Trump are populist politicians, in the sense of being more interested in saying what people want to hear, than saying what is deliverable and will give the outcomes they claim. All politicians are populist to some extent, but these two are more so than most.
David, regarding Krugman, I think he could make such a statement, maybe not not with regard to China, but with regard to much of the rest of the developing world, including Haiti and Vietnam (countries specifically mentioned by Sanders as examples). Certainly many others economists have recently said this.
George
“Do you really think all these improvements can be explained by an increase in aid and charities?”
No, I would expect improvements as part of development without free trade. I’m suggesting that the bulk, maybe all and more in some cases, of benefits from free trade with developing countries go to (a) global corporates, (b) local elites, (c) middle class consumers in the West who get their clothes etc. cheaper. Aid and charity fill the gap and there is not enough to go around. But fair trade can make an enormous difference to all parties. Investment choices too – some countries have squandered their limited resources, others have invested in technology and education, creating a broader middle class and domestic demand. Intelligent governance is so important. Protectionism that defends inefficient poor quality domestic production is bad news but so is free trade that destroys efficient high quality domestic production purely on labour costs – often deliberately so. As with most of life there is no simple answer but balances and fine judgements.
“Of course, Sanders and Trump are populist politicians, in the sense of being more interested in saying what people want to hear, than saying what is deliverable and will give the outcomes they claim.”
No “of course” at all. Sanders and Trump are two politicians who aren’t beholden to the interests of big business and big finance – in Sanders’ case on principle, in Trump’s case because (as he brags, and makes it a selling point) he’s rich enough not to need their money. Because Sanders and Trump aren’t under the thumbs of corporate interest, they can manage to listen to ordinary Americans, and seek to give them what they ask for.
Hillary Clinton, and the Bushes / Rubios / Kasiches, depend on corporate money to run expensive campaigns. Ergo, their policies are (to varying but considerable extents) shaped to suit corporate interests. The fact that these policies might, as an unintentional byproduct, also (sometimes) help people in poorer countries is largely irrelevant to them. Except that it enables corporate apologists to dredge up a bogus “socially concern” argument in favour of managing trade to suit the big boys.
George,
fair enough.
Stevan Rose,
My argument would be that very little of the benefit of Free trade really goes to consumers because the retail prices tag does not correspond with the cost of production. It’s really only about cheap labour to maximise profit and where the prices are low it’s often about killing the competition. I also dispute the idea that protectionism is necessarily bad when it protects inefficient local production. Western farming methods are far more efficient than food production in the emerging economies which is why those economies, as well as some established economies, put high tariffs on staple foods stuffs like rice. The point to me is that there is more to society than economics and capitalism is not a philosophy as such. If you actually look at examples from history the two most prominent features of emerging economies are protectionism at home and disregard for patent and copyright laws. This is true of America, which until fairly late in the 19th Century had a strong domestic economy but as an exporter barely registered, It’s also true of Japan amongst others in the mid to late 20th century and China amongst others now. In short free trade actually only really benefits emerging nations when it’s essentially a one way street. This is my problem with UKIP who seem to think pulling out of the EU will mean Britain will be a hive of unrestricted trade when the reality is that if nations were going to open their markets to us it would already have happened! To me the main advantage pulling out of the EU is that it will make domestic politics more important than global concerns.
@ George Kendall,
Perhaps the idea that you might be in some way right wing ( I don’t believe hat you are from what I have read of your contributions on here) is that you select a comment by Bernie Sanders and declare him as a danger to developing countries. You might cut developing countries some slack, but the EU in its’ free trade’ agreements does not, and I am not just talking of infant industries.
I would look at the information from Oxfam, Doctors without Borders, Oxfam and other charities on the consequences of what the EU proposed regarding India’s generic Medecin industry. An industry that has saved millions of lives, and enabled HIV programmes in poor countries that cannot afford the products produced by big pharma.
TRIPS plus increasingly high levels of intellectual property Property rules have been used by the USA to deny poor people medicines in developing countries like Jordon , threatening public health programmes by making them increasingly unaffordable a long time before Bernie Sanders came on the scene… and yet you wonder why idealistic people might vote for him. What is the alternative?
Hi Jayne,
The reason why I attacked Bernie Sanders and not Trump, is because I think those who support Sanders have good motivations, and if they think the issue through, there’s a chance some will change their minds.
I’d like to think the same was true of Trump supporters, but I fear it is not.
Regarding the Bernie Sanders quote “If corporate America wants us to buy their products they need to manufacture those products in this country, not in China or other low-wage countries”. I singled that out because the sentiment he expresses is shared by many on the left in the UK. That they are being progressive by protecting low-waged workers in the rich west, because the only people who will lose out are the nasty rich capitalists. They’re wrong.
The graphs from https://ourworldindata.org show that, far from just hurting rich capitalists, we’ll be risking destitution for the most vulnerable in the world.
Personally, I get annoyed when I see excessively extravagant lifestyles. But does it matter that much if a famous pop star buys their own private jet, a billionaire a second yacht, or a TV personality another Ferrari?
Ultimately, what matters is if a mother dies in childbirth, a child grows up stunted by malnutrition, if a whole new generation don’t even know how to read and write.
If globalisation means that some of the rich get richer, that the owner of a million pound house in London has a nicer standard of living, that’s not such a big issue. Let’s face it, in global terms, some of us are actually very rich. What matters is that the poorest in the world have better life chances.
Those who oppose “globalisation” wholesale haven’t thought this through.
They might be right to argue against the details of specific trade agreements. If so, they should narrowly focus on those issues, and not join the wider anti-globalisation movement.
If their campaigning provides backup for politicians who want to shut the global poor off from a chance to work their way out of poverty, that’s not progressive at all.
George.
You’ve just confirmed everything I thought about globalist ideas and what’s happened to what passes for progressive politics why they are increasingly unpopular amongst ordinary voters. Basically it’s a suck it up and accept your lot message to the domestic electorate because after all there are people worse of elsewhere variation on we know best and I’m all right jack. Then you wonder why people who do not have job security, are not really rich, struggle with there bills and are probably going to be broke in their old age are attracted to the populism you are so scared of.
Hi Glenn,
Paul Krugman had a similar reaction from people in 1997 when he wrote this article. If he was unable to convince people then, I’m not surprised I’m not able to.
http://www.slate.com/articles/business/the_dismal_science/1997/03/in_praise_of_cheap_labor.html
My position is that protectionism doesn’t work, and will only hurt the underprivileged in this country. For myself, as well as wanting retraining and other initiatives for the low skilled workers in this country, I prioritise the global poor, whose children are threatened with malnutrition.
If you think that makes me right-wing and you and Trump left-wing, you’re entitled to your opinion. But in my opinion, it’s the opposite.
I agree with Glenn (all comments).
George – I suspect you’re (a) creating a fake bogeyman of ‘protectionism’, 1930s style and (b) assuming it’s a zero sum game. Well, the world has moved on from the 1930s and it’s not zero sum.
The worst protectionism today – or rather its modern equivalent – is to be found sailing under the false flag of ‘fee trade’. It seeks to stop developing countries protecting their infant industries until they are globally competitive and to extend intellectual property rights. The beneficiaries are of course corporations not people. Yet, as Glenn says above, these are the key to development as history clearly shows time and again. I think most people take it as read (I certainly do) that most, probably all, developing countries have something they can export whether it’s minerals or cheap labour in the form of garments and suchlike labour-intensive goods. I don’t think that a big problem for many high wage countries who should be moving to higher skill products.
What is a problem is when multinationals export high-end jobs not to supply overseas markets but to beat down workers back home while also earning slightly greater margins by reason of the cheap labour- or so they think. (Actually, in the long term it looks like the extra profit is tiny and they tend lose the ability to innovate because in manufacturing that’s closely tied to keeping design and shop floor close.) This is financialised trade, not bona fide trade. It’s possible only by building up debts to unsustainable levels. All that is what I object to.
As for developing countries they must develop industries and products primarily to supply their home market because that’s a proven route and also because the import capacity of the richer world simply isn’t great enough to satisfy their ambitions. Or, to put it another way, what you advocate isn’t a sustainable model as China is currently discovering.
Nor is it sustainable for us. Productivity is falling which guarantees the next generation will be poorer if the trend continues. And that in turn means pensions won’t/can’t be honoured.
So, what we have is a process which over time asset strips our economy firm by firm. Directors pocket bonuses based on unsustainable short-run profits and workers are immiserated.
Gordon is right.