The New York Times’ Thomas Edsall has been doing a terrific job of monitoring U.S. economic trends – especially in the labor markets – and of spotlighting the scholarly research that’s doing the most to keep clarifying the picture. He could do even better if he would take the next step and start recognizing the central role played by two decades of offshoring-happy trade policy decisions in pauperizing so much of the workforce and miring the U.S. and possibly world economies in a state of secular stagnation.
In his most recent article, evidence for focusing on trade policy as a wage-killer was staring him right in the face – albeit in the 31st paragraph. It came in the form of a 2013 Brookings study he cited reporting, “Our data yield one robust correlation: that declines in payroll shares are more severe in industries that face larger increases in competitive pressures from imports.” This accounts, the authors specified, for “3.3 percentage points of the 3.9 percentage-point decline in the U.S. payroll share over the past quarter century.”
That “payroll share” is American labor’s share of the country’s income. One study of course is hardly dispositive, but this figure is stunning nonetheless. For decades, it’s been a commonplace among economists that trade liberalization has been a best a minor contributor to America’s growing rich-poor gap (a different but closely related indicator). Now Brookings, which has long supported trade expansion, is publishing papers blaming it for the lion’s share of one measure of the typical U.S. workers’ plight. That’s a development worth at least much higher placement – if not a story in and of itself.
Edsall’s article, however, also made clear a likely reason for his failure to appreciate trade’s responsibility for wage lag, growing inequality, and the like: his portrayal of trade liberalization as a natural phenomenon that simply reflects historically unprecedented levels of foreign competition faced by U.S. workers. That heightened competition is all too real. But decisions in Washington and other governments have been central to determining its form – and which Americans would be the biggest winners and losers. Depicting the current version of globalization as a force of nature or an inevitable byproduct of technological advance and other forms of progress needlessly obscures the choices U.S. leaders have always had, not to mention the full-court-press lobbying campaigns by business’ offshoring lobby to shape them.
Even more important, since the state of globalization has resulted from human choices, it can be remade by these same choices. As a result here’s hoping Edsall – and other journalists – will start spending less time agonizing about (admittedly significant) abstractions like “the legitimacy of free-market capitalism” and more illuminating the concrete policy changes urgently needed to get the economy back on a productive, sustainable course.