Another recent article lambasting the impact of neoliberalism on globalization and the critical need to rethink trade policy. I agree with most of the points made in the recent article in the New York Times. We have many more issues to think about today than just economic efficiency and cheap imports. Such as national security, data protection, effective global taxation, sustainable supply chains, domestic employment. All without spurring a 1930’s protectionism.
This is the challenge in formulating trade policy today. Involving both new national laws and the role of the WTO and other international institutions. Especially those that formulate new rules and juridical dispute settlement.
The Trump administration started to attack the global trading system with tariffs and insults toward the WTO and others. The Biden administration has continued this attack in a somewhat less hysterical manner and supporting legislation codifying various measures impacting industrial policy.
Here are a few excerpts from this morning’s article:
- Global institutions like the International Monetary Fund and the World Bank and later organizations like the World Trade Organization — groups that were essentially about connecting global finance, trade and business across borders — were influenced by neoliberal philosophies.
- They vigorously advocated the Washington Consensus, a series of economic principles derived from the tent poles of market liberalization and unfettered globalization.
- The Reagan-Thatcher revolution unleashed global capital by deregulating the financial industry, and global trade was fully unleashed during the Clinton era, with deals like NAFTA and the eventual accession of China into the W.T.O., which tipped the balance of policy interests between domestic job creation and global market integration toward the latter.
- The neoliberal philosophy is tapped out not only in the United States but also abroad — witness the backlash in Britain to Prime Minister Liz Truss’s ill-fated experimentation with trickle-down tax cuts.
- And complex supply chains resulted in any number of production disasters well before the global crises of the past few years.
- Meanwhile, free trade itself, which was supposed to foster peace between nations, became a system to be gamed by mercantilist nations and state-run autocracies, resulting in deep political divides at home and abroad.
- Trade policy is shifting to better consider labor and environmental standards, with an understanding that cheap isn’t always cheap if products are degrading the environment or being made with a child’s tiny hands.
- There’s also a rethink of trade in digital services to account for privacy and liberal values.
- So what now? How can we make sure that economic globalization doesn’t again run too far ahead of national politics? And how can we fix things in a way that doesn’t result in 1930s-style protectionism or a false fit of nostalgia for a bygone era?
- It’s up to those who care about liberal democracy to craft a new system that better balances local and global interests.
“Globalism Failed to Deliver the Economy We Need.” (October 23, 2022).