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April 18, 2017

Comments

Trachtman

Thanks, Dani, for this response. I see now that your main point was not about compensation at all, but about insulation from certain types of competition. You distinguish trade winners and losers from others on the basis of the normative or political attractiveness of allowing people to “lose” due to what you, provocatively, call “social dumping.” Of course, one person’s social dumping is another’s legitimate diversity of social contract. When you say that some trade “violates norms embodied in our institutional arrangements,” you seem to be suggesting that, for trade to take place, others must accept our institutional arrangements. My first question is the empirical one: does trade from low regulation countries cause reduction of our regulation? I have not looked at the regulatory competition literature for years, but last time I looked there was little evidence of a race to the bottom in labor rights or environmental protection. If that is still true, what is the problem with social dumping? In other words, is it true, as you suggest, that domestic social bargains are being undermined “through the back door?”

Second, I am unsure why political will should not be deployed to protect the social bargains directly, rather than to try to do so indirectly through trade barriers, and with inevitable substantial errors if our experience with dumping, subsidies, and safeguards is any guide.

But the main question, which would be important to answer even if there is a significant race to the bottom, is whether insulation from competition is the right response at all to institutional diversity. Within the U.S. federal system, we in theory and practice address interstate diversity that has excessive externalities not by blocking interstate commerce, but by legislating at the federal level. Of course, the international system has markedly less legislative capacity than most countries, but in important areas it has had some success. And it is a system that, with all its limits and opportunities for exercise of power does not in theory insist on imposing our institutional arrangements on others. Best, Joel

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