Talkin' About Trade

TALKIN' ABOUT TRADE....Jared Bernstein says that although he loves himself some cheap imports, opening up trade has some downsides too:

Estimates are that U.S. trade with low-wage countries explains 20 to 30 percent of the increase in wage inequality over the past generation....Tens of millions of incumbent workers — men and women still at work — have lower wages today than they would if trade were more balanced. My colleague Josh Bivens, an economist, estimates that increased trade has cost the typical household about $2,000 over the past generation. That's not a huge dent, but it's not trivial either (and remember, this is a net calculation — it accounts for the low-price effect).

....It would thus be a real advance if [] trade deals devoted less ink to protecting "intellectual property rights" of first-world producers and more to the rights of workers in developing countries. One good reason to get behind globalization is that we'd like to see the world's poor realize some of the prosperity that expanded trade is supposed to generate. When we play overly nicely with repressive governments — when we essentially make exclusive deals between their big investors and our big investors — we sacrifice this opportunity.

(1) Trade is pretty damn free these days. There's really only a limited amount of progress left to be made. (2) We've had sluggish wage growth for the past seven years and we're now entering (or about to enter) a recession. Expecting public support for trade agreements at a time like this is just quixotic. There's really not much point in banging our collective heads against the free trade wall right now. (3) We've been hearing forever that we should pass trade agreements today and fix their harmful impact on the working class tomorrow. But tomorrow never seems to come, does it? Maybe it's time to switch that policy sequence around for a while. (4) There's not really any danger of seriously regressing on trade. The worst that's likely to happen is a slowdown in new agreements. We'll all live through that. (5) A lot of us who supported NAFTA are sort of wondering what happened to all the benefits that were promised. As near as I can tell, there's a pretty widespread agreement that NAFTA, on balance, hasn't really had much net impact. (6) The Doha round of trade talks is stalled primarily because rich countries, as usual, refuse to reduce agricultural tariffs and subsidies. Anyone who pretends to be a free trader ought to be screaming blue murder about this. So why aren't they? (7) Extending the U.S. intellectual property regime to the rest of the globe doesn't really excite me a whole lot. Personally, I think "Happy Birthday" ought to be in the public domain by now.

All that said, I'm still a temperamental free trader. But the current backlash against further trade agreements is hardly surprising and hardly without merit. Taking a breather to rethink how we approach trade seems pretty reasonable at the moment.