Selective Protectionism…Does It Help Poor People?
Ezra Klein notes that many “free traders” are perfectly happy to see free trade and mobility in inexpensive goods and in the jobs of those in the working class, but when it comes to expanding trade to include those middle class and professional jobs, we see some “selective protectionism”:
Dean Baker has long argued that there’s no such thing as free trade in this country. Rather, what we have is a trade regime that pushes the prices of manufactured goods down by encouraging competition for downscale jobs but keeps the prices of professionalized services high by protecting skilled industries. It’s essentially what you’d expect if you were Karl Marx and you were trying to figure out what a trade policy created by the economic elite would look like.
But today Dean Baker has a nice term for these folks that I’ve not heard before: What we’ve got, he says, are not “free traders,” but “selective protectionists.” And it’s true. Low wage jobs? Trade em, and stop being so sentimental. Law jobs? Protect ‘em. Software patents? Protect! Drug patents? Protect! Hell, you can’t even be president if you’re born outside this country. But just think how little a Chinese president would work for! And he’d probably put in longer hours, too.
First off, there are some problems with this analysis. We are starting to see professional jobs – software engineering, x-ray reading – that are already ending up in India. Rememeber Alan Blinder’s concern that 40 million jobs could be offshored? He notoriously started to raise concerns about offshoring and the like when he realized that middle class jobs could be departing for overseas. Or look at Dianne Feinstein, a bona fide free trader, who constantly pushes for letting more foreign high-tech workers come into the US.
But generally, Klein and Baker are right: we’re substantially more likely to increase labor, employment and financial mobility in those cases where professionals aren’t immediately worse off. What’s odd, however, is that where we have embraced trade full heartedly, it has greatly reduced the costs of consumption for poor people. It is generally the rich, or at least middle and upper middle class, who consume the products of those sectors that we haven’t liberalized as much. I would, of course, like to see full-spectrum liberalization
of all types of labor and less restrictive IP regulation, but it’s certainly possible that what trade liberalization we have seen, despite Klein describing it as the type of policy one would expect “if you were Karl Marx” could disproportionally be delivering gains to the poor…
