Prometheus 6

Let's be clear: It is not the protectionists of the AFL-CIO or CNN who are primarily to blame for the erosion of public support for trade in the United States, as bone-headed as they may be. The blame lies squarely with a business community that continues to support Republican politicians who refuse to raise the taxes and spend the money necessary to provide the economic safety net for American workers that a free-market economy has not, and will not, provide.

Much, much, MUCH more sensible.

Wave Goodbye to the Invisible Hand
By Steven Pearlstein
Friday, August 1, 2008; D01

Not so many years ago, respectable people seemed to agree where the world was headed. Communism had fallen to capitalism, and a particular strain of capitalism -- the entrepreneurial, market-driven capitalism found in the United States and Britain -- had proven itself superior to the more corporate and statist variety practiced in Japan and Western Europe. Free trade and the free flow of capital had lifted billions of people out of poverty, and further globalization seemed not only desirable but also inevitable. Here at home, there was talk of a permanent Republican majority dedicated to smaller government, lower taxes, freer trade and more deregulation.

It's always risky to call turns in history, but my guess is that this consensus is unraveling. Just as the Gilded Age gave way to the Progressive Era and the New Deal gave way to the post-war era of big government, big business and big labor, the current era of free-market capitalism seems to be giving way to something else.

To say that it is ending is not to suggest that it was misguided or illegitimate. It is merely to acknowledge that these eras tend to last a generation but not longer. Like the others, this one achieved what it could before taking things too far.

That is certainly the lesson that should be drawn from the final collapse this week of the latest round of global trade talks in Geneva. The internationalist community is already sputtering contemptuously about the triumph of mindless protectionism, and certainly there was some of that. But the larger truth may be that the social and economic costs of the next increment of globalization probably outweigh the benefits for many people, and that reality has now been reflected in the political marketplace.

For developing countries, there is still plenty more economic gain to be had from more fully exploiting existing trade treaties without having to open up their own uncompetitive industries to destabilizing competition. If anything, these countries have been growing too fast in recent years and need time to consolidate their gains and rebalance their economies.

Here in the United States, consumers have already realized most of the possible gains from importing different and cheaper goods -- any further liberalization won't help them much. But because the government has refused to deal, in any serious way, with the dislocation and economic insecurity that increased trade has spawned, too many lower-skilled workers have concluded, with reason, that they are the inevitable losers from globalization.