Must-Read: Francis Wilkinson: Trade Is the Scapegoat for Political Failure

Must-Read: Francis Wilkinson: Trade Is the Scapegoat for Political Failure: “Democrats have no viable plans to bring back sustainable, high-paying, blue-collar jobs… https://www.bloomberg.com/view/articles/2017-05-03/trade-is-the-scapegoat-for-political-failure

…Neither, it seems, does anyone else. And wages in the service economy don’t remotely compare with the best wages of industrial glory days. (Neither do most of today’s manufacturing wages.) The notion that “lousy trade deals” are responsible for the erosion of working-class prosperity is a common denominator in the rhetoric of Trump and Bernie Sanders…. At a panel discussion last week at the City University of New York, a handful of prominent economists grappled with “Trade, Jobs and Inequality.” None echoed the views of Sanders or Trump.

“No, lousy trade deals are not a primary cause” of working-class despair, said panel member David Autor of MIT in a follow-up email to me. “It is the case that China’s accession to the WTO in 2001 was a big shock to U.S. manufacturing. This was not really a trade deal, however. This was China becoming a member of an existing trade agreement. And this was an inevitable long-term result of China’s spectacular development.”…

Bradford DeLong of the University of California at Berkeley, pointed out that technological evolution steadily drove down manufacturing’s share of U.S. labor for half a century before the China shock. The demonization of trade deals, DeLong wrote to me in an email, is off target. “NAFTA was supposed to kill the U.S. auto industry,” he wrote. “It didn’t — the auto industry loved it.”

It might not matter whether trade, automation, globalization or some combination is at fault. But it matters greatly that American politics has proved incapable of mitigating the damage, helping to open the path to power for Trump…. Ann Harrison, a former director of development policy at the World Bank who is now a professor at the University of Pennsylvania, said: “The idea behind globalization is the winners, the exporters, the consumers, are so much richer that it is easy and straightforward to redistribute some of the winnings to compensate the losers. That turned out not to be true.” That failure of redistribution is a failure of politics more than economics.

It’s in part a function of the consistent devotion of the Republican Party to lowering tax rates on the most successful while resisting virtually all efforts to help the economy’s losers. But the resistance is also rooted in powerful social attitudes…. “Our package for helping the losers, Trade Adjustment Assistance, helped only about half those that it should have helped,” Harrison said at the CUNY event. “But, much more important than that, Americans do not want handouts. What they really want are jobs.”

Good jobs bestow dignity as well as wages. Concepts such as a universal basic income are controversial in part because they promise to separate income from work…. [But] as DeLong said at CUNY, wealthy heirs don’t seem to suffer a loss of dignity when they cash their trust checks.

“Back in the 1920s ‘welfare’ was a good word,” DeLong said. “When Edward Filene in the 1920s talked about ‘welfare capitalism’—firms providing health, accident, and pension benefits to their workers—the ‘welfare’ was in there to make his readers think that the idea was a good thing. But because people want respect, over the past century the word ‘welfare’ has been poisoned.”…

Trump’s attacks on trade always implied that the old factories would materialize in their old haunts once the trade regime went away…. Abandoning nostalgia for the glory days is long overdue. Indulging it misleads voters and allows politicians to remain complacent. Trump’s extravagant promises changed U.S. politics. Perhaps his all-but-certain failure to redeem those promises will be a preface to a new and better deal for workers.