Principle over Personality, Part II. The case for a liberal approach to the issues of globalization, trade and immigration.

This is Part II, the second article in which my hope is to frame the election not as a contest of personalities, but rather with recourse to the differing political philosophies, progressive versus conservative, which underlie the platform and vision of the two parties and candidates.

Between these two personalities of the candidates, and the baggage that each brings, from the constant reminders of email controversies, allegations of sexual predation, the inflammatory rhetoric and insults, discussions of temperament and the like, so much attention has been directed at two individuals and the issues of their personae, that almost completely lost has been any awareness of the two governing principles being contrasted. Ultimately, while the personal peccadillos of the candidate are of key importance, no less so is their approach to governance.

In Part One of this article I argued that a progressive, “liberal”, center left approach to government, at the present time, was most likely to solve the overall threats to our society, and world.

In this, Part Two, I would like to drill down to the issues which seems (when any issues are discussed at all) to get the most attention. That is globalization, trade, immigration – basically our relationship to the outside world and how it effects our overall economy, our employment picture, and how the benefits of the last seven years of recovery have been distributed, or rather not distributed throughout our society.

I will try to research the benefits and detriments of so-called globalization, whether it is inherently harmful to our overall economy and also to the middle and working class, and whether the damage done, if any, can be corrected by different trade policies and barriers to illegal immigration. It is worth considering whether, regardless of the personalities involved, liberal policies would be more helpful in alleviating and addressing the distress caused by globalization, or whether conservative policies would be better. I will argue for the former.

I am aware that at this stage of the game, the election may come down primarily to personality, whether the number of people who view Hillary as a cheat and liar outnumbers those who think Donald is a megalomaniacal fascist and sexual predator. Perhaps that is the nature of elections in this day. Still I think some consideration of the political principles which ultimately inform the two camps is worthwhile, and I hope I can draw distinctions which a reader might find useful.

Globalization and the differential effects on different segments of the work force

It would be pointless to argue that “globalization” has been of universal benefit. It has been of mixed blessing and detriment. Even experts who have advocated for increased globalization argue, that globalization has failed to live up to its potential” to bring benefits to both the developing and developed world.

On one hand, economic analysis shows a beneficial effect of globalization on overall growth.

Some economists have a positive outlook regarding the net effects of globalization on economic growth, citing variables such as trade, flow of capital, GDP per capita and direct investment. However the largest effect has been in the transfer of wealth to well-educated and technically skilled segments of the economy. For those not at the top, however, the benefits have been considerably less. It has been noted that

“as labor-intensive industries move to developing nations, demand for labor in the United States decreases, thus reducing wages for non-college educated workers. At the same time, globalization increases demand in the United States for professionals, skilled labor and capital, thereby increasing incomes for college-educated workers and widening the gap between the rich and poor.”

The need to compete with workers in poor countries leads to decreased wages for non-college educated workers. Certain domestic industries, ranging from consumer electronics to textiles are “endangered due to comparative advantages of other countries” Further, growth in competition which inevitably follows growth in trade leads to domestic companies having to down-size to improve efficiency and increase profits. (Labourec

It is interesting that globalization has also lead to a worsening of the position of unskilled relative to skilled labor in developing markets.

Stiglitz, an economist known for his concern over growing inequality, argues that this is because special interests have constructed the rules to benefit themselves and that has lead to the detriments to those not so happily connected. He was referring primarily to the growing imbalance between rich and poor, industrialized north versus developing southern global economies, however the success of Donald Trump’s candidacy in bringing out real passion, real anger over this issue is clear evidence that such disparities exist in out developed country as well.

Donald Trump’s answer to the adverse affects of globalization on lower economic sector wages is to institute a form of trade protectionism. While this may have short-term benefits, in the long run it lowers general competitiveness and weakens overall world growth, as it was said to do in the great depression and lead up to the Second World War. At that time short term and temporary gains in local employment were ultimately followed by longer-term decrements in trade, productivity, and prolongation of depression. Isolation of American products from international competition has not been shown to increase, in the long run, the competitiveness of American industry, as was demonstrated by the growth of Japanese presence in the car industry at a time when American’s rested on an increasingly non-competitive standard.

There are real questions about whether, for example, NAFTA had a net benefit or gain. One recent Wharton school of business analysis concludes that, while there have been a net loss of some jobs, automotive jobs, for example, from the United States there are certainly gains for North America, and that had there not been a NAFTA, most of the jobs that have gone to Mexico would have gone to China. Interestingly enough, the author also concludes that the NAFTA facilitated improvement in the employment situation in Mexico has brought migration of Mexicans into the US to a virtual standstill. That is not what we would hear from Mr. Trump.

There is not one single “liberal / progressive” view on whether to increase globalization, and many well remember that in the primaries the more progressive wing of the Democratic party looked with great suspicion on a process which enriches the upper echelons to the detriment of the workers. However I believe a center left position would look, rather than to kill trade with protectionist policies, to help workers retrain and retool for growing industries. That is, at least, Secretary Clinton’s position.

The effect of immigration on American workers

The effect of immigration on American work force and wages is complicated. Some reports have suggested that rather than lowering economic opportunity for native born Americans, immigrants actually increase the opportunities for American jobs and incomes. This is because of a concept called “complimentarity”, which essentially says that if a low paid, less skilled worker can help a higher skilled person to get their job done (the person who builds what the architect designs), then both benefit. Providing services that the higher skilled work might otherwise have to take the time to do, house keeping, gardening, home care and the like, frees them to do more productive jobs.

“Not so fast” argues GW Bush speech writer, David Frum . He argues that the positive effect proposed for native American workers will obtain only if the presence of the lower skilled newly arrived worker can allow and facilitate the transfer of the native to a higher paying job. In his examples,

“The immigrant groundskeeper can’t speak English very well, so the lawn service hires a bilingual Mexican-American to supervise him. The rising numbers of immigrant nannies call forth specialized payroll firms that hire native-born workers to process checks and pay taxes.”

Frum goes on to argue that any positive effect of immigration might not really occur. It is not so easy for, essentially blue collar workers to move from less to more skilled jobs. “Up-skilling” as he calls it, requires time, effort, money, flexibility and it can “force older workers to begin again at a time in their lives when they felt settled to risk failure at a time in life when risk is not appreciated”.

Given these challenges, which are admittedly very real, it is not such a stretch to see why an apparently simple and straightforward solution such as Donald Trump suggests is appealing, and not so easy to demean or laugh off. The fact that these concerns are real, persistent and vocal on the part of Trump and his supporters, it is incumbent on a liberal, progressive and Democratic candidate to say how she would address the concerns.

How might a progressive approach the threats to worker well being from Globalization and Immigration?

The effect of Education. Globalization is surely not without its detrimental effects, however there are opportunities created for those with more competitive educations. Unfortunately for the US, the presence of a globalized increase in competition for lower skilled jobs, and an increase in the value of jobs that require improved education is occurring just at the time when the position of US education with respect to other countries has decreased. Due to increased international educational efforts, especially in emerging economies such as China and India, the US has fallen from 1st to 8th nation in the world in the percentage of students finishing high school.

Our competitiveness in advanced educational skills has fallen even more dramatically. In a compendium of recent studies we have fallen to 14th in reading skills, 17th in science, and a whopping 25th place in math! In other words, “the results from the world’s global education report cards show that American students are not well prepared to compete in today’s knowledge economy. A host of developed nations are surpassing us in education”.

The Effect of Health Care Costs on American competitiveness

It has been long known and well documented that the high cost of health care, relative to other developed countries, and the fact that it falls mostly on employers can have adverse effects on the global competitiveness of our industries. Put simply, if an American corporation has to factor the costs of health care for its workers into the price of a product, especially when that cost is high and growing, it forces the product to be more expensive and therefore less competitive.

Asking workers to forego healthcare in their contracts is well known to be a non-starter, but any system in which some of the burden is shifted from employers, and some of the costs increases of health care are mitigated would tend to increase our competitiveness.

Analysts of the effect of the Affordable Care Act have concluded that, while it is too early to know for sure, (and there are clearly some fixes needed), there is a real possibility that the provision of near universal care, care whose cost is rising more slowly, and care which can be separated from the burden to the employer may make our industries more competitive. Certainly a liberal progressive agenda would seek to improve on the promise of more universal and less expensive health care, something which the conservative surely would not.

So what could a more progressive, or center left administration do to address the damage to the American worker which globalization and immigration have created, and why would these responses come more likely from a democratic administration? Here are some possible answers.

1) Investment in American infrastructure would create jobs and opportunities for workers which are much harder to “out-source” to other countries. I have previously argued (see Part I of this article) that such a massive investment in infrastructure would require public private partnerships, debt assumption which only the full faith and credit of the government in partnership with industry could accomplish, and some element of public planning. All of these are more likely with a progressive administration.

2) Public investment in education, both at the primary level, but more to the current point at the retraining level would help make American workers more competitive compared to workers in emerging economies where educational advancement is occurring more rapidly.

3) Public efforts both improve the economics of health care delivery could relieve a tremendous burden from American export industries. Thousands of dollars are added to American cars, for example, decreasing their international competitiveness. Although the “public option” is currently too progressive by far to take hold, certainly public efforts to reign in spending are needed for us to remain competitive, and a return to an unregulated fee for service, such as might occur with the repeal of the Affordable Care Act runs the risk of putting the competitiveness of our products even further back.

In conclusion, I have tried to analyze how a liberal, or progressive agenda might approach one of the most glaring issues of the day, compared with how a conservative might do the same thing. I have tried to do so without a single reference to either candidate’s personality, temperament or trustworthiness. Certainly those issues are not without their importance, but I believe we, as an electorate, would be better served by far to try to debate the issues from the standpoint of principle over personality.

My conclusion continues to be that while there is not easy fix, a liberal, progressive, center left agenda continues to be the one with the most chance of addressing both the longer global issues (see Part I) and the more current issue of globalization, trade and immigration.