Monday, May 14, 2007

Globalization: Krugman on mitigating the social impact

I've written quite a bit about globalization lately, particularly in the context of toxic food, medicine, and consumer products. Not to mention the toaster problem, or those DVD/VCR combo units that last (at most) six months. Cheap goods from Walmart aren't cheap if you need to buy 3 times as many of them. (Incidentally, this shows up as increased productivity rather than increased inflation.)

So I'm against trade agreements and globalization? Well, no. I not only buy the party line on trade and poverty, I saw the positive effects of trade in Bangladesh in the early 80s. It's true that Ricardo's theory comparative advantage didn't anticipate how fraud and deception would lessen the mutual advantages of trade, but it's also true that billions of people are emerging from poverty on the back of international trade flows. Even from the selfish perspective of the privileged, that translates into a much safer, albeit warmer world. The net balance is clearly positive, and the balance for all participants is individually positive.

It also won't be sustained if we don't mitigate the disadvantages for the non-wealthy American, including soon-to-be outsourced IBM workers and everyone who doesn't have an advanced degree. We need stronger regulation of imports, and the beginnings of a world regulatory authority. We need to treat declining product lifespans as increased inflation rather than increased productivity. And, above, all, we need to change the American contract between society and citizen, starting with health-care...
Divided Over Trade - Krugman -New York Times:

...So what’s the answer? I don’t think there is one, as long as the discussion is restricted to trade policy: all-out protectionism isn’t acceptable, and labor standards in trade agreements will help only a little.

By all means, let’s have strong labor standards in our pending trade agreements, and let’s approach proposals for new agreements with an appropriate degree of skepticism. But if Democrats really want to help American workers, they’ll have to do it with a pro-labor policy that relies on better tools than trade policy. Universal health care, paid for by taxing the economy’s winners, would be a good place to start...
John Edwards, in other words. Everyone else is just business as usual.

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