April 25, 2021 | View in Browser
Welcome to The Backstory. Every Sunday, we’ll guide you through the debates driving U.S. foreign policy and international affairs using pieces from the Foreign Affairs archives—some recent, some decades old. It has become an axiom in American politics that workers have suffered at the hands of globalization. As economic integration connected the world, opportunities dried up at home. “A responsible policy would capture the gains of free trade but make up for domestic losses,” Gordon Hanson writes. “In recent years, the United States has done neither.”
For decades, policymakers assumed that openness and economic growth would bring prosperity to all. But warning signs began to crop up. “Growing income inequality, job insecurity, and unemployment are widely seen as the flip side of globalization,” Ethan Kapstein wrote in 1996. “The world may be moving inexorably toward one of those tragic moments that will lead future historians to ask, why was nothing done in time?” But the economists Paul Krugman and Robert Lawrence warned not to be too hasty with a diagnosis. International trade was a “convenient scapegoat” for more complex problems, Lawrence noted.
On the whole, “globalization has been a powerful force for equality and poverty reduction,” David Dollar and Aart Kraay wrote in 2002. But not everyone benefited. Globalized markets “squeezed the middle class, both within societies and in the international system,” Geoffrey Garrett pointed out in 2004. “The system takes no responsibility for the human costs” of its rules, Jay Mazur argued. “Trade policies that ignore the rights and needs of workers move the world backward, not forward.”
The backlash seeped into U.S. politics. “Public support for engagement with the world economy is strongly linked to labor-market performance, and for most workers labor-market performance has been poor,” Kenneth Scheve and Matthew Slaughter wrote in 2007. At the time, they recommended a “substantial redistribution of income” to stave off protectionism. Revisiting that proposal a decade later, however, they found it insufficient: beyond merely compensating those adversely affected, “the country needs to rethink the role of government in developing human capital.”
The Trump administration opted instead for tough positions on trade, from introducing new tariffs to entering a trade war with China and weakening the World Trade Organization. U.S. Trade Representative Robert Lighthizer defended these policies as “[making] it possible for most citizens, including those without college educations, to access the middle class through stable, well-paying jobs.” In practice, Chad Bown wrote, they had the opposite effect, proving “costly for American businesses, workers, and farmers.” “American workers have indeed been left behind,” Kimberly Clausing asserted. “But open economic policies remain in their best interest.”
The real problem lies with the United States’ response to economic change, Adam Posen argues—especially those policies that “increasingly insulated the economy” by rejecting global standards and competition. “It is the self-deluding withdrawal from the international economy over the last 20 years that has failed American workers, not globalization itself.”
“Can Trade Work for Workers?” and “The Price of Nostalgia” are featured in the lead package of our May/June issue, “Trade Wars.” Read the rest of the issue here. 
New Issue Trade Wars The Fight Over the Global Economy's Future The Backstory is a subscriber-only email. Was it forwarded to you? Subscribe here to receive it. © 2021 Council on Foreign Relations | 58 East 68 Street, New York NY | 10065 Reset your password here. |
