On trade, Bernie Sanders is usually portrayed as an arch-protectionist who, like Donald Trump, seeks to trash existing trade agreements and erect new walls against imports. The truth is much more complex. Of course, Sanders has faulted recent trade agreements, and the normalization of trade relations with China under the WTO, with leaving US workers highly vulnerable to import competition, suffering losses in jobs and income. But his solution to getting jobs and middle-class prosperity back to America is not focused on re-establishing barriers to imports; rather redistribution and rebuilding America's infrastructure are the main tools for enhancing the competitiveness of America and its workers. Indeed by emphasizing general redistributive programs and investment in infrastructure, and rejecting subsidies and incentives to businesses ("corporate welfare"), Sanders avoids the protectionism of picking winners and giving particular firms and industries a leg up, and here he follows more closely the prescriptions of liberal economics than Hillary Clinton, who is enamored of programs that supposedly serve public goals but do so by handouts to the private sector. Clinton's trade policy platform emphasizes on the one hand discriminatory and protectionist policies like "domestic sourcing", which-ironically-the United States has been challenging vigorously as violations of WTO rules, and on the other greater enforcement against other countries, presumably including more "fair trade" type remedies such as anti-dumping actions, which she suggests will bring competitiveness and jobs back to the US. While Sanders is often (and sometimes quite unfairly) criticized for lack of realism in his policies, Clinton's notion that punishing our trading partners with enforcement actions will help US workers is largely a pipe-dream.
Trade Agreements and American Jobs
Is it protectionist of Sanders to claim that American workers have been seriously hurt by trade agreements? At least since the NAFTA economists have been arguing about the effects of trade agreements on jobs, and some studies have shown serious negative effects. I'm not an economist, and I'm not going to wade into this deeply. An article earlier this month in the Economist provides a reasoned, up-to-date overview of the evidence from a publication that has historically been strongly on the free trade side of things. What's very clear is that the notion of significant job losses and greater inequality from trade liberalization, particularly following China's entry into the WTO, can't be dismissed any longer as populist rhetoric playing on people's ignorance of how the global economy really works. Many have challenged Sanders' figures as exaggerated, but the preponderance of competent economic analysis suggests that he is identifying and channeling a disturbing reality, not a protectionist myth. Moreover, as the Economist notes, trade-induced job losses, even where small in number, are "particularly painful" because of the difficulty for workers of finding new jobs of quality. Of course, the Economist also sensibly notes that trade alone is not a determinant of the problem, technology, education, and skills matter a lot. As they write "the economy is now an unwelcoming place for jobseekers without a university degree." It is arguable that Sanders' most important trade policy is making public colleges and universities accessible to all, free of charge. But we'll get to that.
Is opposing trade agreements like NAFTA or TPP anti-free trade?
In the current election discussions about trade, opponents of post-GATT trade agreements often get tarred with the brush of Donald Trump-like xenophobia. It is worth remembering that these agreements, while admittedly taking further the kind of tariff-cutting begun with the GATT, are not primarily about non-discriminatory free trade. They reflect neo-liberal ideas about optimal economic governance and public policy that have been, rightly challenged, both from the perspective of national sovereignty, but also from a more cosmopolitan point of view (particularly the protection of monopoly rents from intellectual property). Among the clearest explanations of the difference is to be found in Dani Rodrik's The Globalization Paradox: the "deep integration" to which post-GATT trade agreements seek is not really based in classic free trade theory but a more recent and more questionable (and questioned) economic orthodoxy. In a Guardian oped last year, Sanders displayed an understanding of this difference. While as always his main focus was on the fate of American workers, his critique of TPP was broader: it included turning a blind eye to slave labor in Malaysia, one of the world's worst offenders, and concerns about the effects of the intellectual property provisions on access to medicines in developing countries. This is not the place to debate the full costs and benefits of the TPP-Clinton opposes it too;the point is simply that one can be against such agreements and it doesn't mean that one stubbornly refuses to see the basic economic logic driving earlier arrangements like the GATT. I should add here that the issues of transparency and inclusiveness that Sanders sometimes raises-that these agreements have largely been negotiated in secret and bear the imprint of particular corporate lobbies in some of their features-are genuine ones (the case of intellectual property being perhaps the most egregious).The Obama Administration offered more transparency in negotiating a sensitive nuclear security deal with Iran than has been the case with recent trade agreements.
What Is to be Done?
In the past, as a legislator, Sanders has called for what might be considered radical, Trump-like solutions, such as the US withdrawing from the WTO. If one looks carefully at the explanations for these rather wild initiatives, Sanders almost tells you he knows they won't succeed but are intended to focus minds on the problems of these agreements, and to get Americans thinking about an alternative, more progressive trade policy. If we turn to Sanders' current platform on trade the way forward is very different than a crude repudiation of America's existing international commitments. While Sanders may attribute the problem of lost jobs to past trade agreements, his answer to keeping jobs in the US is primarily about rebuilding America's infrastructure, and other domestic policies. To my mind, this is fundamentally sound. Second, Sanders believes that "trade agreements can be successful"; new agreements on trade should be reoriented from neoliberal pro-corporate agendas to a progressive agenda, and emphasize real labor and environmental standards. Opportunities to renegotiate existing agreements should also be pursued. Here Sanders actually tracks the unanswered demands of many developing countries in the now defunct Doha Round, who insisted that a development round should rebalance and rewrite the Uruguay Round deal in a more development friendly way. Boosters of neoliberal globalization have often presented existing trade agreements as constitutional documents that can't be opened up and revised but can only be extended and supplemented by ever deeper integration in new agreements. That's nonsense. Imagine trade agreements of the future that put front and center combating climate change (for example limiting fossil fuel subsidies), tackling slave labor and human trafficking, or smuggling in endangered species? Boosters of neoliberal free trade will tell you all that is not really about trade. But of course it is just as much or more so as protecting monopoly rents of intellectual property holders or the interests of the financial industry through curbing policy instruments like capital controls. While Sanders sometimes appear to put in question whether normalized trade relations with China should continue, the emphasis of his platform suggests a new kind of relationship where cooperation on climate, other environmental and labor issues would be linked to our economic relations with China. That of course is bold, but it isn't unrealistic given China's own emerging challenges in these areas, including increasing labor unrest. When the US supported China's WTO membership, it was supporting in part the use of trade negotiations by China's leadership to advance one domestic reform agenda. Linking trade with some of China's greatest reform challenges today is at least equally sensible.
The Best Trade Policy for American Workers is Domestic Policy
The vulnerability and pain that American workers have felt from being exposed to globalization have a lot to do with being exposed without the tools to adjust to a new world of competitiveness. The best way of keeping our borders open to trade and defeating the xenophobic demagoguery of Donald Trump is to restore the ability and the confidence of American workers to thrive in a changing dynamic world economy. A single-payer health care system, where health insurance is no longer tied to a job, and above all, making a college diploma the new normal for opening the doors of the labor market, are policies designed to do just that. Sanders' infrastructure plan will make America a more attractive place to invest, while helping to put the unemployed to work, giving them a chance to re-skill and and the psychological boost that comes from the dignity of a real job. To return to the Economist article discussed above, there is no single factor that sets apart American workers who can withstand and thrive on the challenges of globalization than college education. The numbers are dramatic, indeed astounding. This is why for me Sander's plan of universal accessibility to public colleges and universities is the best trade policy of any candidate in this election-by far.
The Hillary Clinton Alternative
Now, by way of comparison, we should turn to Hillary Clinton's platform on trade. But first a general observation on how Sanders has been presented in relation to Clinton on global issues. The typical view, exemplified by this Brookings piece, is that Clinton is an active globalist while Sanders is an isolationist who seeks to separate America from the world. Not so. In Clinton's platform, foreign policy is essentially covered by "national security." There's little role for global cooperation, except where military or other threats are involved. One notable and laudable exception is women's rights where Clinton does give prominence to the global dimension. As for general human rights, that's tellingly buried under "National Security", as if it were little more than a pretext for US military intervention. On climate, she seems to think that after the Paris deal the international piece has been done, and addressing climate change going forward is just about domestic policies (apart from some cooperation with Canada and Mexico, where Obama has already taken the lead, and bullying China:see below). One searches in vain in Clinton's platform for any general positive statement of the need for global engagement beyond the security context. In Latin America, she sees US partnerships as based upon the countries concerned being committed to "free markets" American style-that's not openness to others, it's old-style US economic imperialism in the region. Instead of cooperating with China on climate issues, which is what Sanders proposes, Clinton sees the US role as disciplinarian,territorial disputes and cyberspace being lumped in with climate as areas where the US needs to keep China in line. Sanders' platform on "war and peace" emphasizes diplomatic engagement, not unilateralism and isolationism. Whether its terrorism or other issues defined by Clinton as "national security", Sanders stresses the limits of what can be done with guns and jails and importance of a broader focus for global cooperation.
Now let's look at what Clinton has to say specifically about trade and jobs.The platform has 2 main planks: 1) protectionist policies such as "domestic sourcing" and "Buy American"; 2) greatly enhanced enforcement of trade rules against other countries. While Sanders is often attacked (quite unfairly) for poorly worked out policy ideas, Clinton's championing of "domestic sourcing" as a way of keeping jobs in America could take the prize for that. There is not a word of explanation of how this policy can overcome the inconvenient reality that "domestic sourcing" is one of the clearest violations of WTO rules (and indeed also other trade agreements like NAFTA). Indeed, the Obama Administration has been aggressively attacking at the WTO domestic content policies of other countries in the renewable energy area, most recently India; India has already indicated it will respond by challenging existing state-level domestic sourcing rules. In the circumstances, Clinton's suggestion that ramping up these protectionist policies is a feasible means of saving or re-gaining jobs in the US appears utterly unrealistic.
What about enforcement of existing trade rules against other countries? Clinton suggests that we triple the number of enforcement officers and create a prosecutor in chief for international trade violations. This notion is almost comical. It's a kind of absurd extension of Clinton's military intervention mindset to international trade-if only we have enough firepower targeted at other countries, we will make the rules of the game work for American labor. Is there any evidence that the US is sub-optimally "enforcing" trade rules now? As for China, in a path-breaking paper that will be published in the Harvard Journal of International Law, Harvard professor Mark Wu shows how the idea that China can be effectively disciplined under WTO rules is a chimera-the non-transparent hard to identify links between government and bureaucratic, and private sector decision-making simply defy the architecture of WTO disciplines that generally depend on being able to clearly identify and trace to a government decision the offending measures.The limits of what the US can and should do on "enforcement" are set by having to play by WTO norms in areas like dumping and countervailing duties, and also concern that aggressive enforcement will result in a strong reaction by the targeted countries, including more challenges to US policies. Even if we do end up slapping more retaliatory duties on imports, are workers likely to benefit? Corporations can take advantage of these trade barriers to give shareholders a break while all along continuing to outsource and replace workers with technology.
When it comes to jobs policy and general economic policy, Clinton prefers handouts to corporations to general redistributive programs.Almost every idea she has whether about infrastructure or re-training or investment involves "crony capitalism", such as the private/public infrastructure bank that she proposes, and the multiple tax incentives, "rewards", subsidies to firms that she proposes in order to get them to behave in a way that is positive for workers and the economy. Few of these proposals are worked out in any detail, but if they were ever realized they would likely give our trading partners a field day challenging them under the WTO Subsidies and Countervailing Measures Agreement, or simply countervailing them directly. One of my favorites is a plan to relieve companies from workers' wage demands by providing a 15% tax credit to allow them to pay non-salary amounts to employees based on share profits.In the guise of better compensating workers, Clinton actually proposes to have the taxpayers help companies that are making significant profits contain their labor costs!
But Isn't Bernie A Socialist?
As just indicated, it is Clinton's not Sanders' jobs and industrial policies that most resemble the kind of "state capitalism" that many people associate with negative features of "socialism"-whereas Sanders emphasizes general redistributive programs that provide workers with the tools to compete rather than picking winners and rewarding favorites among firms and industries. But I close on a historical note. It isn't widely known but one of the GATT's chief architects was a socialist (some said communist) the French-Russian philosopher Alexandre Kojeve, who was chair of the GATT's legal drafting sub-committee. In the 1950s, Kojeve wrote to his friend Leo Strauss that the battle between socialism and capitalism would be resolved either by socialism reforming itself in a capitalist direction or the capitalists saving themselves from the consequences of their own excesses through adopting some of the socialist ideas. Kojeve saw that while socialism would not be able to adapt, capitalism already was doing so by embracing a social welfare state, wage laws, worker protections etc. that would allow workers to afford to buy the products that they were making, and share in the gains of increased productivity and growth. Periodically, a dose of social democratic redistribution is needed to save capitalism from itself; this is the kind of socialism that Bernie Sanders offers, one that isn't ideologically triumphalist but offers the possibility of another "New Deal" as the outcome of the suffering and anger that so much of America has felt over the last decade. If Democrats do not take this offer, they are apt to learn that this suffering and anger will find darker, more dangerous outlets, ones truly destructive of openness, tolerance and the other goods that liberals at least since Montesquieu have associated with freer commerce.
