Free trade and social justice

It’s been a couple weeks, so I thought I’d share some thoughts.

Arguments I’ve heard:

1. Those who are left behind must not want it. All you need to succeed is hard work. Racism is not keeping minorities from succeeding.

2. We need to punish China. The only reason they are succeeding is because they are flouting the rules. Or the international rules favor them.

These ideas seem to be unrelated, but they are simply two expressions of the same idea: rules matter.

The assumptions underlying the first argument are a) that the rules for all Americans are the same and b) are applied the same, regardless of race. The argument we’ve been hearing louder than ever the last several months is simple: these assumptions aren’t true. Resolving the debate will require if that is the case and then how to rewrite the rules or how to apply them fairly.

The second argument makes this assumption: Americans are hard-working and rule-abiding, so they should succeed in manufacturing and agriculture. If we aren’t succeeding, then either the system is broken or other countries are cheating.

Considering these arguments and their assumptions in concert can help us identify potential problems.

In both cases you have two groups: whites and minorities; Americans and Chinese. In both cases you have a set of rules: the laws of the land and international trade rules. In both cases there is a problem: a portion of one of the groups is being left behind – in the first case, as demonstrated by lower education levels, lower incomes, lower wealth, higher incarceration rates, etc. of blacks and, in the second case, as demonstrated by the former manufacturing communities in the U.S. that have had high unemployment.

Are these problems caused by the rules or are they the responsibility of the groups themselves? Do blacks fail to graduate from high school because they simply aren’t working hard enough? Are plants shutting down because American workers are lazy?

The second question is one we all agree on: no. American plants are shutting down because it is cheaper to produce goods overseas. Companies move those plants overseas and American workers lose their jobs.

Why is it cheaper? Are Chinese workers simply willing to accept less? Are the Chinese cheating through government subsidies, IP theft, and other means? Perhaps the lack of worker protections makes it cheaper. Or perhaps the rules simply favor the Chinese. Perhaps the World Trade Organization is biased toward China for some reason and makes it easier for them to export goods.

While some of these things are true, another possibility is simply that the system is changing. For whatever reason – higher education levels, different sets of worker protections, differences in culture, different resources – compared to the U.S., China is simply better at producing manufactured goods. So, whether Democrats or Republicans are in charge, manufacturing jobs fail to return to the U.S. The circumstances that made the U.S. a manufacturing powerhouse in the 20th century no longer exist. The sooner we accept that, the sooner we will stop fighting the same battle every 4 years and we can make progress on real issues, like helping former manufacturing workers find new jobs or providing a social safety net so they don’t fall into poverty.

This shift in focus to the dynamic system can help us identify potential fixes to racial problems, too. Simply telling minorities, “Hey, we fixed the laws so they apply equally to you,” may not be enough. The circumstances that allowed whites to become, as a group, wealthier and better educated, are not the same for blacks, Hispanics, and other minorities. A black father today isn’t likely to be able to support his family of 10 children as a dairy and ice cream seller the way my great-grandfather did. Cost of living, education requirements for his children, and various other circumstances have changed. Perhaps our expectations for what he can accomplish on his own should as well.

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