Thread on some thoughts on @ewarren's plan to demand poor countries meet labor & environmental standards to trade with the US & on @Noahpinion's critique.
1) Yes, Clinton-era free trade agreements caused a multi-decade job bleed from the US, especially in manufacturing
2) Free trade generally benefits lower cost providers. Therefore, a net positive for emerging nations.
3) There are things we could have done to phase in free trade deals, like boost investment & re-training in other industries, to limit the downsides. But hindsight is 20/20.
4) While ALL consumers benefit from lower prices from free trade & much smaller groups of workers benefit from protectionism, it's the job of a nation's leaders to balance the two. That did not happen here. The digital boom abandoned the analog workers of exported industries.
5) All leaders have a fiduciary duty to their citizens first. But that can be interpreted differently & vary by whether they're thinking short- or long-term. In some cases, short election cycles incentivize bad decisions for that reason.
6) It's not constructive to re-litigate the past. We need to deal with reality. @ewarren proposes demanding a higher bar for trading with the US, which will likely make it difficult for some countries to meet, raising their costs & making domestic production more competitive.
7) This would drive higher consumer costs in the short-term but incentivize faster automation in the long-term (a bit like minimum wage does), potentially leapfrogging foreign development altogether. That means poor economies won't get their chance to get richer via labor.
8) The result will be a faster, JOBLESS domestication of global industries. When manufacturing "comes back", it will not employ any of the forgotten high-school grads and blue collar workers that currently favor it.
9) The biggest implication is we're speeding towards GLOBAL REDISTRIBUTION of goods & profits, as well as pressure to sustain other industries who's labor quotient (and costs) are also dropping. (I laid out the full argument in 'Inequality We Trust')
ideafaktory.com/7-inequality-t…
10) WHATEVER we decide, #9 is INEVITABLE. ALL industries will require fewer workers w/different skills & the conversation will quickly shift away from trade to sustaining & incentivizing populations sans-market rate salaries. #UBI is one (flawed) option:
11) We are a few decades from truly confronting the complexity of maintaining personal freedoms, innovation/entrepreneurship, mass underemployed populations & global distribution of goods, free from Orwellian control of centralized government or corporate authority.
12) In the meantime, I support a different approach to upgrading other nations. In my plan, trade is an incentive not a contingency. Read it here: ideafaktory.com/UNPrime
Elizabeth Warren's demand that trading partners comply with labor & environmental standards might sound radical, but it's only a speed bump to the inevitable. Here's why...
ideafaktory.com/trade
#economics #jobs #future #trade
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