New(ish) intelligence on trade
When Congress is in recess, it's always a good time to catch up on some of the academic and think-tank writings on globalization. Hey, it's definitely more interesting than the horse-race among the 2008 candidates for president, now in it's second year.
- Bruce Campbell of the Canadian Centre for Policy Alternatives takes a look at the corporations operating in Canada that pushed for the Canada-U.S. FTA in 1988, which paved the way for NAFTA in 1993. (Here in the U.S., the Canada FTA counted among its supporters: John McCain (and Biden and Dodd), and had among its opponents Duncan Hunter and Bill Richardson (in a rare fair trade vote).) Campbell finds that, despite the promises of these companies at the time, they have actually reduced their number of employees by 20 percent, while increasing revenues by nearly 130 percent. (CEOs have also seen their pay relative to workers more than double since 1988, during which time workers' wages have not budged in inflation adjusted terms.
- Ann Helwege and Melissa Birch from the Global Development and Environment Institute at Tufts University take a look at Latin America under neoliberalism, and find that the claims that poverty has been reduced are highly suspect. Namely, once you exclude Mexico and pre-96 Brazil (and even these are contested), most major economies in Latin America have seen rising or stagnant poverty. Moreover, as they point out, no one should be getting a cookie for modest poverty reduction even where it may have occurred: the lives of folks making $2.01 a day versus those making $1.99 a day are broadly comparable and desperate, even though $2.01 is considered above the poverty line. Moreover, if income is increasing (which it nearly always does), we ought to see poverty decline. The rate of improvement is what matters. In some of these cases where poverty has actually increased (in some cases while income has increased), we have a major problem.
- Josh Bivens at the Economic Policy Institute summarizes some of his recent work looking at claims of benefits from trade from major trade boosters, and finds them sorely wanting. The point made by Josh and in related work is that, if we're going to pursue a trade policy that contributes to massive stagnation of incomes of the majority, the chattering classes should at least expect to see a massive increase in national income. As Josh shows, a high growth figure from trade is questionable. So on both normative and positive analytical grounds, the status quo is pretty unattractive.
- Nancy Birdsall at the Center for Global Development does a fairly comprehensive mainstream literature review for the case that high levels of inequality can actually hinder growth, primarily through creating or interacting with failed markets and institutions.