GregsOpinion.com

oy vey!

I think you guys need to stop dealing with trade on the purely theoretical level. Even George Stiglitz and Paul Krugman have endorsed controls on capital flight to deal with problems that David Ricardo couldn't have predicted.

This hedging reflects the clash between economic ideas developed in the early 19th century and the realities of the modern world. Consider: does Matt feel we should adopt unrestricted immigration, as the US did between 1880 and 1920? If not, why not? The answer is that transportation has gotten too fast and too cheap.

For me, the best comparison is the emergence of federal economic regulation during the Progressive Era. When transportation costs plummeted after 1870, and firms became too big for states to handle, people saw a need for some sort of national control.

Globalization presents us with the same problems, and it creates the need for new governing institutions (such as the WTO and EU). Rather than succumbing to protectionism, the US needs to create international institutions to govern fair trade, bar forced labor, and encourage democracy. In this sense, Greg, trade offers Democrats a way of linking economic justice to democratization and development.

Remember: we need to channel popular anger about globalization into real reforms rather than forcing a reluctant population to accept free trade. Otherwise, we're just policy wonks, not viable reform politicians.

Fine, but can I just settle on "viable reform policy wonk" as a matter of personal preference?

Sure. And you can call me a "reform politician wannabe."

My point is that it's ok to have doubts about free market globalization, and it's smart to for Dems to address popular angst. In his book, Stiglitz admits that economists don't know everything. Free trade, structural adjustment, and the bulk of neoliberalism are experimental.

AWC,

Didn't Kerry talk about this during the campaign? If so, how is your solution different than his? Did he just muffle a solution or did the public ignore it during the election?

EG--

I haven't read Kerry's position papers, but his speeches focused on "Benedict Arnold corporations" that move their operations to Grand Cayman. He mau-maued a bit on outsourcing, but refused to attack NAFTA, which might have won him many votes in Ohio.

I believe Kerry was restrained by his desire to maintain the support of the Rubin-ites, as well as by a principled belief in free trade. I believe it was an honorable political mistake, one his opponent would not have made.

For the future, I think Dems need to take economic nationism seriously, but to channel it into something much bigger and more productive.

I'm not expert, but my zany scheme is a North American/ Caribbean Maastrict treaty. It sounds crazy, but think of the political possibilities. But committing to development, you appeal to Latinos. By strengthening international labor standards, you appeal to white workers. By establishing terms upon which free trade with poorer nations can occur-- democracy, debt, GDP, etc.-- trade becomes a tool of government rather than of multinationals. We need to give the people some control over random economic forces rather than abdicating to the market.

I think you guys need to stop dealing with trade on the purely theoretical level. Even George Stiglitz and Paul Krugman have endorsed controls on capital flight to deal with problems that David Ricardo couldn't have predicted.

International capital mobility and international trade in goods/services are two entirely different animals -- you can have one without the other. Ricardo was focusing purely on the trade side, though his conclusions are effectively independent of whether capital is internationally mobile or not.

Funny, nobody thought of those policies as distinct until the Asian flu of the 1990s. Before that, capital mobility, free trade, structural adjustment, privatization, and free floating currency were all part of the neoliberal edifice. Now that developing nations have raised real questions about capital flight, it's an "entirely different animal" from free trade.

My point is that economists are not infallible, any more than doctors or physicists. It's a complex field, and I find the best economists are more open to their own limits than many commentators, whose economics education ended at 22 years old.