Jeff Faux writes:
Dodging the Question | TPMCafe: Brad DeLong brings us the startling news that there are a lot of poor people in China, that the Chinese rich are not as wealthy as Bill Gates, and that incomes are up since the cultural revolution. Wow! Stop the presses!
What does this have to do with my proposition that we need social protections in the rules of globalization? Nothing. It is a red herring to divert discussion away from the ways in which the globalizing economy creates an upward redistribution of income, wealth and political power--and to stop the conversation about how to change that...
Jeff and I are clearly talking past each other. I think we live in a world in which the tremendous wave of globalization over the past two decades has produced enormous benefits for those members of China's urban working class lucky enough to get jobs in export-oriented industry and for those ex-peasants who have managed to move to China's coastal cities.
Jeff, by contrast, thinks we live in a different world: one in which "class solidarity among [transnational] educated elites and global movers and shakers" leads to "a business partnership between Chinese commissars who provide the cheap labor and American and other transnationals who provide the technology and financing... whose lobbyists in Washington provided access to the US market" which "undercut[s] the bargaining position of labor virtually everywhere," "effectively excluding ordinary people." Thus little "of the sacrificing by the American working class through out-sourcing to China trickles down to the poor Chinese workers" where "wages have been stagnant for most manufacturing workers there for the last decade."
In Jeff's world, American policies to restrict the growth of world trade don't hurt anyone worth worrying about: those whose standard of living falls if trade volumes stop growing or are rolled back are the "90 percent of Chinese citizens with more than US$128.2 million [who] are the children of senior officials"; those "at the top [where] China is a place of immense wealth... commissars turned capitalists [who] ride around Shanghai in a different Rolls every day"; those "Davos... apparatchiks dictate the rules to trade negotiators and high-level international bureaucrats... the government-business revolving door.... Robert Zoellick, who was George W. Bush’s, [who] now works at Goldman-Sachs.... Bush’s treasury secretary Henry Paulson (who came from Goldman Sachs, which is heavily invested in China) [who] tells us we have to be patient. Clinton’s treasury secretary Robert Rubin (also from Goldman Sachs, and now at Citigroup, also invested in China) [who] agrees..."
I don't think we live in that world.
I think we live in a world in which Chinese peasants and workers have not the same but very different interests than American manufacturing workers, who have very different interests from Americans consumers who work outside of manufacturing. I think I am the one who is grounded in reality.
In general, we have a choice between policies. We can eliminate or sharply restrict trade with an odious regime--as we do with Cuba--in the hope that it will put pressure on it for reform. We can encourage the maximum possible trade with an odious regime--as we do with China--in the hope that the more economic, cultural, and political contact there is the more we strengthen the forces over there that we like. Which of these policies we follow will have impacts on domestic income distribution--but much smaller impacts than do our educational, social insurance, and tax policies which do much, much more to move wealth and opportunity down or up the American income distribution.
I tend to be on the side of free trade abroad and social democracy at home. But I am not sure that I am right. I am sure, however, that painting the issues as Davos plutocrats (and their water carriers) and commissars-turned-capitalists on one side and America's working people on the other doesn't move us forward at all.