Wednesday, March 28, 2007

Free Trade

From the Wall Street Journal

"Mr. Blinder's job-loss estimates in particular are electrifying Democratic candidates searching for ways to address angst about trade. "Alan, because of his stature, provided a degree of legitimacy to what many of us had come to feel anecdotally -- that the anxiety over outsourcing and offshoring was a far larger phenomenon than traditional economic analysis was showing," says Gene Sperling, an adviser to President Clinton and, now, to Hillary Clinton. Her rival, Barack Obama, spent an hour with Mr. Blinder earlier in this year.

Mr. Blinder's answer is not protectionism, a word he utters with the contempt that Cold Warriors reserved for communism. Rather, Mr. Blinder still believes the principle British economist David Ricardo introduced 200 years ago: Nations prosper by focusing on things they do best -- their "comparative advantage" -- and trading with other nations with different strengths. He accepts the economic logic that U.S. trade with large low-wage countries like India and China will make all of them richer -- eventually. He acknowledges that trade can create jobs in the U.S. and bolster productivity growth.

But he says the harm done when some lose jobs and others get them will be far more painful and disruptive than trade advocates acknowledge. He wants government to do far more for displaced workers than the few months of retraining it offers today. He thinks the U.S. education system must be revamped so it prepares workers for jobs that can't easily go overseas, and is contemplating changes to the tax code that would reward companies that produce jobs that stay in the U.S."

I think Blinder is right. We need to leverage our strengths in order to keep our standard of living high.

To do this we need to develop our technology and education systems. I have been terribly pained to see the cuts in education, at just the time we need to educate our population to keep stay ahead of the rest of the world. Education is a critical place to invest for the future. It is too bad we have squandered 500 billion in Iraq that we could have put into something that will benefit us for generations to come.

We also need to make ourselves very efficient economically. That means our use of energy and resources. We should be building infrastructure to allow people to work from home, and share ideas quickly.

We need to stop exporting capital. That is, we need to start saving and living within our means. A little pain now will pay dividends in the long term.

Finally, we need to stop pissing off the rest of the world. America used to be the place you wanted to come if you were the best and brightest in your country. We benefit a great deal from the talent that comes to our shores from Africa, India, China, and the Americas. To stop this flow of talent is just stupid, when we benefit so much. The damage that has been done in this area is profound. We need to reverse the trend and once again be a mecca for talent and ideas.

1 comment:

voyageur said...

That's kind of interesting, actually. A sort of middle view I haven't really heard.