The Audacity of Hope - Barack Obama [82]
We need a new approach to the trade question, I would say, one that acknowledges these realities.
And my union brothers and sisters would nod and say that they were interested in talking to me about my ideas—but in the meantime, could they mark me as a “no” vote on CAFTA?
In fact, the basic debate surrounding free trade has hardly changed since the early 1980s, with labor and its allies generally losing the fight. The conventional wisdom among policy makers, the press, and the business community these days is that free trade makes everyone better off. At any given time, so the argument goes, some U.S. jobs may be lost to trade and cause localized pain and hardship—but for every one thousand manufacturing jobs lost due to a plant closure, the same or an even greater number of jobs will be created in the new and expanding service sectors of the economy.
As the pace of globalization has picked up, though, it’s not just unions that are worrying about the long-term prospects for U.S. workers. Economists have noted that throughout the world—including China and India—it seems to take more economic growth each year to produce the same number of jobs, a consequence of ever-increasing automation and higher productivity. Some analysts question whether a U.S. economy more dominated by services can expect to see the same productivity growth, and hence rising living standards, as we’ve seen in the past. In fact, over the past five years, statistics consistently show that the wages of American jobs being lost are higher than the wages of American jobs being created.
And while upgrading the education levels of American workers will improve their ability to adapt to the global economy, a better education alone won’t necessarily protect them from growing competition. Even if the United States produced twice as many computer programmers per capita as China, India, or any Eastern European country, the sheer number of new entrants into the global marketplace means a lot more programmers overseas than there are in the United States—all of them available at one-fifth the salary to any business with a broadband link.
In other words, free trade may well grow the worldwide economic pie—but there’s no law that says workers in the United States will continue to get a bigger and bigger slice.
Given these realities, it’s easy to understand why some might want to put a stop to globalization—to freeze the status quo and insulate ourselves from economic disruption. On a stop to New York during the CAFTA debate, I mentioned some of the studies I’d been reading to Robert Rubin, the former U.S. Treasury secretary under Clinton whom I had gotten to know during my campaign. It would be hard to find a Democrat more closely identified with globalization than Rubin—not only had he been one of Wall Street’s most influential bankers for decades, but for much of the nineties he had helped chart the course of world finance. He also happens to be one of the more thoughtful and unassuming people I know. So I asked him whether at least some of the fears I’d heard from the Maytag workers in Galesburg were well founded—that there was no way to avoid a long-term decline in U.S. living standards if we opened ourselves up entirely to competition with much cheaper labor around the world.
“That’s a complicated question,” Rubin said. “Most economists will tell you that there’s no inherent limit to the number of good new jobs that the U.S. economy can generate, because there’s no limit to human ingenuity. People invent new industries, new needs and wants. I think the economists are probably right. Historically, it’s been the case. Of course, there’s no guarantee that the pattern holds this time. With the pace of technological change, the size of the countries we’re competing against, and the cost differentials with those countries, we may see a different dynamic emerge. So I suppose it’s possible that even if we do everything right,