Post by account_disabled on Feb 20, 2024 3:33:22 GMT -5
Similarly, since the Covid-19 pandemic and the war in Ukraine, overly simplistic notions of shareholder “value” have been rethought. We have left behind the era when corporate leaders were only expected to raise stock prices and lower those of consumers. We now understand that stakeholders – from workers to communities to the public sector – must also be served. We see that “negative externalities”, such as environmental degradation or low labor standards, carry their own costs. That has forced a much deeper conversation about the true price of “cheap” goods and services. But these kinds of discoveries have not yet made their way into much of our thinking about global trade. Any questioning of free trade is still considered equivalent to a defense of protectionism. Tariffs are always bad. However, we rarely stop to consider the assumptions of the models we have relied on for decades to help us arrive at these supposed truths.
This is despite the fact that events of the last 20 years have increasingly challenged our basic preconceptions about how countries do or do not trade. In that sense, we must consider everything from the Job Function Email Database rise of state capitalism and mercantilist China, to the successful use of industrial policy by the East Asian “tiger” countries, to the fact that most agreements trade agreements signed in the last 30 years were less about removing cross-border restrictions and more about negotiating standards for workers, the environment, intellectual property, etc. In such negotiations, multinational corporations have had an enormous advantage relative to individual nation states and the workers within them. As Indian politician Rahul Gandhi recently put it, the West “created” modern China as the factory of the world, as American and European multinationals favored its “coercive” production model over that of other nations.
Capital prospered by outsourcing production globally, while workers in places with empty labor markets or polluted environments did not. These asymmetries are now prompting greater scrutiny of the models that policymakers have traditionally used to generate support for free trade agreements. Consider, for example, the general equilibrium models that economists use to analyze the impact of trade reform. They contain Panglossian assumptions about “full employment” and “costless change,” according to which a laid-off auto worker in Detroit, for example, can simply cross the street and find a new job at the same wage. Such models also do not take into account the tendency of capital to seek places with the lowest costs of production, or the broader economic and social effects of the hollowing out of communities.
This is despite the fact that events of the last 20 years have increasingly challenged our basic preconceptions about how countries do or do not trade. In that sense, we must consider everything from the Job Function Email Database rise of state capitalism and mercantilist China, to the successful use of industrial policy by the East Asian “tiger” countries, to the fact that most agreements trade agreements signed in the last 30 years were less about removing cross-border restrictions and more about negotiating standards for workers, the environment, intellectual property, etc. In such negotiations, multinational corporations have had an enormous advantage relative to individual nation states and the workers within them. As Indian politician Rahul Gandhi recently put it, the West “created” modern China as the factory of the world, as American and European multinationals favored its “coercive” production model over that of other nations.
Capital prospered by outsourcing production globally, while workers in places with empty labor markets or polluted environments did not. These asymmetries are now prompting greater scrutiny of the models that policymakers have traditionally used to generate support for free trade agreements. Consider, for example, the general equilibrium models that economists use to analyze the impact of trade reform. They contain Panglossian assumptions about “full employment” and “costless change,” according to which a laid-off auto worker in Detroit, for example, can simply cross the street and find a new job at the same wage. Such models also do not take into account the tendency of capital to seek places with the lowest costs of production, or the broader economic and social effects of the hollowing out of communities.