The Washington Post’s Zachary Goldfarb deserves lot of credit for, if not debunking a popular myth, at least illuminating the difficulties of reaching clear cut conclusions. What a shame, though, that in the process, he wound up perpetuating another myth – and one that’s not only widespread but nothing less than pernicious.
The myth Goldfarb dissected concerned whether or not income inequality in America has increased under President Obama – a key issue not least because the president says he’s deeply committed to narrowing the rich-poor gap. Among the services Goldfarb’s article provided was reminding readers that although some of the forces affecting inequality (like tax policy) can be controlled or influenced significantly by presidents (and Congresses), others are largely beyond the reach of policymakers (like technological advance, and financial crises that began before one’s term in office).
The myth Goldfarb perpetuated? That globalization falls into the latter category, and is best seen as one of the “market forces” that will “continue to widen inequality” — but that will also eventually by definition deliver the best possible results for the nation and for the entire world. Although at one point, Goldfarb allows that presidents can “influence” globalization through “trade standards,” he consigns this possibility to de facto irrelevance by insisting that any policy changes “will operate with a huge lag.”
But there are at least two problems with this point of view. First, if by “trade standards,” Goldfarb means the worker rights and environmental requirements that have dominated media trade policy debates for so long, these don’t even begin to describe the levers Washington – and the nation’s most important economic interests – can use to shape trade flows. Trade agreements and related policy decisions regularly encompass nearly each and every economic issue contested in the domestic policy arena, along with many that aren’t – like currency manipulation. Moreover, trade policy battles are waged both domestically – among various industries and other interest groups – and internationally.
And anyone doubting that these struggles matters greatly both for the relative fortunes of different industries, and for major power relationships that shape the entire economy, wasn’t following the great legislative and lobbying trade battles of the 1990s. Multinational businesses in particular lobbied lavishly to push through the North American Free Trade Agreement and expanded trade with China in particular precisely because victory meant domination over smaller businesses (like suppliers) and over their own employees.
Meanwhile, Goldfarb’s contention that trade policy changes can only affect inequality patterns slowly overlooks how long America’s approach to the global economy has been in place, and how faithfully President Obama has continued to follow it for the past six years.
Americans can legitimately disagree over whether U.S. trade flows have widened or narrowed the country’s rich-poor gap, over how important the effect has been, and over how long trade trends take to produce whatever influence they have. What should no longer be remotely controversial is that these flows have reflected deliberate policy decisions at least as much as the natural evolution of the U.S. and world economies. As a result, contrary to what’s constantly repeated by the trade policy status quo’s supporters, U.S. leaders are anything but helpless to ensure that they advance dramatically different priorities.