The Democrats have an opening for a genuinely new deal on trade, since the figures can no longer support the 'its all good' meme, even allowing for a distinction between 'fair' and 'unfair' labor market adjustments. More of the same starts to look like too much short-term gain at the risk of long-term stability, balance, and financial capacity to assert self-interest.
A true Lion of the party would be able to use moderate protectionist taxes to dampen overwrought US consumption spending, re-build US public savings, and possibly broaden world-labor standards and address structural imbalances (i.e. simultaneously achieve long-term policy objectives). That would be a fitting legacy indeed, one that will never be matched by the free-trade myopia of the Republican party, that continues to risk a broad inflation on the heels of a slow decline in the dollar or a rapid fall of it, on the heels of some future inflection point.
THE JUST-AS-UGLY TWIN
Zakaria's reported Asian tour appears to have influenced him to write like a cyclops on the (a) the upcoming needs for a hard look at the other deficit that the GOP has been ignoring, the burgeoning balance of payments problem and (b) the rest of the 'realities' that are being financed by abject worship at the 'perfect trade' totem:
The current Democratic approach to these issues is misguided. Loading trade pacts with environmental and labor standards is ineffective, unless the aim is to sink them. It will not really change the fact of low-wage competition from poor countries. And, most important, it doesn't really help American workers to prosper in the long term.
What America needs is a new way to tackle trade. It is a C-and-T agenda: cushion and train. The government should help people to weather the shocks of this roller-coaster ride, and it should help train them to be better equipped for the next round of global competition. We do very little of this today.
But does Fareed consider this (have all these problems been fixed?):
Contrary to promises by business and government leaders that increased trade would benefit workers on both sides of the Pacific, the opposite is actually occurring. China's export industries are associated with gross violations of human rights, including forced labor,1 and even while China's economy is growing and becoming more productive, minimum wages are stagnant or decreasing in major manufacturing centers.2
THE FANTASY OF A 'NEW' AMERICAN CENTURY
The financial picture isn't pretty either (see chart below). Even if there is some context in which to make sense of this, there is no new "American Century" to be built on the back of this triple-witching, as one was once built on the back of the WWII break-up of the British financial empire, the technology acquisition from the Germany empire, and the human capital that came along with war flight:
- (1) Rising need to managing social costs, such as healthcare against an adverse demographic trend,
- (2) a fiscal deficit driven ever higher by a GOP that prefers to cut taxes in the face of dangerously expanding wealth and income disparities,
- (3) a near permanent decline in the terms of trade dictated by 'cheap global labor' cum 'open markets' and long-term geopolitical oil instability.
All of these things suggest that, in addition to the declining efficacy of military power, at least for the foreseeable future, the new century will be marked by how well America manages its coming changes in relative position. On that score, pushing now for trade "fairness", including labor-market stabilization and equalization practices, while the US still has the relative standing to do so, can only help down the road, when arguably, her assets and financial health will be in others hands along with the associated 'bargaining power' that goes with them ...
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*Mark Stein reminds that "American Century" was a phrase of Henry Luce. We're lucky to have those around who remember.
