Anyone here familiar with that argument?
I’ve read Buchanan’s arguments but in the light of what’s happening to the US economy, I don’t see how his doom and gloom makes sense.
Consider what happened in 2007 even in the midst of globalization ( source : American Enterprise Institute) :
The US trade deficit declined. As our trading partners become wealthier, they demand more of our products. At the same time, the weaker dollar has made U.S. exports cheaper. Exports have boomed, and the real trade deficit has narrowed, from $624.4 billion in 2006 to an estimated $562.4 billion in 2007.
Even in the face of the housing-market bust, economic growth was solid. If someone told me last December that construction of single-family homes would drop in 2007 by 27 percent, about the current estimate from Economy.com, then I would have expected the economy to be in recession. But a collapse of that scale did occur, and annual GDP growth, according to the latest Economy.com estimate, was about 2.5 percent. There are plenty of developed countries that would take that type of growth every year.
Job creation was robust. According to the latest jobs report, which covers data through November, the U.S. economy added 1.3 million jobs on net in 2007. The unemployment rate was 4.6 percent in January, and finished the year a smidgen higher at 4.7 percent. Both levels are very low by historical standards.
AND TO TOP IT ALL :
Households are wealthier. In part because of rising equity markets, household net worth increased in 2007, according to the latest numbers from the Federal Reserve. At the start of the year, net worth was $56.1 trillion. By the third quarter, this climbed to $58.6 trillion and probably rose again in the fourth quarter. If changes in wealth affect the economy through consumption, then the affect will be favorable.
Of course there will be winners and losers in globalization just as there will be in any capitalistic system. Hey, thousands of switchboard operators became redundant with the advent of computerized switching, the Pony Express became obsolete with the advent of the railway and cars. Surely Buchananites aren’t suggesting that we stop inventing new technology because it would displace thousands of workers are they ??
What we’re looking at is ON THE AGGREGATE -— Globalization has been good for BOTH America and the rest of the developing world ( even when there are inevitably going to be displaced workers who will be affected ).
You mean trade barriers like the Smoot-Hawley amendment of 1930 that exacerbated The Great Depression? Barriers and tariffs designed to help small segments of a nation's work force usually end up hurting the country at large.
Pat and others try to compare today to the Post WW 2 era.
At that time, the US held the competitive edge in manufacturing and had plenty of cheap oil. Under those conditions, multi-lateral foreign trade was the policy.
As the US lost its competitive edge to an industrializing world, and rising, imported energy costs, trade policy changed from only multi-lateral to include bi-lateral and regional. To trading in our own back yard. To trading with undeveloped nations.