Барак Обама - The Audacity of Hope

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, we could still face some challenges.”

I suggested that the folks in Galesburg might not find his answer reassuring.

“I said it’s possible, not probable,” he said. “I tend to be cautiously optimistic that if we get our fiscal house in order and improve our educational system, their children will do just fine. Anyway, there’s one thing that I would tell the people in Galesburg is certain. Any efforts at protectionism will be counterproductive — and it will make their children worse off in the bargain.”

I appreciated Rubin’s acknowledgment that American workers might have legitimate cause for concern when it came to globalization; in my experience, most labor leaders have thought deeply about the issue and can’t be dismissed as kneejerk protectionists.

Still, it was hard to deny Rubin’s basic insight: We can try to slow globalization, but we can’t stop it. The U.S. economy is now so integrated with the rest of the world, and digital commerce so widespread, that it’s hard to even imagine, much less enforce, an effective regime of protectionism. A tariff on imported steel may give temporary relief to U.S. steel producers, but it will make every U.S. manufacturer that uses steel in its products less competitive on the world market. It’s tough to “buy American” when a video game sold by a U.S. company has been developed by Japanese software engineers and packaged in Mexico. U.S. Border Patrol agents can’t interdict the services of a call center in India, or stop an electrical engineer in Prague from sending his work via email to a company in Dubuque. When it comes to trade, there are few borders left.

This doesn’t mean, however, that we should just throw up our hands and tell workers to fend for themselves. I would make this point to President Bush toward the end of the CAFTA debate, when I and a group of other senators were invited to the White House for discussions. I told the President that I believed in the benefits of trade, and that I had no doubt the White House could squeeze out the votes for this particular agreement. But I said that resistance to CAFTA had less to do with the specifics of the agreement and more to do with the growing insecurities of the American worker. Unless we found strategies to allay those fears, and sent a strong signal to American workers that the federal government was on their side, protectionist sentiment would only grow.

The President listened politely and said that he’d be interested in hearing my ideas. In the meantime, he said, he hoped he could count on my vote.

He couldn’t. I ended up voting against CAFTA, which passed the Senate by a vote of 55 to 45. My vote gave me no satisfaction, but I felt it was the only way to register a protest against what I considered to be the White House’s inattention to the losers from free trade. Like Bob Rubin, I am optimistic about the long-term prospects for the U.S. economy and the ability of U.S. workers to compete in a free trade environment — but only if we distribute the costs and benefits of globalization more fairly across the population.

THE LAST TIME we faced an economic transformation as disruptive as the one we face today, FDR led the nation to a new social compact — a bargain between government, business, and workers that resulted in widespread prosperity and economic security for more than fifty years. For the average American worker, that security rested on three pillars: the ability to find a job that paid enough to support a family and save for emergencies; a package of health and retirement benefits from his employer; and a government safety net — Social Security, Medicaid and Medicare, unemployment insurance, and to a lesser extent federal bankruptcy and pension protections — that could cushion the fall of those who suffered setbacks in their lives.

Certainly the impulse behind this New Deal compact involved a sense of social solidarity: the idea that employers should do right by their workers, and that if fate or miscalculation caused any one of us to stumble, the larger American community would be there to lift us up.