Has Trade Run Aground?
By Matthew Hennessey | October 24, 2007
As astonishing as it seems, globalization is playing better in Pretoria than in Peoria. Two recent surveys show Western attitudes toward global trade hardening even as the developing world is eager for more.
According to the Pew Research Center's Global Attitudes Project, support for globalization has dropped nearly 20 percent in the United States since 2002. Just 59 percent of Americans now voice support for free trade. Although that may seem like a lot, globalization enjoys near universal support in India, China, Southeast Asia, and parts of Africa.
More than 90 percent of the public in Senegal, Ivory Coast, and Kenya reported positive feelings about free trade. Eight in 10 Africans surveyed said they believed that trade was having a positive impact on their country's economic development. More than 80 percent of Slovakians, Bulgarians, and Czechs share that view. Ukrainian support is through the roof—91 percent in favor. In Latin America, support for globalization is somewhat milder, but still solidly positive.
The Pew numbers seem to challenge the notion that trade is a one-sided game that harms the developing world while enriching the West. Economists have long held that trade liberalization is a key first step toward economic growth for underdeveloped nations. This notion, vilified by globalization skeptics as a Trojan horse for exploitation of labor and resources, became an integral part of the so-called Washington Consensus reforms.
As John Williamson, Peterson Institute economist and coiner of the term Washington Consensus, said at the Center for Strategic and International Studies in November 2002, "Audiences the world over seem to believe that [the Washington Consensus] signifies a set of neoliberal policies that have been imposed on hapless countries by the Washington-based international financial institutions and have led them to crisis and misery. There are people who cannot utter the term without foaming at the mouth."
And yet, five years later, the developing world has grown bullish on globalization. Even in Hugo Chavez's Venezuela, nearly three-quarters of the population supports free trade.
The popularity of global free trade in the developing world stems from the average citizen's ability to see exactly how globalization is improving living conditions. In Bangladesh, for instance, foreign direct investment nearly tripled from 2000 to 2005. Bangladeshis are hard at work in new factories, and the goods they produce are gobbled up by huge trading partners like India. Small wonder that 90 percent of Bangladeshis think globalization is working out well.
When surveyed in 2002, only 52 percent of Jordanians agreed that trade was good for their country. Since implementation of the U.S.–Jordan Free Trade Agreement in 2001, however, Jordan's GDP has nearly doubled. No surprise then that 72 percent of Jordanians now hold globalization in high regard. Average folks are seeing their friends, families, and villages prosper as a result of free trade.
There are other significant findings in this report. For instance, there appears to be little support anywhere in the world for policies that promote economic growth at the expense of the environment. Only in Indonesia did a majority express the view that development should take precedence over environmental concerns. Also, majorities in 14 of 36 developing countries would choose prosperity over democracy for their country.
Meanwhile, a Wall Street Journal–NBC News poll found 6 in 10 Republicans agreeing with the statement that free trade has been bad for the United States. A similar number claimed willingness to support a presidential candidate who would toughen U.S. import policy. Democrats expressed a slightly more favorable view, but a majority agreed that free trade has done more harm than good.
These findings, viewed alongside the Pew numbers, are remarkable in that they confirm two old sawhorses about politics—namely that perceptions trump reality and all politics is local.
Poll results aside, globalization has been good for the United States. As former Labor Secretary Robert Reich recently told the Carnegie Council and Dartmouth economist Matthew Slaughter recently told Policy Innovations, globalization adds between $500 billion and $1 trillion to U.S. income annually. But that benefit is often spread out and therefore hard to see, coming in the form of lower prices on food, clothing, and items for everyday use.
What is driving rich countries to worry about globalization? To be sure, the economic profile of the American town and city has changed in the last 20 years as the forces of globalization have moved workers out of factories and into service industries. Outsourcing is a frequently voiced concern and opportunistic politicians from both parties have scored points by exploiting this fear. But the steady stream of Chinese product recalls and similar bad press hasn't helped.
In this environment, it's easy to see why Americans are souring on globalization. The benefits are disguised while the costs are highly visible. To the man on the street, it sure looks like a losing game.
The last great round of U.S. protectionism, the Smoot-Hawley era of the early 1930s, led to a 66 percent decline in world trade. More importantly, as the State Department's website notes, tariff barriers do "nothing to foster trust and cooperation among nations in either the political or economic realm during perilous era[s] in international relations." We are clearly on the edge of a perilous era in international relations, as the primacy of foreign policy on the campaign trail shows.
The leading Republican candidates for president may believe in free trade's benefits, but they may be forced to accomodate emerging protectionism among the party base. Hillary Clinton, the leading Democrat, is looking less and less like her free-trading husband, possibly triangulating with the more protectionist John Edwards. She recently opposed the U.S.–South Korea free trade pact.
If both parties start sounding the protectionist horn, it could have disastrous effects on U.S. income and economic growth worldwide. Americans should think carefully about what a world without globalization would look like. Like affordable clothes? Like your Toyota Prius? Like Starbucks coffee? Like your laptop? You may have to do without them in a post-globalization world. And who wants to break that news to the Bangladeshis?
An equitable distribution of the gains from trade should be of concern to participants in the global economy. But that conversation is moot in a protectionist climate. Let's hope the next occupant of the White House pursues a trade policy beneficial to more people rather than fewer.
|This article is licensed under a Creative Commons License.|