WorldCity Business Magazine

(1) Publisher’s Note – Free Trade: How to Restore Its Tarnished Reputation

by Ian McCulskey

To listen to the nativist table-thumping and isolationist rants that often pass for punditry, one would think that the greatest threats to the U.S. economy are immigration and trade. Nothing could be further from the truth.

Like many free-trade advocates, this magazine believes fervently that nothing invigorates and enriches an economy more than open markets. But, while Colombia, India, VietNam and other countries are embracing globalization, the United States seems to be shrinking away from it, denying the obvious benefits that come from the free flow of goods, services and talent.

The biggest beneficiaries of globalization over the past half century have been the U.S. economy and the U.S. consumer. And yet, presidential candidates would be booed off the stage if they were to make such a claim. Not to mention, pilloried by talk-show blowhards for selling out America.

But why has free trade become such a dirty word? Where are the vociferous champions of trade? And, more importantly, why is it so hard to make a convincing argument in favor of trade that sells not only in the board rooms of economic think tanks, but also on cable TV?

The standard explanation is that visible pain is so much easier to pinpoint than invisible gain. In other words, the steelworkers who lose their jobs become a front-page story, while Best Buy shoppers who can purchase TVs for half the price because of more efficient global supply chains hardly notice their good fortune. But complaining that the media only hypes the bad news of layoffs, while ignoring the broad benefits of trade, is lame. What we really need is hard data to
make the case for trade.

At WORLDCITYS monthly Connections event in January, Chris Sabatini, senior policy director at the Council of the Americas, provided a recipe for the kind of information cocktail that might make free trade popular or at least palatable again.

What we need first, he said, is a survey congressional district by congressional district of how voters feel about trade. Then we need detailed analyses of the many but diffuse benefits of trade. How much have prices been lowered as a result of trade? How many companies have shifted to higher modes of production due to foreign competition? How many have thrived and added jobs because they were able to create more efficient supply chains by outsourcing specific tasks? How has the overall wage pool been affected? How many more design, engineering and logistics jobs have been created for every low-grade assembly job that was lost to outsourcing? How many foreign companies (think KIA, Toyota, Mitsubishi) have insourced jobs to the U.S. by opening plants here?

Like immigration, said Sabatini, trade is an easy punching bag. But armed with meaningful data that can be given to each congressional representative, maybe then we could start punching back.

Contact: imccluskey@worldcityweb.com