No more false choices. . . .

. . . is the title of a perceptive op-ed article in today’s New York Times by two of Senator Obama’s economic advisors. They debunk three widely held “false choices” facing the economy, and then propose alternatives to the either/or categorization. One important polarizing dichotomy they target is “free trade versus protectionism.”

The article’s special significance is that it is written by Robert E. Rubin, a former U.S. treasury secretary who is currently a Citigroup executive, and Jared Bernstein, a senior economist at the Economic Policy Institute. The two express agreement on trade as follows:

“With respect to trade, the choice is not trade liberalization versus protectionism. Instead, as trade expands, we must recognize that protecting workers is not protectionism. We must better prepare our people to compete effectively and help those who are hurt by trade—not just displaced workers, but those who find their incomes lowered through global competition. This means investing more of the benefits of trade in offsetting these losses, through more effective safety nets, including universal health care and pension coverage.”

But the two economists then go on to disagree on a key issue:

“Beyond that, while we share a commitment to helping workers deal with our new global challenges, one of us (Mr. Bernstein) would advocate provisions in trade agreements that are intended to protect workers, both here and abroad, and the other [Mr. Rubin] would have considerable skepticism about the likely effectiveness of those provisions for our workers.”

In other words, since we are facing “new global challenges” in international trade, Bernstein advocates addressing them domestically and globally. Rubin, even while recognizing new global challenges, advocates addressing them only domestically, with better U.S. safety nets.

Two apparently different approaches. Can either work effectively?

The domestic approach, concentrating on U.S. measures alone, could work if U.S. legislation were globalized, truly globalized. That would mean adding a worker-friendly dimension to a wide set of U.S. laws. Tax laws, for example, would provide incentives for businesses to invest in the United States instead of abroad. Tariffs would be raised to cover more than the cost of building and maintaining our sea and airports, but also some of the cost of new safety nets. Corporate laws would be revised to make U.S.-based multinationals accountable for their treatment of workers in foreign countries, both those on their own payroll and those on the payrolls of contractors of the multinationals.

Rubin is right to be skeptical about labor provisions added to trade agreements, if he has in mind the provisions in existing agreements and the limited provisions adopted so far (as in the Peruvian free trade agreement). But Bernstein seems to favor a broader approach, one that would “protect workers, both here and abroad.”

To be serious about meeting the new global challenges facing workers here and abroad, it is pitifully inadequate to improve only the labor chapter of a trade agreement. The whole trade agreement, every single chapter of it, must be analyzed from a brand new perspective, one sharply different from the prevailing paradigm among negotiators.

At present, all trade agreements, including overall accords on the scope of trade agreements, are dominated by negotiators who have this objective uppermost in mind: How can we protect the rights and interests of business and business organizations in the global economy? The resulting document, whether bilateral, regional, plurilateral, or multilaternal in reach, is then judged by that one-sided standard.

That standard needs to be balanced by another: How can we also protect the rights and interests of workers and their organizations in the global economy? To its great shame, the World Trade Organization, like its predecessor bureaucracy, has steadfastly refused to put that question on its agenda. Worse, the WTO’s bosses, the political leaders of the world’s nations, are complicit in that shameful taboo.

Let me propose an addition to the list of economics false choices. The issue of what approach to take under the new global challenges is not global versus national. The most effective approach is to work at both.


Print Page