Blinder, Summers realize "free" trade destroys US jobs

This is the front page story in today’s Wall Street Journal (via MaxSpeak): three Establishment economists, Princeton economist and former Federal Reserve Board Vice Chair Alan Blinder, Nobel laureate Paul Samuelson and, along with his mentor Bob Rubin, charter member of the “Party of Davos”, former Clinton Treasury Secretary Lawrence Summers, have all now publicly pronounced what the data has been showing for years, namely that “free” trade deals are responsible for hundreds of thousands of lost jobs and spiraling trade deficits in the US via outsourcing, the reduction of tariffs on foreign goods and/or elimination of import quotas.

The article explains the recent historical data that is leading mainstream, neoliberal economists to revisit their fundamentalist free-market philosophies:

Some trade critics are bothered by the disappointing performance of Latin America since it slashed tariffs in the 1980s and 1990s while more protectionist China and Southeast Asia sped ahead. Others are struck by the widening gap between economic winners and losers around the globe. The rethinking on trade issues is the most significant since the early 1990s when many in the U.S. worried that Japan would overtake the U.S., a fear that has since abated.

According to the article, Blinder says there’s an urgent need to retool America’s education system “so it trains young people for jobs likely to remain in the U.S.” It isn’t how many years one spends in school that will matter, he says, it’s choosing to learn the skills for jobs that cannot easily be delivered electronically from afar.

He offers some interesting policy perscriptions, such as making changes to the tax code that encourage employers to create jobs that are harder to perform overseas, arguing that the focus should be on “jobs with person-to-person contact, regardless of pay and skill levels — from child day-care providers to physicians.”

Curiously, Blinder and the WSJ don’t mention the fact that “free” trade deals without labor, environmental or human rights protections also lead to a race to the bottom as the US looks to exploit labor markets in the Global South, or the fact that “free” trade deals like NAFTA and CAFTA not only cause unemployment but also erode the wages of working Americans (and, of course, Mexicans.