Fresh thinking needed on trade
You have to give Donald Trump credit for one thing — and it may be the only thing in his depressing campaign for the presidency — he has focused some overdue attention on the plight of those Americans most impacted in a bad way by the movement over the past 20 years to liberalize the rules on international trade.
In big picture terms, the gradual erosion of tariff barriers that began in the 1980s, and went on to reach a high point of sorts with the signing of the NAFTA treaty (North American Free Trade Agreement) in 1993 between the U.S., Mexico and Canada has benefitted all nations involved. Work on a another trade liberalizing treaty, but one even further reaching in its geostrategic implications because of the China factor, known as the TPP (Trans Pacific Partnership) is stalled at the moment, which is unfortunate. Unlike NAFTA, which focused on tariff reductions, TPP benefits include protection for intellectual property, enforcing stricter labor and environmental standards and loosening rules on trade in services, according to The Economist, an influential and reliable publication on global affairs. These are areas where the U.S. has long nursed often justified grievances against other trading partners, and where we have comparative advantages. Significantly, it is also our best response to date to the economic rise of China, which is increasingly asserting itself in its Pacific neighborhood in ways that don't always harmonize with U.S. interests. China's rise is inevitable and the influence that comes with its economic clout is something that we need to learn to manage and cope with, rather than thwart, if more serious conflict is to be avoided.
Unfortunately, TPP has become a poster child and whipping boy for all the major Presidential candidates, from Donald Trump to Bernie Sanders (including, sadly, if not unexpectedly, Hillary Clinton, who supported it enthusiastically as Secretary of State but now finds it politically expedient to backtrack on), as well as other political leaders and economists who should know better. On a broad scale, liberalized trade with other nations does act to raise living standards globally. The U.S. has benefitted from lower costs in all manner of items, from clothing to electronics. Overseas, millions of people in developing nations have climbed out of poverty in a single generation, far more rapidly than would have been possible in the absence of freer trade; certainly a comparable amount of money in "foreign aid" would not have come close to being as effective. This is a remarkable achievement that we should be proud of.
That, however, is likely to be cold comfort to a former factory worker in Ohio, or elsewhere in the rust belt, when it comes to manufacturing (even though we've added more than 1 million manufacturing jobs since 2010). And the rust belt isn't just the Midwest, either. Look around New England and you see plenty of shuttered factories that used to pay good wages for jobs that were the economic bedrocks of their communities.
Even though liberalized global trade may have benefitted the country as a whole, its downsides have been longer lasting and of more severe impact than anticipated by most of its champions. Liberal trade, much like taxes, create winners and losers. And the losers lost a lot — from well-paying jobs to social and in many cases family cohesion. This dichotomy between winners and losers and the income disparities underlying it is at the heart of what has so far provided the jet fuel for Mr. Trump's otherwise unfortunate candidacy, with its nonsense about building walls along the Mexican border, keeping would-be immigrants who happen to be Muslims out solely for that reason and his more recent bizarre comments on abortion. However, he is the first one who successfully tapped and gave voice to the seething anger of those who saw their futures stolen from them when the local manufacturing plant where generations before them had gainfully worked and earned decent living standards closed down, and the jobs outsourced overseas.
Simply re-creating the world and trade rules of 1980 or so isn't the answer, even if that were possible, which it's not. Too much has changed. What we as a nation can and must do, for moral and pragmatic reasons, is to drastically increase the support displaced workers can obtain under the Trade Adjustment Assistance program, which is supposed to be a safety net for workers who lose their jobs to foreign competition. But the program is far too limited, and too often, workers find it makes more sense to claim disability benefits when the initial TAA benefits expire.
It's a complex picture, with technological change rendering many jobs either obsolete or completely transformed in any event. The only sure answer is to inculcate a mind-set among those students still in middle or secondary school that formal education shouldn't stop with a high school degree. That is just the end of one chapter, not the book. And for those who earned their high school diploma decades ago, that notion has extra relevance. Continual openness and opportunities for training and re-training are the only ways someone who used to make a good living on an assembly line can hope to return to happier economic circumstances. But before that, the TAA program needs a drastic upgrade to train the electricians, plumbers and technologists of the 21st century.
Reversing NAFTA or shutting the door on TPP won't accomplish a return to the good old days. Only by upping our own game — with a better educated, more productive and skill-equipped workforce — will those good paying jobs return. It won't be because XYZ Corp. decided to return the work stateside from China or Mexico or wherever else in a fit of patriotism — but because of proximity to its biggest market, the U.S. — and an abundance of qualified workers made it the economically smart move to undertake.
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