The next trade agenda must also, I’ve argued, pursue a new kind of trade deal, one that elevates a wholly different group of stakeholders than the largely corporate interests who have come to dominate that process.
That agenda must also incorporate an evolving understanding of international macroeconomics, one that incorporates “savings gluts,” wherein large trade surplus countries export savings to and import labor demand from deficit countries, capital flows and their contribution to “secular stagnation,” and the impact of these dynamics on the dollar, interest rates, the Fed’s macro-management, and inflation.
The problem we face, of course, is that it took way too long to get to this discussion. That has allowed protectionists/demagogues to blame immigrants and trade for all that ails us, which leads to the obvious solutions: get rid of the immigrants and build barriers to trade.
But those ideas can’t work in no small part because globalization is…um…a global force with a massive, infrastructure in place and benefits that American consumers will not comfortably sacrifice, nor should we, both for our own well-being and for the ability of emerging economies to lift their living standards through trade with richer countries.On the Economy
Because we ignored the brewing problems with trade for so long, wasting time with fractious arguments over trade deals instead of dealing with the real problems identified by Autor et al and EPI, we’ve not built the policy architecture to deal with the micro and macro issues raised above (sorry, but “wage insurance” doesn’t get it).…
The new age or the stone age: we either deal with the costs of trade or they deal with us