Too Late to Compensate Free Trade’s Losers by Dani Rodrik - Project Syndicate
Pagina 1 di 4
ECONOMICS
DANIRODRIK
DaniRodrikisProfessorofInternationalPoliticalEconomyatHarvard
University’sJohnF.KennedySchoolofGovernment.HeistheauthorofThe
GlobalizationParadox:DemocracyandtheFutureoftheWorldEconomyand,
mostrecently,EconomicsRules:TheRightsandWrongsoftheDismal
Science.
APR11,2017
TooLatetoCompensateFree
Trade’sLosers
CAMBRIDGE–Itappearsthatanewconsensushastakenholdthesedaysamong
theworld’sbusinessandpolicyelitesabouthowtoaddresstheanti-globalization
backlashthatpopulistssuchasDonaldTrumphavesoablyexploited.Goneare
theconfidentassertionsthatglobalizationbenefitseveryone:wemust,theelites
nowconcede,acceptthatglobalizationproducesbothwinnersandlosers.Butthe
correctresponseisnottohaltorreverseglobalization;itistoensurethatthe
losersarecompensated.
ThenewconsensusisstatedsuccinctlybyNourielRoubini:thebacklashagainst
globalization“canbecontainedandmanagedthroughpoliciesthatcompensate
workersforitscollateraldamageandcosts,”heargues.“Onlybyenactingsuch
policieswillglobalization’slosersbegintothinkthattheymayeventuallyjointhe
ranksofitswinners.”
Thisargumentseemstomakeeminentsense,botheconomicallyandpolitically.
Economistshavelongknownthattradeliberalizationcausesincome
redistributionandabsolutelossesforsomegroups,evenasitenlargesacountry’s
overalleconomicpie.Therefore,tradedealsunambiguouslyenhancenational
https://www.project-syndicate.org/print/free-trade-losers-compensation-too-late-by-da... 11/04/2017
Too Late to Compensate Free Trade’s Losers by Dani Rodrik - Project Syndicate
Pagina 2 di 4
wellbeingonlytotheextentthatwinnerscompensatelosers.Compensationalso
ensuressupportfortradeopennessfrombroaderconstituenciesandshouldbe
goodpolitics.
Priortothewelfarestate,thetensionbetweenopennessandredistributionwas
resolvedeitherbylarge-scaleemigrationofworkersorbyre-imposingtrade
protection,especiallyinagriculture.Withtheriseofthewelfarestate,the
constraintbecamelessbinding,allowingformoretradeliberalization.Todaythe
advancedcountriesthatarethemostexposedtotheinternationaleconomyare
alsothosewheresafetynetsandsocialinsuranceprograms–welfarestates–are
themostextensive.ResearchinEuropehasshownthatlosersfromglobalization
withincountriestendtofavormoreactivesocialprogramsandlabor-market
interventions.
IfoppositiontotradehasnotbecomepoliticallysalientinEuropetoday,itis
partlybecausesuchsocialprotectionsremainstrongthere,despitehaving
weakenedinrecentyears.Itisnotanexaggerationtosaythatthewelfarestate
andtheopeneconomyhavebeenflipsidesofthesamecoinduringmuchofthe
twentiethcentury.
ComparedtomostEuropeancountries,theUnitedStateswasalatecomerto
globalization.Untilrecently,itslargedomesticmarketandrelativegeographical
insulationprovidedconsiderableprotectionfromimports,especiallyfromlowwagecountries.Italsotraditionallyhadaweakwelfarestate.
WhentheUSbeganopeningitselfuptoimportsfromMexico,China,andother
developingcountriesinthe1980s,onemighthaveexpectedittogotheEuropean
route.Instead,undertheswayofReaganiteandmarket-fundamentalistideas,the
USwentinanoppositedirection.AsLarryMishel,presidentoftheEconomic
PolicyInstitute,putsit,“ignoringtheloserswasdeliberate.”In1981,the“trade
adjustmentassistance(TAA)programwasoneofthefirstthingsReagan
attacked,cuttingitsweeklycompensationpayments.”
Thedamagecontinuedundersubsequent,Democraticadministrations.In
Mishel’swords,“iffree-tradershadactuallycaredabouttheworkingclass,they
couldhavesupportedafullrangeofpoliciestosupportrobustwagegrowth:full
employment,collectivebargaining,highlaborstandards,arobustminimum
https://www.project-syndicate.org/print/free-trade-losers-compensation-too-late-by-da... 11/04/2017
Too Late to Compensate Free Trade’s Losers by Dani Rodrik - Project Syndicate
Pagina 3 di 4
wage,andsoon.”Andallofthiscouldhavebeendone“beforeadministering
‘shocks’byexpandingtradewithlow-wagecountries.”
CouldtheUSnowreversecourse,andfollowthenewlyemergentconventional
wisdom?Backin2007,politicalscientistKenScheveandeconomistMatt
Slaughtercalledfor“aNewDealforglobalization”intheUS,onethatwouldlink
“engagementwiththeworldeconomytoasubstantialredistributionofincome.”
IntheUS,theyargued,thiswouldmeanadoptingamuchmoreprogressive
federaltaxsystem.
SlaughterhadservedinaRepublicanadministration,underPresidentGeorgeW.
Bush.ItisanindicationofhowpolarizedtheUSpoliticalclimatehasbecomethat
itisimpossibletoimaginesimilarproposalscomingoutofRepublicancircles
thesedays.TheeffortbyTrumpandhisCongressionalalliestoemasculate
formerPresidentBarackObama’ssignaturehealth-insuranceprogramreflected
Republicans’commitmenttoscalingback,notexpanding,socialprotections.
Today’sconsensusconcerningtheneedtocompensateglobalization’slosers
presumesthatthewinnersaremotivatedbyenlightenedself-interest–thatthey
believebuy-infromthelosersisessentialtomaintaineconomicopenness.
Trump’spresidencyhasrevealedanalternativeperspective:globalization,at
leastascurrentlyconstrued,tiltsthebalanceofpoliticalpowertowardthose
withtheskillsandassetstobenefitfromopenness,underminingwhatever
organizedinfluencethelosersmighthavehadinthefirstplace.Inchoate
discontentaboutglobalization,Trumphasshown,caneasilybechanneledto
serveanaltogetherdifferentagenda,moreinlinewithelites’interests.
Thepoliticsofcompensationisalwayssubjecttoaproblemthateconomistscall
“timeinconsistency.”Beforeanewpolicy–say,atradeagreement–isadopted,
beneficiarieshaveanincentivetopromisecompensation.Oncethepolicyisin
place,theyhavelittleinterestinfollowingthrough,eitherbecausereversalis
costlyallaroundorbecausetheunderlyingbalanceofpowershiftstowardthem.
Thetimeforcompensationhascomeandgone.Evenifcompensationwasa
viableapproachtwodecadesago,itnolongerservesasapracticalresponseto
globalization’sadverseeffects.Tobringthelosersalong,wewillneedtoconsider
changingtherulesofglobalizationitself.
https://www.project-syndicate.org/print/free-trade-losers-compensation-too-late-by-da... 11/04/2017
Too Late to Compensate Free Trade’s Losers by Dani Rodrik - Project Syndicate
Pagina 4 di 4
http://prosyn.org/OfBWbBf
©1995-2017ProjectSyndicate
https://www.project-syndicate.org/print/free-trade-losers-compensation-too-late-by-da... 11/04/2017