Saturday, April 9, 2016

Trade and Global Poverty

Recently I suggested that Democrats need to have a more thoughtful discussion about trade agreements. Teeing off of another excerpt from the Sanders' interview with the Daily News, Zack Beauchamp has written a must-read article about their impact on the very poorest people on earth.

He begins by pointing to the bar Sanders set for what would constitute fair trade:
I do believe in trade. But it has to be based on principles that are fair. So if you are in Vietnam, where the minimum wage is 65¢ an hour, or you're in Malaysia, where many of the workers are indentured servants because their passports are taken away when they come into this country and are working in slave-like conditions, no, I'm not going to have American workers "competing" against you under those conditions. So you have to have standards. And what fair trade means to say that it is fair. It is roughly equivalent to the wages and environmental standards in the United States.
Beauchamp goes on to discuss an outcome of Sanders' proposals to "reverse" NAFTA/CAFTA and get rid of permanent normal trade relations with China that is usually not included when we talk about trade agreements.
There's one big problem, according to development economists I spoke to: limiting trade with low-wage countries would hurt the very poorest people on Earth. A lot.
Free trade is one of the best tools we have for fighting extreme poverty. If Sanders wins, and is serious about implementing his trade agenda as outlined in the NYDN interview and elsewhere, he will impoverish millions of already-poor people.
It is worth noting that in 2015, the number of people around the globe who lived in "extreme poverty" (less than the equivalent of $1.90 a day) fell below 10% for the first time. Beauchamp notes research showing that:
The global decline in extreme poverty is inseparable from the global trading regime. When poor countries can sell cheap goods to rich countries, or bring in a lot of foreign direct investment, growth skyrockets. This means more jobs, better government services, and thus less poverty.
This poses a dilemma for Americans because, as Beauchamp points out, the same trade agreements that have reduced extreme poverty around the globe have eliminated jobs in this country. It is understandable that, for Donald Trump and his supporters, this is a simple matter that is covered by his mantra about "making American win again." But it poses a more complex challenge for liberals. A failure to acknowledge this dilemma constitutes what David Drezner calls, "economic nationalism from the left."
Beyond the economics, however, is the fact that reducing global poverty is also in our self interest. As President Obama said back in 2009, a peaceful world depends on it.
...a just peace includes not only civil and political rights -- it must encompass economic security and opportunity. For true peace is not just freedom from fear, but freedom from want.
It is undoubtedly true that development rarely takes root without security; it is also true that security does not exist where human beings do not have access to enough food, or clean water, or the medicine and shelter they need to survive. It does not exist where children can't aspire to a decent education or a job that supports a family. The absence of hope can rot a society from within.
President Obama has also suggested that - on almost every issue - our job as liberals is harder than the conservative's job.
After all, it's easy to articulate a belligerent foreign policy based solely on unilateral military action, a policy that sounds tough and acts dumb; it's harder to craft a foreign policy that's tough and smart. It's easy to dismantle government safety nets; it's harder to transform those safety nets so that they work for people and can be paid for. It's easy to embrace a theological absolutism; it's harder to find the right balance between the legitimate role of faith in our lives and the demands of our civic religion. But that's our job. And I firmly believe that whenever we exaggerate or demonize, or oversimplify or overstate our case, we lose.
We can add another item to that list: dealing with the complexities of how both our country and people around the globe can benefit from trade.

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