Some of the 2016 presidential candidates -- notably Donald Trump and Bernie Sanders -- make it sound like global trade is a bad thing. They talk about bringing jobs back to America and even forcing manufacturers like Apple to make their products in the United States.
In discussions with fellow liberals, I've questioned the wisdom of this negative attitude toward international trade.
I'll argue that while global trade agreements have caused some jobs to be lost in this country, overall international trade (a.k.a. "globalization") has been positive for the world as a whole. Many millions of people have been lifted out of abject poverty in Third World nations.
This is a story about clothing. It’s about the clothes we wear, the people who make them, and the impact the industry is having on our world. The price of clothing has been decreasing for decades, while the human and environmental costs have grown dramatically. The True Cost is a groundbreaking documentary film that pulls back the curtain on the untold story and asks us to consider, who really pays the price for our clothing?
Filmed in countries all over the world, from the brightest runways to the darkest slums, and featuring interviews with the world’s leading influencers including Stella McCartney, Livia Firth and Vandana Shiva, The True Cost is an unprecedented project that invites us on an eye opening journey around the world and into the lives of the many people and places behind our clothes.
There's a lot I could say about the movie, which touched me deeply. It was heartbreaking to see the working conditions in Bangladesh factories where clothes are made on the cheap. But I want to focus on one thing that wasn't spoken about in "The True Cost."
Reversing the globalization push that has led clothing manufacturers to make their wares in developing countries.
The filmmakers were critical of how cotton is grown with nasty chemicals, how factories mistreat their workers, how environmental pollution spews from unregulated clothing factories, how wasteful the "Fast Fashion" trend is, and such.
But there wasn't any mention of closing down the Third World factories and bringing clothing manufacturing jobs back to the United States. This ship has already sailed, by and large. It may adjust its course, but it isn't making a 180 degree turn in the opposite direction.
Yes, working conditions in developing world factories need to be much improved. The employees need to be paid more. Environmental regulations need to be made stricter. Global trade, though, isn't a bad thing.
This is the message in a Vox piece I came across today, "Free trade critics love to cite this economist. But he actually thinks trade is essential." It presents a nicely-balanced look at international trade.
Here's some excerpts:
Gordon Hanson is an economist at the University of California San Diego, and you'd expect him to be a fierce critic of free trade. He's a co-author of perhaps the most famous study showing the downside of trade for American workers, which concluded that exports from China in the 1990s and 2000s cost the US a huge number of manufacturing jobs.
Yet Hanson is anything but anti-trade. Those job losses, Hanson told me, were inevitable so long as rich countries were willing to trade with relatively poorer countries like China. Those poor countries needed trade, Hanson argues, in order to fuel the massive declines in extreme poverty we've seen since World War II.
"Exports were what allowed China to grow," Hanson told me. "We haven't seen poverty fall dramatically in any country that kept itself closed."
In other words, there was a trade-off: Rich countries lost a significant number of jobs, but poor countries gained enormously. What follows is a transcript of our conversation about why this had to be the case, edited for length and clarity.
[Following are Hanson quotes]
...We haven't seen a country that got rich, and we haven't seen poverty fall dramatically, in any country that kept itself closed. That openness is a necessary condition for development, [though] it’s not a sufficient condition.
[The export-driven growth story] was especially true in the countries that were particularly good in manufacturing, because those are the sectors where you're going to be employing lots and lots of labor. So as you engage the global economy, you're going to see this dramatic improvement in the standard of living. That was the story for East Asia. It’s also been mostly the story for Southeast Asia.
...The US, along with Europe, Japan, Canada, Australia, and other similar countries, built the global trading system through multiple rounds of negotiation for the General Agreement on Trade and Tariffs (GATT), which then morphed into the WTO in 1994. Countries that liberalized said, "Okay, we're now going to join the global community of trading nations." They could join the WTO and benefit from access to markets for all those other WTO members.
If you want to think about the aspects of the US trade policy that mattered most for poverty reduction, it was that component. The bilateral deals had been much less important, in part because we're making bilateral deals with countries that had already liberalized quite a bit. NAFTA mattered, but what the US did through the seven or eight rounds of GATT and WTO negotiations over 40 years mattered much, much more.
...I think the fair statement to make is that trade is a necessary but not sufficient condition for poverty reduction.
There are plenty of countries that have fully liberalized their markets and haven’t seen big reductions in poverty. I don't think economists would say, "Trade globalization is the magic bullet. You do this and you're going to see massive reduction in poverty in the country." The evidence just doesn’t support that.
I think the evidence also doesn’t support the idea that you can have massive reductions in poverty without globalization. We just haven't seen it.
I think we've come to realize that when you talk about development, trade policy is one of many changes that need to happen in a society to allow income growth to occur.