Thread by @Noahpinion

I'm at a panel on globalization and American workers, featuring @KClausing, @rodrikdani, and @joshbivens_DC, organized by @aaronsojourner! Exciting!!

Bivens notes that over time, the U.S. has been trading with poorer and poorer partners. That presented huge predictable challenges that we chose not to address!!

Bivens: Trump claims he cares about the working class but it's obviously a fraud. But because Dems supported free trade and failed to address the challenges, Trump was able to trick working-class people into thinking he cared about them

Bivens: We need to make sure trade policy addresses labor standards, climate change, antitrust, etc.

Bivens: Flooding the world with labor lowered the price of labor in America.

(My question: why did developing countries' labor share fall too?)

Bivens: Non-college U.S. workers got an average of around $2000 a year knocked off their wages by trade (cites Krugman and Autor)

He cites evidence that globalization reduced workers' bargaining power.

It's not "either globalization or de-unionization". One causes the other.

Bivens: We allowed the "trade agreement industrial complex" to capture the negotiating process

Bivens: 2002-2007 was the China Shock. We had a manufacturing recession that we should have bounced back from but we didn't bounce back due to China trade.

Bivens gives Trump credit for curbing ISDS in the USMCA. He says he's annoyed it was a Republican who did it rather than a Democrat.

Next up is Clausing.

amazon.com/Open-Progressi…

Clausing: Just because inequality went up when trade went up doesn't mean trade caused inequality.

Trade pressure has affected everyone, but some countries prevented inequality from rising.

So it's a choice.

Clausing: Tariffs are regressive. They hurt poor people. Meanwhile, tariffs won't undo the effect of the China shock. But it will cause retaliation, which also falls hardest on low-income Americans.

Clausing: The potential gains from tougher trade policy are modest, while the potential losses are large.

She claims that U.S. trade deficit are a function of U.S. govt. budget deficits and low savings, and that German austerity and high national saving is the cause of their trade surplus.

(I'm really not sure about that...)

Clausing says that instead of protectionism we need BETTER TAX POLICY. More progressive taxes, more payments to low-income families, more taxation of capital, more and better taxation of inheritance, policy to stop tax haven profit shifting.

Next up: Dani Rodrik!

He says that most of the things we do to make things better for our workers will be about domestic policy.

He endorses an idea he calls "embedded liberalism" - the idea that the purpose of the global economy is to serve domestic economies.

Rodrik's idea of trade is implicitly nationalist - American trade policy should be about benefitting Americans.

Much of Rodrik's talk is a rehash of the standard well-known ways free trade can go wrong - inequality, unfairness, diminishing gains from trade, crappy stuff in trade agreements...

BUT, Rodrik is probably NOT preaching to the choir here. This basic case probably IS worth reiterating to a room full of economists - even sympathetic ones.

The free trade consensus was allowed to go unchallenged too long, and it seeped into people's minds.

A questioner points out that most trade agreements have a heavy geopolitical component. We sign trade agreements in part because we want allies. We give them access to our market to incentivize them to remain in our camp. How does that change how we should think about trade??

Rodrik: Geopolitics is geopolitics. But economists need to stop signing on to every trade agreement just because it's called "trade agreement".

In general this panel makes it clear that economists are questioning the free trade consensus more than ever, but don't really have a clear replacement yet.

(end)