The Corner

Free Trade in Jobs?

So, should the arguments for globalization be applied to the US labor market? If we have free trade in steel, why not in labor? The answer is, or should be, purely pragmatic. There has to be some understanding that, in the real world, some abstract theories have to recognize the realities of the nation state. Free market dogmatism makes little more sense than any other blind faith.

One of the most compelling intellectual arguments for globalization is the theory of comparative advantage. Put very simply, if all countries are, through free trade, able to exploit their competitive advantages (whether it is cheap labor, technological savvy or a benign climate) then everyone should benefit. Trade is not a zero-sum game. Importantly, there are also strong practical arguments in favor of globalization, at least one of which has important implications for the US immigration debate. By extending prosperity, or the hope of prosperity, to poorer countries, it lessens the pressure on their citizens to emigrate. In this context, it’s worth remembering that those who are most likely to emigrate tend to be the most enterprising, exactly the sort of people who those countries – if they are to flourish – need to retain.

We need to recognize that benign as the globalization process should be, it can be the cause of considerable dislocation, some positive, some not. In the case of a rich country such as the US, one of the principal benefits of globalization is that it allows its workers to ‘trade up’. Put crudely, instead of tilling the fields, they become computer programmers. The problem is that not everyone can become an IT specialist – there are going to be some folks who just can’t compete so well. These are, at least temporarily, the most obvious losers from globalization, but as, theoretically at least, there are, thanks to better education and training, fewer and fewer of them, the services they have to offer become more expensive and they too can share (to some extent) in the more general prosperity.

The Bush plan, with more relaxed immigration rules and the creation of a gastarbeiter class, kicks away that ladder. That is why it is, in particular, a punch in the face of blue collar America.