Monday, July 4, 2016

Wanted: A New Liberal Policy on Immigration and Trade

I don't like blog posts that are mostly just links and cites to other blog posts, but Donald Trump seems to bring out the worst in me as he does in so many others.  So here goes one that is mostly a cite to  this post and this one explaining why Bernie Sanders' trade policy is just a less honest version of Trump's.

Both Trump and Sanders are protectionist.  Both are protectionist for the same reason -- they see cheap imports as harmful to the US working class, eating away at out good-paying blue collar jobs and hollowing out our working class as its livelihood is undermined. And they are essentially right there.  I recall well being warned of this in my college course on international economics.  Complete global free trade has the effect of tending to equalize wages world-wide, to the great detriment of people in high wage countries.

But it benefits people in low wage countries.  And therein lies the unfortunate fact.  Wages that are abysmally low by US standards can still be the best around in Mexico or China.  Cutting off imports from China or Mexico would devastate these countries economically.

To Sanders the answer is simple.  Just insist that these countries pay wages comparable to the US as a precondition to trading with them.  But really, in cases like these calling for wages comparable to US wages is unrealistic.  It simply means calling on all the low-wage industries in these countries to shut down and throw millions out of work.

Many countries have pulled themselves out of poverty by the export of cheap goods made with low wage labor.  Japan led the way, followed the the foursome of Taiwan, South Korea, Hong Kong and Singapore.  Other East Asian countries are following in their path, such as Thailand, Malaysia, Indonesia and, of course, China.  The pattern all have followed has been essentially the same.  They begin as exporters of cheap, low quality manufactured goods, trading on cheap labor as their advantage.  Over time, these countries move from cheap, low quality manufactured goods and low wages to high quality goods and high wages, and from production for export to production for domestic consumption.  But in all cases, their initial advantage is low wages and higher wages come with time and practice.

This is not to deny or dismiss the importance of very real labor abuses -- unpaid wages, extremely hazardous factories, outright enslavement, death squads killing labor organizers etc.  These should not be written off as inevitable side effects of progress.  These things should be recognized and strongly opposed.  But to insist on protecting our domestic industry by protectionism is to deny millions in poorer countries to opportunity to advance -- or to throw them catastrophically backward by shutting down whole industries overseas.

And here is the difference between Sanders and Trump.  (Or, if you will between a liberal and a conservative or authoritarian, or between favoring breadth and favoring depth).  To Trump and his supporters, the answer is to shrug and say so what.  As President of the US my job is to concern myself with the well-being of American workers.  What happens to the rest of the world is not my concern.  To Sanders and his supporters, such an answer is simply not morally acceptable.

Much the same applies to immigration.  A Trump supporter sees the interests of immigrants as a non-issue. A liberal or Sanders supporter cannot shut immigrants out of the moral calculus, yet the fact remains that we really can't admit everyone the world over who might want to come here.  And even if we would, it is not only the US that would be harmed, but the countries losing so much of their population to us.

Right-wing populists in the US and Europe alike show that a large portion of the population has had enough of immigration and trade and will be heard, whether through respectable voices or otherwise. Liberal principle do not allow us to treat immigrants or the global poor as scapegoats for our problems, and rightly so.  But neither does political or economic reality allow us to shoulder the entire burden of lifting the world up.  What is needed is something new -- a policy that takes the needs of immigrants and global poor into account, but rejects a simple "more is better" approach to immigration and trade.  This is at least a proposal in such a direction for trade.  We need one for immigration as well, preferably one focused on improving conditions in countries with large out-migration and rewarding people who chose to stay.

No plan yet, but something to turn around and think about.

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