If you’re looking for a way clever way to support America’s disastrous free trade deals, and to pretend they’re not exclusively about letting corporations outsource jobs to countries where they can pay workers subsistence wages (at best), or to leverage the threat of such a move to reduce the wages of American workers and decimate unions, try this:
1. Gloss over the incredible damage these deals have done to American’s manufacturing sector, and the ongoing wrecking ball they’re applying to the working class, as an inevitable product of globalization.
2. Use selective research to assert the ridiculous position that deals like CAFTA, NAFTA, and PNTR are responsible for alleviating poverty in poor countries.
3. Appeal to liberal sympathies by posing the free trade question as an either/or proposition. As in, either you accept the hit to American workers and the disappearance of our national manufacturing sector, or you’re a shitty nationalist who wants to condemn millions of foreigners to starvation and death just so you can keep your HBO subscription and high-fructose corn syrup.
It’s not a bad strategy. If you ask the average American whether he or she would support an agreement that would help destroy our economy for speculative gains abroad, all while contributing to the plight of climate change by empowering the industrial sector in countries with no environmental protection, my educated guess is that most responses would be resoundingly negative.
But what if you performed the old free trade soft shoe, and framed the argument this way: “Aren’t you willing to sacrifice some American prosperity for the good of the global poor?”
In that case, you might be able to hoodwink a few well-meaning liberals who don’t quite understand the complex free trade issue, but who positively, definitely, emphatically don’t want those poor people overseas to starve. This argument is especially persuasive to the privileged upper class liberal, who prefers to care about the less fortunate from a safe distance.
Zack Beauchamp of Vox is the latest to propagate the free trade global savior myth in a recent feature called, “If you’re poor in another country, this is the scariest thing Bernie Sanders has said.” And holy shit, that title: The fear-mongering is strong right from the jump! I’m assuming that Vox’s audience mostly consists of people who are not poor and from another country, which means that the title is the vanguard of a written shame campaign directed at privileged Americans who may have found themselves persuaded by progressive rhetoric.
It only gets better from there. This is not a new argument, of course, but progressives are used to seeing it come from the mouths of conservatives who are trying to pretend that their support for free trade goes beyond simple greed. It’s more puzzling when the message comes from a less radical voice, so let’s investigate Beauchamp’s reasoning point-by-point to test its merit. His words in bold, my response after.
In a new interview with the New York Daily News, Bernie Sanders said something striking — he basically doesn’t think the US should be trading very much at all with countries where wages are much lower than its own.
“You have to have standards,” the senator said. “And what fair trade means to say that it is fair. It is roughly equivalent to the wages and environmental standards in the United States.”
First off, I want to thank Beauchamp for making his deception clear almost immediately. A more dishonest writer (or a more clever one) might try to disguise the agenda for longer than a paragraph, but Beauchamp follows his aggressive headline with this blatant mischaracterization. Here’s what Sanders actually said in that interview:
“I do believe in trade. But it has to be based on principles that are fair. So if you are in Vietnam, where the minimum wage is 65¢ an hour, or you’re in Malaysia, where many of the workers are indentured servants because their passports are taken away when they come into this country and are working in slave-like conditions, no, I’m not going to have American workers “competing” against you under those conditions. So you have to have standards. And what fair trade means to say that it is fair. It is roughly equivalent to the wages and environmental standards in the United States.”
Sanders is talking specifically about free trade agreements, not all trade. (#NotAllTrade?) So when Beauchamp writes that Sanders “basically doesn’t think the US should be trading very much at all with countries where wages are much lower,” it’s hard to call that anything but an outright lie. One way to distinguish free trade from other forms of trade is that free trade either diminishes or totally abolishes any form of protectionism between member countries. That’s why U.S. companies can outsource to places like Mexico or China or Costa Rica, pay workers pennies per hour, and export the goods back to America to sell cheaply without getting hit by the kind of tariff that might help protect American industry. It’s also why we get cheap electronics and other goods from places like China—companies in China pay workers so little due to a lack of labor laws (about one-tenth of a U.S. worker’s hourly wage for similar industries) that they can import those goods, sell them for less than an American company, and still make big bucks.
These are very basic examples, but you get the picture—free trade hurts American workers from all sides, while “fair trade” maintains protectionist policies. Sanders, when he talks about going back on deals like PNTR and NAFTA and CAFTA, always distinguishes between free trade and fair trade. Zack Beauchamp, over and over again, does not.
From Sanders’s point of view, this makes sense. He has recognized, correctly, that freer trade with countries like China has hurt a subset of American workers (while benefiting others).
Enjoy this, because you’re not going to get much more from Beauchamp about the disastrous effects of free trade in America. Since he won’t discuss it, I will, although to do it justice I’d need about 300,000 words. My boss might kill me if I gave in to that kind of self-indulgence, so instead, here are the broad strokes:
Despite the prediction of many economists that the U.S. wouldn’t be hit by severe job loss, and that workers who lost their jobs could simply relocate to greener pastures, what happened? Free trade led to massive job loss and decreased wages and increased poverty in manufacturing hot zones, and—imagine this—it wasn’t so easy for real people with actual families and responsibilities to just pack up and move somewhere better. According to an EPI study conducted in 2007—less than a decade into PNTR with China—the effects have been disastrous:
The rise in the U.S. trade deficit with China between 1997 and 2006 has displaced production that could have supported 2,166,000 U.S. jobs. Most of these jobs (1.8 million) have been lost since China entered the WTO in 2001. Between 1997 and 2001, growing trade deficits displaced an average of 101,000 jobs per year, or slightly more than the total employment in Manchester, New Hampshire. Since China entered the WTO in 2001, job losses increased to an average of 353,000 per year—more than the total employment in greater Akron, Ohio. Between 2001 and 2006, jobs were displaced in every state and the District of Columbia. Nearly three-quarters of the jobs displaced were in manufacturing industries. Simply put, the promised benefits of trade liberalization with China have been unfulfilled.
By 2012, that total had increased to 2.8 million lost jobs—1.9 million of them in manufacturing.
NAFTA has led to a $181 billion trade deficit with Mexico and Canada, as well as the loss of more than a million U.S. jobs and wage decreases in countless others, all of which has contributed to our staggering wealth inequality. Even those workers who were able to find new jobs experienced an average pay cut of 20 percent—and those were the lucky ones. Meanwhile, our manufacturing exports to Mexico and Canada actually slowed down, significantly, after NAFTA. That’s some great “free trade,” right?
Let’s leave it there for now—even though we could trace similar results from CAFTA and other free trade pacts—because this isn’t the central thesis of Beauchamp’s argument. It should be, probably, but if you’re a writer who supports free trade, you obviously don’t want to talk about the American work force. You want to talk, instead, about the glorious proletarian utopia free trade has brought about in poor foreign countries.
But there’s one big problem, according to development economists I spoke to: Limiting trade with low-wage countries as severely as Sanders wants to would hurt the very poorest people on Earth. A lot.
Free trade is one of the best tools we have for fighting extreme poverty. If Sanders wins, and is serious about implementing his trade agenda as outlined in the NYDN interview and elsewhere, he will impoverish millions of already-poor people.
First, I want to point out how funny that last formulation is: “He will impoverish millions of already-poor people.” Beauchamp didn’t mean it this way, of course, but it gets at the absurdity of his argument. These people Bernie is supposedly going to hurt are already poor, and guess why? Because free trade hasn’t done a damn thing for them. That’s why they’re “already-poor”! This bromide for global poverty that Beauchamp is going to spend the next thousand words defending has been shown not to work, and he admits it here! Brilliant.
But let’s get serious and tell the truth about the effects of U.S. free trade policies on impoverished countries in the developing world. We’ll answer Beuachamp’s web of nonsense in a moment, but it’s important to know the facts.
1. In Mexico, poor people have been epically screwed by NAFTA. Per the NYTimes, and many others, NAFTA has “cut a path of destruction” through the country, and the results have been staggeringly bad. Not only has growth gone stagnant, and not only have wages gone down as unemployment rises, but U.S. exports into Mexico have forced more than two million farmers to abandon their farms since 1994. There are 20 million Mexicans who now live in “food poverty,” inequality is sky-high, and pollution has poisoned the country’s rivers. And if you don’t think these societal ills have contributed to the thriving drug economy in Mexico, or sent waves of immigrants north to exacerbate an already problematic immigration situation, then you’re not paying attention. NAFTA is a knife that cuts both ways.
2. Elsewhere, there’s a serious “race to the bottom” phenomenon that is driving down wages in developing countries—and, worse, leading to meager enforcement of existing labor laws. If you were an American (or European, or Japanese, or whatever) company, and you wanted to outsource your factory to the country with the lowest wages, what would you do? In the absence of morals, you would play those countries against one another to see where you could pay workers the lowest wages. And that’s exactly what’s happening worldwide, which has predictably led to slave wages and sweatshops in places like Central America.
3. Even in the so-called “success story” countries, like China, Pakistan, or Thailand, workers rarely make much more than the equivalent of $2.00/hour (sometimes far less), which is nowhere near wages in the developed world, even when you factor in a reduced cost of living. These can only be said to lift people out of poverty by questionable World Bank standards, which put the “extreme poverty” line at around $2.00 per person per day. If a country’s average is $1.95 and it goes up to $2.05, it can be said that the country has been “lifted out of extreme poverty,” though the numbers show that the truth is less triumphant. If that’s truly what it means to escape poverty, ask yourself how you might fare on two dollars every day.
4. And by the way, many of these countries have ZERO legitimate environmental protection laws, which makes free trade one of the worst offenders in the climate change disaster.
Again, there are endless heaps of supporting evidence we could marshal for this argument, but the basic point is that in the best of cases, the benefits of American free trade on poor economies have been vastly overstated, and in the worst cases it has made things infinitely worse. Let’s see if Beauchamp bothers to mention any of that…
What’s worse is that the specific ways Sanders has proposed to roll back previous trade agreements could lead to serious reprisals from the affected countries. The nightmare scenario, experts say, is a global slide toward protectionism, wherein China and other countries take cues from the US and impose their own retaliatory tariffs. That would devastate economies in the developing world, dooming many more millions to a lifetime of crushing poverty.
Nothing yet. But I do want to analyze this paragraph for two reasons. First, that use of “experts say,” which is employed again and again by Beauchamp as a safety net for unsupported arguments. (And which, apparently, is one of Vox’s favorite tactics.) Sometimes, the names of these experts aren’t mentioned. Other times, he cherry-picks economists who seem to support the points he wants to make that rely on theoretical outcomes rather than hard data. There’s an economist in the world for just about every half-baked argument you want to make, so that tactic is the easiest thing a writer can do. It’s also the laziest.
Second, the use of the hypothetical doomsday scenario. “If free trade is repealed, here’s something that might happen.” Again and again, Beauchamp uses words like “could” and “might” to instigate fear in the reader, and occasionally he gets even more clever with formulations like “nightmare scenario.” These are all things that are possible, in the same way that it’s possible I’ll wake up tomorrow having turned into a talking microwave. But they’re untested and unproven—irrelevant forecasts plucked from various economists for their utility in gluing together a broken argument.
You know what’s not theoretical? The incredible damage done to U.S. and foreign economies by free trade.
What makes this issue particularly tricky, though, is that there’s real truth to Sanders’s critique: Recent economic research suggests that freer trade has hurt many Americans, particularly those who worked in manufacturing. The question, then, is how much we’re willing to hurt the world’s poor in order to help ourselves.
And now that either/or choice rears its ugly head: If you don’t support free trade, the implication is that you’re a horrid nationalist who only cares about American lives. We’re reaching a point of peak dishonesty here, and the liberal pandering follows close at hand.
Extreme poverty — defined by the World Bank as living on less than $1.90 a day — is crushing. It’s the kind of grinding poverty where you don’t get access to running water, adequate food, proper toilets, or basic health care. Wealthy countries like the US have (nearly) eradicated this kind of poverty. Thankfully, extreme poverty is in decline globally, with the biggest declines (roughly 800 million people’s worth since 1981) coming in China:
Here’s the problem for Sanders: The global decline in extreme poverty is inseparable from the global trading regime. When poor countries can sell cheap goods to rich countries, or bring in a lot of foreign direct investment, growth skyrockets. This means more jobs, better government services, and thus less poverty.
Again, we have to start with the fact that Beauchamp fails to distinguish between what he calls “global trading” and the narrower, more harmful breed of trading we call “free trade.” Bernie Sander is for “global trading,” just as any rational human being would be. Global trade is a reality, and it’s not going away—unless Donald Trump becomes president, walls off the entire country, and launches a round of pre-emptive nuclear strikes. Which is totally possible, but not very likely. In a more realistic future, global trade persists. It always will, and nobody opposes that.
Beauchamp is not conflating these two types of trade by accident. It’s a cute technique designed to lump free trade in with the positive benefits of a more general concept of trade. Yes, China has lifted many of its people out of poverty. No, that move is not inseparable from free trade. It’s very, very, very…separable.
Here’s the story with China: By reducing population growth, increasing industry, increasing social benefits, and enacting a critical series of rural reforms, the country brought a lot of its people past that threshold of extreme poverty. The biggest decrease, by far, came between the late ‘70s and 1985.
And just to put a very fine point on it, here is the World Bank’s conclusion from the end of that report:
No clear evidence that greater external trade openness brought rapid gains to the poor.
Let’s just state it plainly: Beauchamp’s attempt to credit China’s reduction in poverty to free trade is absolutely f***ing outrageous. In terms of serious scholarship, it is the equivalent of a toddler closing his eyes and loudly proclaiming that nobody can see him anymore.
Does Beauchamp go to the China well over and over? You bet!
China is, of course, the most dramatic example of this effect: Its incredible economic growth since 1981 came principally from exports. While the Chinese economy has since shifted away from exports somewhat, the sector still makes up 22.6 percent of Chinese GDP.
Trade with the US — the world’s largest economy — is a key part of that story of uplift. Any serious attempt by a Sanders administration to impede trade with China would put a serious crimp in Chinese economic growth, which is already slowing down. This would make it harder for the roughly 54 million Chinese people still living in extreme poverty to escape — and it could potentially could throw even more Chinese people into poverty.
Again, this is the CRUX of the dude’s argument! I get it, though—it’s pretty impossible to find supporting evidence when you’re trying to argue that free trade has somehow helped the poor in the developing world. You have to find something, but here’s an idea: Shouldn’t the thing you find not be totally made up?
Maybe that’s an extreme position on my end. Maybe we should be allowed to attribute effects that have nothing to do with free trade to…free trade. Maybe that’s how rhetoric and debate should work now.
See, for example, this 2008 study by UCLA economist Romain Wacziarg and Karen Horn Welch. Wacziarg and Welch looked at 50 years of trade data to figure out the effects of trade liberalization on economic growth. They found that, on average, economic growth increased by 1.5 points after a country passed laws opening up to foreign trade
Good point, because foreign trade and free trade are the same thing. Really can’t argue with this one, so—
DAMMIT! You got me, Beauchamp! You lumped them in so many times that I was lulled to sleep! You crafty old codger!
“If Sanders were to impose significant trade barriers with China,” Drezner says, “the marginal middle class, or the ones who had just gotten out of poverty, would likely wind up falling back into poverty.”
“China’s economy is already not doing as well as it was,” Charles Kenny, a senior fellow at the Center for Global Development, says. “Anything that slows down the growth of exports … is going to be bad for future reductions in Chinese poverty.”
Here’s the insane irony: You know why China’s economy isn’t doing as well as it once was? It’s due, in part, to increasing wealth inequality, which is among the world’s highest. Poverty hit eight percent in 2001, which was the year China joined the WTO and PNTR began with the U.S. Since then, inequality has increased at a higher rate than ever before, which has slowed the reduction of poverty, and some serious rural-urban disparities have emerged.
It’s a complicated issue with many causes, but guess what phenomenon has played a role in the recent struggles? You guessed it: Free trade! In other words, Beauchamp is using economic troubles in China to argue for the maintenance of free trade, when in fact free trade has helped spur those problems.
We can take a moment to laugh at that, right? I swear, if you gave this guy a rope and left him alone in an empty room, he would manage to hang himself before you walked out the door.
Canceling NAFTA and CAFTA would also be quite bad. While there’s not a lot of extreme poverty in Mexico and Central America, these countries are still far poorer than the US. Impeding free trade with those countries would prevent US dollars from flowing in, thus further impoverishing their poorest.
Waiting for Beauchamp to mention that NAFTA and CAFTA have aggravated poverty in those areas, badly, and not helped it.
(ten years pass)
(flying cars are invented)
(my beard now reaches the floor, my wife has left me, and outside my window zombies are marching down the street, and all I can hear is a chorus of moans as a cloud of ash floats over their heads, heralding the apocalyptic fires that are so near…so very, very near…)
Oh, looks like he probably won’t mention it.
“The proposals to end particular trade agreements — that could be devastating for Central America,” Elliott says. “If it meant going back to the trade barriers that we had in place a decade ago, that’s going to mean much less trade coming out of Central America to the United States, [and thus] many fewer jobs.”
What are they doing to do without those sweatshops? I hope they don’t do something drastic out of tragic economic desperation, like sending their children on a dangerous mission, alone, to try to escape extreme poverty and violence in the United States.
Even Dani Rodrik — a Harvard economist who called NAFTA a “huge disappointment” for Mexico in our conversation — thinks rolling back it and CAFTA would be a bad idea.
“It would make a big difference to how America’s partners in the world look at it, in terms of its credibility to be a leader,” he says. Asked about a major tariff on Chinese goods, he waxed apocalyptic.
Sounds a lot like the sunk-cost fallacy, right? Why don’t we re-start the Vietnam War, while we’re at it?
Beauchamp finishes by arguing that trade protectionism in the U.S. might lead to trade protectionism elsewhere, which might set off a second Great Depression—more “nightmare scenario” fear-mongering with very little supporting evidence. And again, general trade and free trade are conflated. He also manages to totally misunderstand Nordic trade, which includes the very kind of protectionism and industry-preserving policies that he rails against, even as he holds them up as a shining example. Mostly, though, he tries to paint Bernie Sander as an isolationist, which, of course, is not remotely true.
To conclude, Beauchamp reiterates his central point—if you support American labor, and oppose free trade, you’re condemning the global poor. But the facts are against him. Over and over, we have seen that free trade hurts poor people. It hurts them at home, and it hurts them abroad, and it’s managing to kill our planet at the same time. And if you support free trade, and have the gall to accuse its opponents of an anti-poor agenda, you’re either severely deluded, or you’re flat-out lying.