In Defense of Globalize/Grow/Give

I’m horribly late on this, but I’ve been thinking about Freddie’s post last month critiquing the “globalize-grow-give” model of social democracy, and there are a couple of problems with it which I thought were worth delving into.

The first has to do with the gap between the argument he makes about unions and the one he makes on trade. Freddie’s basic gripe with the liberal blogosphere seems to be a lack of respect and support for the American union movement. A lot of this, I think, has to do with the union movement’s rejection of free trade, which some liberal bloggers (myself very much included) see as a major moral failing. When hundreds of millions of people have escaped poverty over the past few decades due to Western countries importing their goods, it seems perverse to support a movement that pushes restrictions on those imports.

So Freddie disputes the underlying logic that free trade is leading to growth (and an ensuing decline in poverty) in developing countries:

There are often serious questions about the role of globalization in economic growth, although that free trade spurs growth is axiomatic in most political circles. In particular, some make the case that many of the strongest economic actors in the world, notably the Asian miracle economies of Japan and Korea but also most certainly the United States and Britain, grew through the protection of infant industries until those industries were capable of competing on the international stage, and only then was trade liberalized. This means that the dominant economies of the world are essentially asking third world economies to undertake trade policies that they themselves didn’t when it was to their advantage not to.

But think about what an international trade regime under a infant industry protection framework would look like. If we’re serious about giving developing countries’ industries a leg up, then developed countries should unilaterally get rid of all trade restrictions with developing countries, and developing countries should either subsidize their industries, restrict imports, or both. Whatever can be said about this approach on the merits, it’s the exact opposite of what unions in America want to have happen.

For the sake of illustration, imagine that Tanzania wants to get serious about exporting textiles. An infant industry approach would imply Tanzania should subsidize textile companies and block American textile imports, while the US should eliminate restrictions on importing Tanzanian textiles. This isn’t what Workers United wants at all! They want a trade regime that benefits US textile workers, which would presumably entail restricting imports from Tanzania and/or fighting Tanzanian subsidies and restrictions at the WTO.

So whether or not infant industry protection is better than straight-up liberalized trade for poor countries is irrelevant to whether the union position on trade is defensible. Unions representing workers in export-intensive industries in the US of necessity have to fight to screw over workers in poor countries that are attempting export-based growth. They’re unions; they have to look out for their members. That’s their prerogative, of course, but it’s also a perfectly good reason to not be so enthusiastic about the US union movement.

Of course, this could all change if the union movement accepts, as SEIU sometimes seems to, that the future of jobs in the US is going to be more in the service sector than manufacturing, and as a consequence stops fighting liberalized trade. I’d be thrilled if that happened. But I’m pretty sure Freddie wouldn’t be.

My second point is about this:

I have no doubt that the well-meaning and enthusiastic bloggers that support the globalize-grow-give model want only the best for workers, but wanting what’s best for others and allowing them to provide for their own needs are two separate things. The g/g/g model is inherently paternalistic…I do want to advance egalitarian ends; egalitarianism starts with equality of power.

To borrow a phrase from Amartya Sen’s critique of Rawls’ focus on “primary social goods”, this argument strikes me as fetishistic. Unless you’re Marlo Stanfield, pursuing power as an end in itself makes no sense. Power is only good if you use it for something. It’s not a political victory for AFL-CIO’s members if its membership and budget were to quadruple and it then didn’t spend anything on lobbying or political campaigns. It’d have more power, as it could (probably) change more legislation and win more elections if it wanted to, but what’s the point if it doesn’t use it? The equation of “worker power” with the power of unions is also problematic, given that individual members don’t always play a huge role in union decision-making, but let’s leave that aside for the time being.

Now, an instrumental case could be made that pursuing progressive domestic policies depends on the existence of a healthy union movement. Hacker and Pierson have a good deal of evidence for this, and I’m generally convinced. It’s not an accident that Western Europe and New Deal/Great Society-era America have/had far greater union density than the US does now. But this hinges on whether a growing union movement today would lead to a much stricter trade regime, such that growth in developing countries would slow down significantly. If the harm to the world’s poor abroad from such policies is large enough to overwhelm the benefits to America’s poor and middle class of a Scandinavia-level domestic welfare state, then it’s a bad deal overall.

As an empirical matter, I don’t think that would be the result of a healthier union movement. Sure, unions hate bilateral trade deals, but a lot of smart trade economists hate bilateral trade deals too, and the long-run economic growth of developing countries isn’t going to be threatened if the US negotiates and passes fewer of them. What would worry me more is if union-backed Democrats obstructed WTO rounds or even tried to pull out of the body, or if they got anti-Chinese tariffs passed, but really serious action on either of those strikes me as a stretch. Presidents want to make nice with other countries, generally, and so I don’t think even a union-backed Democratic president who ran on an anti-trade platform would be too keen on obstructing the WTO or antagonizing the world’s next superpower.

So I’ll take the bargain. I think the wrong turn on trade that would be generated by a stronger union movement would be mild and inconsequential enough that getting universal pre-K and child care, paid parental leave, an expanded earned income tax credit, much-too-late (by the time any of this would realistically happen) action on climate change, and so forth would be well worth it. But it really depends on the empirics. If a stronger union movement means 50% tariffs on all Chinese goods and confining much of the Chinese countryside to decades of unnecessary poverty, that’s bad no matter how many US workers are empowered in the process. So Freddie’s embrace of worker power for the sake of worker power, consequences be damned, strikes me as hard to defend.