The Brief
Get Up To SpeedGlobalization ushered in an era of free trade, fluid borders, and unparalleled corporate profits. For its proponents, the global integration of states and their economies was a political and economic win that created a wealth of opportunities for workers and consumers around the world. But in the United States, jobs are disappearing. From construction zones to clerical offices to coal mines, the American working class is losing ground. Is globalization to blame? Did the push toward global integration leave our most vulnerable populations behind, making them the losers of this grand experiment? Or is globalization being used as a scapegoat for a wider range of failed public policies and unprecedented advances in technology?
View Debate PageThea Lee
- President, Economic Policy Institute
Thea Lee argues that American workers have not benefited from the economics of the past four decades – and trade has been a key factor.
Thea Lee discusses President Trump’s free trade proposals.
In an interview, Thea Lee argues, “For too many decades there has been a mindset amongst elected officials and the corporate sector that our place in the global economy is to import and consume and to own the means of production that is located somewhere else so that our corporations make profits by moving production somewhere cheap … The problem with that business strategy is that at some point the American consumers aren’t wealthy anymore because you’ve taken all the good jobs away.”
Jared Bernstein
- Senior Fellow, Center on Budget and Policy Priorities & Former Chief Economist to Vice President Joe Biden
Jared Bernstein argues, “The real median annual earnings of men — and remember, these are guys that are solidly attached to the job market — have been essentially flat since the early 1970s.”
Jared Bernstein argues, “Many people in advanced economies believe they’ve been hurt by expanded trade with low-wage countries, and many of them are right about it.”
In light of President Trump’s tariffs, Jared Bernstein argues, “Not only do the winners fail to compensate those hurt by trade, they use their winnings to buy politicians and policies that consolidate their gains while further penalizing those left behind.”
Jared Bernstein argues, “It is now clear that globalisation’s cheerleaders did globalisation no favour by ignoring the losers.”
Jared Bernstein argues, “We should welcome the end of the era of F.T.A.s, which had long devolved into handshakes between corporate and investor interests on both sides of the border, allowing little voice for working people.”
Jared Bernstein details the perils of ignoring the effects of globalization on Americans.
Bernstein argued that current transfer programs, despite flaws, are accomplishing their intended goals and thus do not need to be replaced wholesale — which, in his view, would leave many people worse off.
The system tends to offer up minimum wage increases that it can absorb without distortions.
Analysis of the historical record shows that increasing the minimum wage has its intended effect of raising the earnings of low-wage workers who need the raise without harming their employment prospects.
Ive always thought the national minimum wage is a lot more important than most people tend to think.
Which helps low-income people the mostthe minimum wage or the Earned Income Tax Credit? Its a false choice. Together, these two programs balance the social cost of low-wage work between taxpayers and low-wage employers.
Jason Furman
- Former Chairman, Council of Economic Advisers
From its sophisticated inventory systems to its pricing innovations, Wal-Mart has blazed a path that numerous other retailers are now following, many of them vigorously competing with Wal-Mart.
"The U.S. should not waste any more of its negotiating capital on the $200 billion target. Instead, the talks should focus on more-legitimate complaints about China’s unfair practices. In many cases these can be solved by strengthening the hands of reformers, so China continues to take its rightful place as not just one of the world’s major producers but also as one of its leading consumers. The benefits would extend far beyond Beijing."
Jason Furman, former Council of Economic Advisors chairman, discusses how to score the domestic economy and President Trump's economic agenda one year into his administration.
"This decisive policy response helped the economy return to growth only six months after the President took office and made the United States among the first advanced economies to recover its pre-crisis output per capita."
Chapter 6 "STRENGTHENING THE FINANCIAL SYSTEM" from the The 2017 Economic Report of the President.
Jason Furman, Harvard Kennedy School professor and former Council of Economic Advisors chair, joins 'Squawk on the Street' to discuss what he sees the Fed doing right, and what he is concerned about
"Banking regulation naturally has a pro-cyclical bias. When times are good, there’s a de facto easing of standards, which exacerbates lending booms. Then when asset values crash and defaults proliferate, regulations become tougher to meet, which worsens credit crunches and recessions."
"The Federal Reserve has done an outstanding job fulfilling its dual mandate of maximum employment and price stability. To keep the economy in this happy Goldilocks position, the Fed should hold off on raising rates at its December meeting and consider incoming data before deciding when—or even whether—to resume tightening."
"The stimulus that started in 2008, was greatly expanded in 2009, and somewhat expanded and extended further in the several years thereafter, was an integral part of the overall macroeconomic response to the financial crisis. Absent these measures the recession would have been much deeper and more prolonged—potentially even more so than conventional models indicate because of the possibilities of self-fulfilling vicious cycles and persistent losses in output. This stimulus acted in a synergistic manner with monetary and financial policy, helping the U.S. economy fare better than many historical precedents and outperforming other countries in the wake of the Great Recession."
An interview between James Pethokoukis of American Enterprise Institute (AEI) and Jason Furman.
"The BEA should fix the presentation of these data before the next major recession. An easy statistical change is all the Trump administration needs to MAGA: Measure American Growth Accurately."
Jason Furman discusses income distribution and its effects on economic growth.
“The problem is not the number of jobs. Furman points out that the unemployment rate is 4 percent today. ‘One of the one of strongest laws of economics is that about 95 percent of people who want to work can work.’”
Jason Furman argues, “The increase in inequality partially reflects factors largely beyond our control, like changes in the nature of technology and the rewards it confers on skills. But it is also a function of poor policy choices—including the failure to adequately fund, staff and expand the education system, along with the dramatic decline in unionization and the real value of the minimum wage.”
Jason Furman argues, “A range of studies has found that Wal-Mart's prices are 8 percent to 39 percent below the prices of its competitors.”
Jason Furman argues, “The more level playing field created by our proposed trade agreements increases the returns to complementary policies designed to help expand the U.S. economy and benefit U.S. workers.”
President Obama’s chief economist argues that, with the right policies, artificial intelligence can be boon to the labor market, not a threat.
Replacing our current antipoverty programs with UBI would in any realistic design make the distribution of income worse, not better. (See page 8)
James Manyika
- Chairman and Director, McKinsey Global Institute
James Manyika argues, “Like the globalization of trade, digital globalization is not a zero-sum game. One country’s participation does not necessarily come at another’s expense … Now more than ever, it is time for countries to establish a framework that allows them to take advantage of the opportunities beyond their own borders.”
James Manyika argues, “Digital platforms are helping companies that deliver digital goods and services to enter new international markets without establishing a physical presence there. They also give millions of small and midsize businesses global exposure and an export infrastructure.”
James Manyika argues, “Just 15 years ago, cross-border digital flows were almost non-existent. Today, they exert a larger impact on global economic growth than traditional flows of goods, which developed over centuries.”
James Manyika argues that when it comes to jobs, automation is a big threat.
James Manyika argues, “While the impulse to erect trade barriers is understandable given the pain experienced by workers in a range of industries and communities in recent years, it is not the way to create lasting growth and shared prosperity.”
"When the economy is firing on all cylinders, income gains tend to be more broad-based and less easily concentrated."
"If the low economic growth of the past decade continues, the proportion of households in income segments with flat or falling incomes could rise as high as 70 to 80 percent over the next decade."
Conventional wisdom saysthat globalization has stalled. But although the global goods trade has flattened and cross-border capital flows have declined sharply since 2008, globalization is not heading into reverse."
Background
“In simple terms, globalization is the process by which people and goods move easily across borders. Principally, it's an economic concept – the integration of markets, trade and investments with few barriers to slow the flow of products and services between nations.”
“The U.S. working class—defined for this analysis as participants in the labor force with less than a four-year college degree—is more diverse than ever and growing more so."
“Eight-in-ten adults say increased outsourcing of jobs to other countries hurts American workers, and roughly the same share (77%) say having more foreign-made products sold in the U.S. has been harmful.”
A current look at economically distressed or ‘at risk’ communities in the United States.
The ten best (and ten worst) cities to pursue the American Dream.
For the Motion
“American wages were high in the 1960s and 1970s because of steady demand for unionized labor in Detroit and Allentown. Automation and globalization have destroyed many of those jobs, and the process is likely to continue.”
“In the United States, the big losers from the current wave of globalization have been working- and middle-class people.”
“Blaming technology is a common refrain from economists who hate the thought that globalization is not the world’s unambiguous salvation.”
“Their [the working class’s] wages have basically been falling or plateauing for 35 years, and their job stability has declined. The China shock was just another kick in the teeth for a group that had been in decline for a long, long time.”
“The ‘deep causes’ of the increase in white deaths, the economists argue in their paper, are the globalisation and automation that since the 1970s have hit working-class white Americans particularly hard.”
Against the Motion
“Trade protections and legislated wage supports will not only fail to protect the vulnerable; they will also inflict broader economic harm.”
“Adopting a relentless zero-sum approach to globalization would not just be harmful to the US economy but also have real and significant negative consequences for US workers.”
“Increasing absolute mobility will require us to boost economic growth through lower corporate income taxes, deregulation, deficit reduction, higher-skilled immigration, and revived entrepreneurship. The mistaken belief that living standards are falling will lead us to embrace counterproductive policies that will perversely reduce absolute mobility rates.”
“Despite what the rhetoric would have us believe, global manufacturing is trending in a positive direction for the U.S. Factory jobs are on the rise here, and many of these new jobs are coming back to North America from China, which is struggling to maintain its manufacturing capacity.”
“Given the United States’ generally low levels of tariffs on goods, a number of TPP countries already have access to the US market, and the TPP will be of little consequence for US manufacturing employment.”
“Donald J. Trump told workers … that he would bring back their jobs by clamping down on trade, offshoring and immigration. But economists say the bigger threat to their jobs has been something else: automation.”
“Our poor, the rich world poor, are only relatively poor by our standards, they're both absolutely and relatively rich by global and historical standards.”
President Trump's Tariffs
“Tariffs of 25% on cars and car parts, as Mr Trump apparently wants, would be disastrous for Canada’s and Mexico’s car industries, though American buyers of cars and parts would suffer too.”
“A number of U.S. metals companies are dismayed by the administration’s steel and aluminum tariffs and are pushing back against them ahead of the summit.”
“Economists Joseph Francois and Laura Baughman estimated last month that the tariffs would increase employment in the U.S. steel and aluminum industries by more than 26,000 jobs but also lead to the loss of 495,000 other jobs throughout the rest of the American economy.”
Offshoring & Outsourcing
“There are both moral and economic implications of offshoring and outsourcing, but they are distinct."
“Drawing on new and existing research focused on job movement and potential displacement in the U.S., the researchers indicated as many as 25 percent of American jobs could be offshored in the years ahead, at risk of replacement by foreign competition.”
“The old math no longer applies when it comes to where multinationals choose to open shop.”
Backlash to Globalization
“In short, the anti-globalization drive that is spreading across the Western world may be coming at exactly the wrong time — too late to do much to save the working-class jobs that were lost, but early enough to risk damaging the ability of rich nations to sell advanced goods and services to the rapidly expanding global middle class.”
“People in the rich countries would either have to accept lower wages to compete, or lose their jobs. But no matter what, the goods they formerly produced would now be imported, and be even cheaper.”
