There’s a two-word answer to Lou Dobbsism, defined as the terror that immigration and free trade are destroying the American middle class. One is “innovation.” And the second is “investment.”
[IMGCAP(1)]Innovation — the continued development of new products and techniques — has been and will be America’s opportunity to stay ahead of global competition. And innovation requires investment — in research, education and health care — to keep U.S. companies and workers competitive.
Three new tracts, by “New Democrat” economists Edward Gresser and Robert Shapiro, and by former Lockheed Martin CEO Norm Augustine, counter Dobbsian pessimism with the case for action to cope with globalization.
They forcefully argue that economic globalization is not only inevitable, but beneficial, both for the U.S. and developing countries — and that isolationism and protectionism are disastrous.
In fact, reducing trade with Latin American countries, including Mexico, likely will increase the number of poor workers who try to emigrate to the United States. And Latin American poverty will strengthen the anti-American appeal of Venezuelan dictator Hugo Chávez.
There’s no question that Dobbs’ daily rants on CNN against “amnesty” and “off-shoring” tap into public anxieties about the effects of a globalized economy and changing demographics.
Politicians are playing the game, too. Republicans, including most GOP presidential candidates, have picked up the anti-immigrant theme. They say it’s illegal immigration they’re against, but none of them is advocating increased legal immigration, either, even for scientists and highly skilled workers.
And Democrats increasingly have turned anti-free trade. As a prime example, Sen. Hillary Rodham Clinton (D-N.Y.), wife of the president who pushed through the North American Free Trade Agreement, the World Trade Organization and normal trade relations with China, now questions the whole basis of free trade.
She — along with other Democratic presidential candidates — has called for a “review” of NAFTA and a “time out” on new trade agreements.
And, in a Dec. 3 interview with the Financial Times, Clinton said she would take a “hard look” at reviving the stalled Doha Round of trade talks aimed at reducing trade barriers around the world.
She went so far as to question whether the theory of “comparative advantage” — the idea that everyone benefits when countries sell their best products and services to one another, the whole basis of post-World War II U.S. international economic policy — “may not be descriptive of the 21st century economy in which we find ourselves.”
Such political trends suggest, as New York Times columnist David Brooks wrote recently, that “Lou Dobbs is winning.” But there’s reason to hope he’s not — and won’t.
For one thing, it’s worth noting that Dobbs’ CNN show averages just 830,000 nightly viewers and ranks 16th in ratings for cable TV news and talk shows, according to Nielsen. That’s against 9 million each for NBC’s and ABC’s evening news programs.
For another, polls indicate that the public is not persuaded — yet — that this country needs to limit trade and/or close its borders to preserve its lifestyle.
A CNN poll in October showed the public evenly divided over whether foreign trade represents an “opportunity” or a “threat” to the country. A new German Marshall Fund survey shows that 60 percent of American still support “freer trade.”
On immigration, an ABC poll in September showed that while 67 percent of voters favor doing more to exclude illegal immigrants, 59 percent believe that legal immigrants help the country more than hurt and 58 percent favor allowing illegal immigrants to earn the right to stay in the U.S.
Beyond polls, the facts argue for much more confidence than the fear purveyed by Dobbs and other neo-populists, including columnist Pat Buchanan, anti-immigrationists like Rep. Tom Tancredo (R-Colo.) and trade doubters like Clinton.
The case for optimism — and action — to preserve American living standards is available in the three new tracts.
One is a book, “Freedom from Want,” by Gresser, a scholar at the “New Democrat” Progressive Policy Institute, who argues that Dobbs & Co. represent a throwback to 1920s Republicans who closed down immigration and raised tariffs, deepening the Great Depression all over the world, and also a repudiation of free-trade policies advanced by Democrats from Franklin Roosevelt through Bill Clinton.
The second is a paper, “The New Landscape of Globalization” by Shapiro, an economist with the New Democrat Network, who contends that “globalization is unequivocally good for the overall economy of the United States,” but puts downward pressure on workers’ wages that has to be answered by investment in training and education.
The third is a pamphlet by Augustine, “Is America Falling Off the Flat Earth?” which argues that unless this country improves its scientific education and research, “it is possible that our adult generation, for the first time in history, will leave their children and grandchildren a lower sustained standard of living than they themselves enjoyed.”
Gresser’s book, rich and accessible on the history of U.S. trade policy, demonstrates that the era of free trade — from the 1970s on — has been good for America, as has the period since Clinton pushed NAFTA through Congress in 1994.
Contrary to former presidential candidate Ross Perot’s charge that NAFTA would produce “a giant sucking sound” of U.S. jobs out of the country, average unemployment has fallen from 7.1 percent to 4.6 percent since 1993.
U.S. gross domestic product has grown from $7.5 trillion to $13.3 trillion, and the percent of GDP represented by manufacturing has grown from 12.9 percent to 13.6 percent. Even since normal trade relations were established with China in 2000, the value of U.S. manufacturing exports has risen from $666 billion to $853 billion.
Shapiro argues, though, that global competition has forced employers to cut costs drastically — and that workers’ wages have lagged far behind productivity gains. He calls for increased investment in worker training, especially in information technology.
And Augustine cites still-miserable international test scores in math and science to argue for upgrades in science education, federal investment in basic research and automatic awarding of visas to foreign-born Ph.D.s who stay in the United States.
The bottom line is that the United States cannot escape the globalized economy. We do need to ensure that other countries obey world trade laws, but mainly we need to improve our performance to maintain our position as the world’s most innovative country.