The Losers of Globalization
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It’s amazing to me that the media and policymakers, not to mention a whole bunch of commenters on this thread, are just waking up to the fact that globalization is not great for everyone, that there are real losers, and that dealing with job loss and long-term unemployment is a real thing that maybe we should deal with before it fuels racial nationalism and extremist political movements. It’s almost like we shouldn’t believe that corporate-generated policies will benefit everyone! And that’s not just in the United States, it’s not just in Mexico, and it’s not just in Bangladesh. It’s everywhere around the world.
But trade comes with no assurances that the spoils will be shared equitably. Across much of the industrialized world, an outsize share of the winnings have been harvested by people with advanced degrees, stock options and the need for accountants. Ordinary laborers have borne the costs, suffering joblessness and deepening economic anxiety.
These costs have proved overwhelming in communities that depend on industry for sustenance, vastly exceeding what economists anticipated. Policy makers under the thrall of neo-liberal economic philosophy put stock in the notion that markets could be entrusted to bolster social welfare.
In doing so, they failed to plan for the trauma that has accompanied the benefits of trade. When millions of workers lost paychecks to foreign competition, they lacked government supports to cushion the blow. As a result, seething anger is upending politics from Europe to North America.
In the United States, the Republican presidential aspirant Donald J. Trump has tapped into the rage of communities reeling from factory closings, denouncing trade with China and Mexico as a mortal threat to American prosperity. The Democratic nominee, Hillary Clinton, has done an about-face, opposing an enormous free trade deal spanning the Pacific that she supported while secretary of state.
In Britain, the vote in a June referendum to abandon the European Union was in part a rebuke of the establishment, from laborers who blame trade for declining pay. Across the European Union, populist movements have gained adherents as an outraged response to globalization, imperiling the future of major trade deals, including a controversial pact with the United States and another with Canada.
“The trade policy of the European Union is paralyzed,” said the Italian minister of economic development, Carlo Calenda, during a recent interview in Rome. “This is a tragic situation.”
The anti-trade backlash, building for years, has become explosive because the global economy has arrived at a sobering period of reckoning. Years of investment manias and financial machinations that juiced the job market have lost potency, exposing longstanding downsides of trade that had previously been masked by illusive prosperity.
These are huge policy problems and Dylan Matthews and Annie Lowrey impinging the morality of those who point them out isn’t going to make them go away. The entire rhetoric around globalization coming from the elite class remains “this is awesome, we need more, let’s double down.” Yet nowhere through the last half-century of officially sanctioned capital mobility has the American government at the very least taken the disruption to the working classes seriously. I can’t speak to European responses in recent decades, although it’s clear the instability is also affecting those places. In the United States, globalization has happened part and parcel with unionbusting, with rapidly growing inequality, and with the creation of the New Gilded Age. The destruction of good American jobs as a result of globalization has had a very real negative affect on the American working and middle classes. If it has also meant cheap goods at Walmart, OK I guess except for the workers dying to make them, but the economic problems of the United States are very real. Inequality is a lit torch to previously existing racial and social divides. Ultimately, most people in your nation have to believe that life is getting better for them. If they don’t, they will act. That is what we are seeing in 2016. And those actions aren’t likely to be treat others in a very kind way.
This doesn’t mean that we can put globalization back into the box, even if we wanted to. But it does mean that unemployment, job creation for the very people who lose their jobs through globalization and automation, and the creation of a much more robust social safety net has to be a policy priority equal to or greater than passing the Trans-Pacific Partnership. And it’s just not. In the United States, for a family to get even basic help other than standard unemployment insurance, they have to be truly struggling, to the point of not eating. That’s not acceptable. We are just starting to wake up to this as a problem. Meanwhile elites in both parties embracing more and more globalization, seemingly clueless to the terrible damage of communities at home, not to mention the exploitation of global workers. At least domestically, they are now beginning to pay the cost. We will see if they learn. I am skeptical and I fear for the nation’s future.