Globalization anxiety as mass hysteria?

Those who are puzzled by globalization anxiety and attribute it to collective irrationality (see Tyler Cowen's piece in the NYT) overlook a fundamental aspect of markets--their "embeddedness."  What I am referring to is the idea that successful markets need to be embedded in a larger set of man-made rules and governance structures.  Markets need regulation, stabilization, and legitimation because they are not self-regulating, self-stabilizing, or self-legitimizing. The success of modern capitalism is due as much to the institutions that govern markets--political democracy above all--as it is to the power of markets themselves. 

It is important to understand this because it provides an important clue as to why domestic and international trade are different.  Domestic trade takes place within thoroughly embedded markets; there are clear rules and they apply to all transactions equally. International trade, on the other hand, is conducted in only weakly embedded markets: the rules either do not exist or apply unevenly.  I believe this is the fundamental reason why their consequences are often perceived so differently.

Let me make this concrete. If Harvard fires me and hires Tyler Cowen instead, I would feel bad for sure. But I would not blame Tyler or Harvard, because I would assume that the decision was made on fair grounds: we compete under the same ground rules, and if Tyler beat me to it, it must be because he deserves it. 

But suppose instead that Harvard hires John Plagiarizer, who has a much longer vita and larger citation counts than either one of us, because... well because he is a flagrant plagiarizer. I think I would have pretty good reason to feel cheated.

An extreme example? Let me make it less so.  Suppose that I am an experimental psychologist instead of an economist and the person Harvard hires in my place is someone who has accumulated a long vita by virtue of not having to abide by human subjects review standards. (You can find out a lot about human behavior through torture.)  Would I not feel treated unfairly? You bet I would.   

The international trade counterpart of this hypothetical is the worker who loses his job because his company decides to move to a country where, say, labor rights are routinely violated. So the "us" and "them" characterization that Tyler attributes to irrational nativism perhaps has more to do with the absence of a common set of international rules on labor standards, environment, consumer safety, and so on. 

By overlooking the problems created by trade in instances where regulatory arbitrage does play an important role, we miss the opportunity to celebrate the kind of globalization where such arbitrage doesn't play a role.  The latter type of trade probably constitutes the bulk of world trade. But because economists do not make this important distinction, they have no language or ability with which they can respond appropriately to the uneasiness out there--except for calling it irrational. 

And by the way, Harvard cannot fire me because I have tenure (as does Tyler). Which makes any pontification on our part about job anxiety a very poor guide to reality. 

UPDATE: Tyler Cowen responds, but frankly I am not quite sure I follow it, as it seems to have been written in haste.  He concludes thus:

The bottom line is that most people support their countries to a highly irrational degree in most international questions or disputes.  That's just obvious -- watch the World Cup -- and yes Jonathan Swift understood that too.

I have no trouble with this, except that I did not think this was what the argument was about. I thought Tyler was trying to explain why opposition to globalization had increased and become more salient in recent years and why many intellectuals were going soft in their role as cheerleaders for globalization.  I don't think a constant (nativism) can explain a change. I do think an important part of the explanation is that regulatory arbitrage has become a much bigger issue now.

And by the way, some readers may want to be informed by real research as to what drives protectionist sentiment around the world. Here is where you can start (Non-gated version here).

Comments

[John V]

I think you're being too sophisticated with your reasoning.

Perhaps you, as an economist, can arrive at such conclusions. But if actually talk to Joe Sixpack in the street, it has nothing to do with rules or "institutional asymmetry". It's simply about losing "American jobs" to "them" and that ain't good because Americans need those jobs and without "those jobs", we're going to hell in a hand basket. Businesses are simply seen as "sell outs" to "their citizens".

If they agree with your explanation, it's only because it arrives at a similar conclusion that they want to hear.

[John V]

I think you're being too sophisticated with your reasoning.

Perhaps you, as an economist, can arrive at such conclusions. But if actually talk to Joe Sixpack in the street, it has nothing to do with rules or "institutional asymmetry". It's simply about losing "American jobs" to "them" and that ain't good because Americans need those jobs and without "those jobs", we're going to hell in a hand basket. Businesses are simply seen as "sell outs" to "their citizens".

If they agree with your explanation, it's only because it arrives at a similar conclusion that they want to hear.

[Per Kurowski]

Talking about tenures... there should be a fixed number of them and each year there should be a lottery to pick out a couple of them who would lose all their rights, thrown out on the street and never be able to return ... just so to keep up a connection with real life.

Just the sheer possibility of losing a tenure based on no particular fault of their own, could do wonders for the educational system, infusing it with a minimum required dose of uncertainty, and thereby allowing tenured professors to at least to understand the concept of anxiety.

[notsneaky]

"I believe this is the fundamental reason why their consequences are often perceived so differently."

Either that or it's just easier to blame them foreigners. (The fact that for many people there's an uncanny correlation between their views on trade, immigration and the magnitude of foreign aid is some anecdotal evidence for this)

In other words, I agree with John V above. Or in some more other words, I think that what you describe above characterizes the concerns of the ... "non populist" left globalization-skeptic. But it has nothing to do with the Lou Dobbs style globalization-skepticism.

[michael webster]

This is pretty interesting.

Why cannot economists talk about regulatory differences that might seem appealing to some firms?

Don't they make the case for their being a market in corporate governance?

[Publius]

I agree with most of your comments, but I take issue with your understanding of fairness:

"I think I would have pretty good reason to feel cheated."

I contend that you, like most people (if not all), are interested in fairness only within the group that would provide you with optimal benefits.

You want to be treated fairly relevant to others who could have your job, but why would you define fairness so narrowly?

I believe we confine our if you weren't simply interested in enhancing your personal position (rather The systems in which we expect all to be treated fairly based on our own selfish desire to maximize our position (or those who we associate with), rather than an objective analysis of fairness.

If fairness is what you were after, the number one target on your hit list would not be the hiring of professors – that wouldn’t make the top 1,000. Yet that fairness justification is used time and time again; ask an opponent of affirmative action why he is dedicating so much time and money to his cause, and he’ll argue it’s an issue of fairness. I think that case is fairly transparent, but it is the same habit of post-hoc justification used to lend moral weight to what is a shallow and selfish desire.

Cries of “it’s not fair!” rarely signal an issue of fairness; it’s usually just an issue of self-interest, cloaked in the nobility of fairness, justice, and other abstract concepts.

I am all about fairness, but I don’t see how exactly this means I should prevent even one company from opening a factory in a poor nation and increasing their wages 5x (but still under an American min. wage).

If we are to be “fair,” we would let the wages for American “routine producer” jobs continue to fall, opening up the borders to immigrants who have been treated far more “unfairly,” promoting the outsourcing of jobs, and buying only farm products made in Africa. If Lou Dobbs likes it, it’s probably not fair.

Hopefully, I’ve made my point. People say they want things to more fair, but they don’t. On my own blog I should have a post in the near future that looks at Robert Reich’s twisted notion of economic justice as it applies to the nation, but I’d like to see your take on how exactly you define fairness and it’s role in the work of nations and the international community. (DISCLAIMER: Ignoring the Robin Hanson rule, let me state that I agree that the government has a role to play in market design, that markets in their “natural” state are not the most efficient, and that markets, on their own, cannot always create the coordination needed to enhance their power.)

[DC]

"for many people there's an uncanny correlation between their views on trade, immigration and the magnitude of foreign aid"

Maybe so but we don't hear calls for cuts in foreign aid getting the same hearing as trade do we?

[robertdfeinman]

Finally an economist "gets it". Globalization is inherently unfair because there is no world government with enforcement power to prevent the strong from taking advantage of the poor.

The critics of the IMF and WB have been pointing out for several decades now how far the playing field has been tilted (mostly in favor of the US). That the western powers are now willing to abide by some of the rulings of the WTO means nothing. A few million paid out over softwood imports or the like is worth the cover that it provides for the really important trade deals.

To ensure that international bodies don't get too prominent the US has signed bilateral deals with many states, thus bypassing the WTO altogether. What sort of a fair deal can a country get when the US makes it an "offer it can't refuse"?

Those in the weak states haven't been fooled, they just don't have any way to change things.

[terence]

Notsneaky: "Either that or it's just easier to blame them foreigners."

Or the Joe Public actually has a reasonable grasp of the law of supply and demand when it comes to labour markets. The idea that competition with millions of low paid Chinese workers will make Joe worse off has intuitive appeal even to someone who has never seen supply and demand curves on a graph. This, and risk aversion (i.e. I like the job I got), is - I think - what worries a lot of blue collar anti-globalisation folks.

Sure you can argue that they'll still benefit through changes in relative prices, and you can argue that international trade is only a small factor driving rising inequality in the US (although, of course, this may well be changing) - but I think it's that intuitive sense* that this can't be good which gets so many people on board.

In short: pro-globalisers need to find more convincing ways of dissuading people from concerns which aren't real and addressing those that are.

_____________________
*Intuitive sense, partially add backed by quite a lot of what trade theory actually says.

[crack]

Publius:

I am all about fairness, but I don’t see how exactly this means I should prevent even one company from opening a factory in a poor nation and increasing their wages 5x (but still under an American min. wage).

Wages aren't the only difference. Environmental, safety, and prison labor, among others, also affect the relative cost of labor. Workers rightly believe that trade agreements that don't take into account such things end up harming their competitiveness irrespective of their abilities. Once those advantages, in addition to wage differences, take away their jobs its a short trip to becoming anti-trade and even anti-foreigner. The root is still that trade agreements protect capital (IP enforcement) and don't protect labor (safety and enviromental concerns).

[Denis Drew]

Outsource enough jobs and that floods the home market with extra workers – a labor market in the American case where labor has uniquely little collective bargaining power due to thorough de-unionization.

I guess that outsourcing our jobs on a scale that can grow prosperity for nation of 1.3 billion people, almost by definition must have caused a flood in the labor market here.

But labor here also has “insourcing” as I (a cab driver) call it to deal with. Meatpacking companies build plants seemingly incongruously far from any source of domestic labor. Build them and Mexicans will come – at half the pay and next to no benefits. Ditto for a minimum wage of $5.15/hr for which American born workers simply will not show up.

So today’s American workers may face not only a flooded labor market due to workers who will work cheap someplace else – but they are also beset in the labor market place by an additional flood workers who will work cheap right here.
***************
Additionally, even if lower income earners recouped enough money from buying cheap foreign manufactures to make up for some of their lost pay – upper incomes gain equally from cheap priced manufactures without any trade off in lost pay for the most part: ratcheting up inequality.

Inequality or not, lower incomes do not get any break in the price of expensive goods and services produced by upper income Americans so their pay loss to globalization is mostly unrecouped.
*************
For all this, I don’t believe the root of American labor’s deprivations is not mostly globalization or immigrations. It is labor’s gaping lack of understanding of the need to collective bargain from a strong position in a free market – not to just work hard and play by the rules and believe you will get your fair share.

Dual-answer whenever American labor wakes up: 1) sector-wide labor agreements (collective-collective bargaining: the only answer to the race to the bottom) and, I think, 2) revolving (like every four years) union certification and RE-certification elections in every workplace (the only way to keep some union leaders permanently on their toes I am afraid – no need to fear decertification with sector-wide agreements: non union firms are forced to work under conditions negotiated by union terms).

[notsneaky]

"Or the Joe Public actually has a reasonable grasp of the law of supply and demand when it comes to labour markets"

But not when it comes to technological innovation?

[letterhead]

Taking it to the real world... $4bn in US cotton subsidies pushes down global prices, affecting markets as far away as Africa... African cotton farmers in many countries, end up living on starvation wages as a result. Just one example among many. Same with corn subsidies, which overwhelmingly go to big agribusiness.

On the flip side, yes, jobs go to the least regulated, lowest cost regions. Resulting in more gains for global businesses. They get subsidies at home, and ship jobs overseas to cheap unregulated markets.

Globalization anxiety is not mass hysteria, it's a mass reality check for policy makers... as well as the spin doctors (those in my profession) who help them make their case and maintain the lock on power.

[mik]

Super Libertarian Free Marketer Cowen blames pig-headed furriner hating rednecks for low popularity of Globalism. All the while collecting his Government paycheck in a job with Total Job Secuirity.

But amazenly Cowen fails to produce any evidence for his assertion. None, zilch.

Is this how economists debate?

By asserting any nonsense they feel asserting?

And how Cowen knows about rednecks? It is my understanding that the only plain folks Cowen come in contact with are workers in high brow restaurants Cowen visits so often.

[mik]

Same with corn subsidies, which overwhelmingly go to big agribusiness.

There is no corn subsidies currently, market price is too high for that.

If farmers in Africa or anywhere cannot make it at current (very high) corn prices, they should not be in that business.

[mik]

"Same with corn subsidies, which overwhelmingly go to big agribusiness."

There is no corn subsidies currently, market price is too high for that.

If farmers in Africa or anywhere cannot make it at current (very high) corn prices, they should not be in that business.

[alex]

notsneaky: "But not when it comes to technological innovation?"

Oh please, not the old canard that trade and technology have the same effect. With a narrow enough focus on first order economic effects and willfully ignoring the practical differences, I can almost see the false equivalence. Fortunately Joe six-pack's supposed naivety shields him from such sophistry.

First off, technology makes new things possible. Electric lights, cars, trains, air travel, computers, the Internet, modern medicine, refrigeration, air conditioning, indoor toilets, hot and cold running water, etc., etc., etc. Our supposedly naive friend Joe understands that all these things are only possible because of technology. And, not being entirely ignorant of history he knows that technological progress is ongoing. He can see with his own eyes that it's progressed during his lifetime. For a special treat he can recall those old fart stories he heard as a kid from his grandparents about all the things they didn't have. Sometimes technology can screw him out of a job, but its overall effect is desirable.

By contrast, he knows that a T-shirt or a car or a computer program made on the other side of the planet could have been made here in the USA (except that maybe you'd have to pay the workers something more than pocket lint).

And he may even have crawled out from under his rock long enough to have heard about an obscure thing called the "trade deficit". Hmmm, he says, that theory that we'll import T-shirts and export computers is a load of horse puckies, because we now import the computers too.

Let's see, re-enact Smoot-Hawley and we'd suffer a big economic setback. Roll things back to before the Industrial Revolution and we wouldn't be that far from living in caves. And dumb ol' Joe doesn't see that those are the same.

[terence]

"But not when it comes to technological innovation?"

Well the Luddites had their trouble with this too, as have a variety of minor's groups over the years. People are happy enough to blame technology as well when they see it as a clear and present threat.

I'd kindof agree with Alex too that getting one's head around the benefits technology has to offer (for the simple fact that we can go out an buy them) *is* easier than for the purported benefits of trade.

[Gulzar]

Dani,
Your analysis is from the perspective of the developed economies, whereas let me speculate on the view from the side of the developing economies.

1. The operative condition is not so much the quality of embedded institutions, as the issue of uniformity or homogenity in the "rules of the game". In many developing markets too, opposition to international trade arises from the absence of a "level playing field" - larger and well supported MNCs swamping domestic manufacturers, heavily subsidized farm products driving out local farmers, competition and government procurement policies that weigh in favour of larger firms, unregulated financial markets that spawn dubious practices etc. Yes, these are also perceived as "regulatory arbitrage" - depends on which side of the fence you are in!

2. The logical next step in this analysis would appear to be that we need to harmonize the rules of the game, so as to increase the domestic acceptability of globalization and international trade. While this may increase the acceptability in the developed countries (though I suspect, it will not, given the previous point), it will only increase the suspicion and resistance in the developing economies. We have seen this story enacted before!

It is impossible to bridge these contrasting views easily or soon. Till then, international trade and globalization will have to be driven by more uniform sharing of trade benefits, both between and within countries, and by having adequate enough social safety nets that can cushion those hardest hit by trade and globalization. In the meantime, we can progressively strive towards increasing the "embeddedness".

The full post is available here
http://gulzar05.blogspot.com/2008/06/domestic-vs-international-trade.html

[saifedean]

How ironic that you would use the example of Harvard hiring a plagiarist, because, well Harvard has on its booked a demonstrable plagiarist. Alan Dershowitz has very clearly and demonstrably plagiarized a book. You can verify this to your heart's content here: http://www.normanfinkelstein.com/article.php?pg=11&ar=1

[Mike Moffatt]

"So the "us" and "them" characterization that Tyler attributes to irrational nativism perhaps has more to do with the absence of a common set of international rules on labor standards, environment, consumer safety, and so on."

This leads me to ask a couple questions:

1. Do you seriously believe that the U.S. has higher standards in these areas than say.. the EU? Canada? South Korea? I'd like to see your evidence in that area.

Example: Asian countries, on average, are far, far ahead of the United States in adoption GHS (Globally Harmonized System of Classification and Labelling of Chemicals). So is Rodrik saying that the U.S. shouldn't have freer trade because the U.S. is slower in adopting international standards than, say, Taiwan?

2. Do you think that California should have free trade with, say, Louisiana? Or does he think that the two states have even remotely equivalent standards in environmental law? Given my experience with state-level environmental law, I can't see how you can conclude U.S. states have even roughly equivalent systems. So should there be more trade barriers between California and southeastern states?

[Christopher Colaninno]

It's simply about losing "American jobs" to "them" and that ain't good because Americans need those jobs and without "those jobs", we're going to hell in a hand basket. Businesses are simply seen as "sell outs" to "their citizens".

If they agree with your explanation, it's only because it arrives at a similar conclusion that they want to hear.

That’s wrong.

It’s widely understood that many of our trading partners have minimal labor protections, pollute more then American companies, and in general pay massively lower wages then American firms do to domestic workers.

Also for people a little further up the information chain, say Ohio Democratic Party primary voters, it’s understood most Democratic politicians would insist on adding Labor and environmental trade standards to new trade agreements.

[Christopher Colaninno]

There were supposed to be italics around the first two paragraph on the last comment

[Mike Moffatt]

"It’s widely understood that many of our trading partners have minimal labor protections, pollute more then American companies, and in general pay massively lower wages then American firms do to domestic workers."

The minimum wage is many U.S. states is significantly lower than it is in Canada, a major trading partner of the United States.

Do you believe the Canadian government should put an export tariff on, say, oil exports until the minimum wage in Minnesota approaches Ontario standards?

[Chris Moore]

Since they see themselves as "positive" scientists I don't think a lot of economists are comfortable with acknowledging that fair and unfair exist. So, it's a lot easier to label their critics as "irrational" than acknowledge that they are studying a messy social science.

[joe]

"The international trade counterpart of this hypothetical is the worker who loses his job because his company decides to move to a country where, say, labor rights are routinely violated."

I don't get what "labor rights" you are talking about. One can define labor rights the way one likes. For example, if you look at unionization of the work force, many poor countries would fair better than the US. Likewise, a poor country worker can claim to be cheated because he doesn't have the kind of advanced machines which workers in rich countries work with--and hence be not as productive.

There is also a fundamental flaw with your analogy. Unlike John Plagiarizer, the poor country worker, or the company (which might be a US company that have arrived to take the opportunities of international trade) that employs him, is not cheating anyone. If anything he would be better off working for a US company than for an employer from his own country. And what would you say to deny him that opportunity to improve his life--given especially that your forte is economic development?

[joe]

saifedean:
do you think any Harvard professor would speak against their own ilk, and, in this case, being branded anti-semitic

[Christopher Colaninno]

"Do you believe the Canadian government should put an export tariff on, say, oil exports until the minimum wage in Minnesota approaches Ontario standards?"

1. The comment was speaking to question if the dynamics of trade are understood by common people.

2. China and the United States have vastly different labor and environmental standards, whereas Canada and United States have fairly similar standards. It’s not the same at all.

3. Oil isn’t an industry where you usually get much of any competitive advantage from having lower wages in a country.

4. Brining up stuff Canada selling oil to the U.S. is exactly the kind of semantic quibbling that has caused the United States to turn against “free” trade. It’s a cheap debate trick. Sure trade with Europe and Canada is still trade, etc., etc. It’s doesn’t actually speak to question of if people being asked to compete by a set of social institutions that they correctly perceive to be unfair.

[PJ]

"Oh please, not the old canard that trade and technology have the same effect." "First off, technology makes new things possible."

Trade makes everything (including technology and new stuff) possible.

(To be fair I don't think Dani is arguing against international trade per se.)

[Deane]

I will admit first hand that I share more agreement in general with Tyler Cowen than Dani Rodrik, but as someone from a "developing country" -- Sri Lanka, the other side, so to speak. I can confirm a crude sense of economic nationalism is what's driving anti-globalization folks here. The populist msg isn't about WTO, or common rules or environmental standards, I mean, those are not even in the debate. Instead it's about CIA led neoliberal conspiracies by the world bank and suchlike.

[wjd123]

This is one of the conclusions in Anna Maria Mayda and Dani Rodrik's paper on "Why are some people (and countries) more protectionist than others?

• "An individual's relative economic status, measured in terms of either relative income
within each country or self-expressed social status, has a very strong positive association
with pro-trade attitudes. Individuals who rank high in the domestic income distribution
or consider themselves to belong to the "upper classes" are significantly more likely to be
pro-trade. It is relative income, and not absolute income, that seems to matter."--Mayda and Rodrik

Since free trade is leading to a greater division in relative income it would seem that to some extent that free trade in democratic countries contains the seeds of its own destruction.

[wjd123]

The economic rules and regulations of our economy are not abstract. You can study them objectively. You can study the institutions that enforce them objectively. And you can study the historical forces and political compromises that went in to making them and giving them legitimacy. There is nothing abstract here. You can take them out for a drive or bounce them around. They make up the economic morality in our political economy.

When we practice free trade much of this economic morality can be bypassed. Is it any wonder that labor that fought for its rights or environmentalist who fought for cleaner air and water feel betrayed by politicians that set up a trade system that bypasses what they have achieved. Is it any wonder that most Americans don't see globalization as a positive when they have to compete with countries that don't have the legitimacy, instutions or statutes of their political economy.

Even those countries that do have the statutes and legitimacy often don't have the ability to enforce the economic morality of their political economies. In making ethical judgments, how we should act, the ethical fact that "ought implies can" has to be a consideration when trading with other countries if we want to defend our system and our values.

The problem with free trade is that it requires reciprocity when it comes to political economies. The lack of rules and regulations there undermine the rules and regulations here. Moral relativism doesn't mean that I have to accept their rules here. I like the fact that labor here has the right to free association. I would like to see it easier for labor to exert that right. Free trade as practiced today makes that exercise harder.

Many corporations today might see this as a boon. Weak labor makes them more competitive in a global economy. After all in a global economy in order to compete don't we have to adjust to the moral relativism that comes with other political economies? Yes, but we are not adjusting we are drifting. And just because we recognize that other countries have different values than ours doesn't mean our values shouldn't be defended. Our values may be relative to theirs but they are still our values.

Today most Americans feel that they have been hurt by free trade. It not just those whose place of employment was shipped to some other country, or those who have lost their jobs to outsourcing, but those who feel our huge trade deficit with China has led to distortions in our economy such as the housing bubble.

But for whatever reason people believe they are hurt by free trade the important point is that the political tides are changing.

Corporations will try to hold onto the the changes they have effected in our political economy. They won't be chastised by the mess their free rein to ignore the other stakeholders in our political economy has made.

This can not be allowed to go on. I suggest the following actions.

We should counter corporate influence by insisting on substantial change in the way we do free trade by raising up the specter of tariffs when corporations undermine our economic morality.

We should insist on a time for achieving a balance of trade with China. We should set benchmarks to achieve that goal and see that they are meet.

We should go back to normal trade relations with countries that would undermine our political economy by their inability to meet standards.

We should leave the WTO and work to form an international government--not a world government--that can protect our values and expand them while expanding free trade.

We should see to it that free trade agreements are representative of a wider range of values than corporate values.

[Mike Moffatt]

"I do think an important part of the explanation is that regulatory arbitrage has become a much bigger issue now."

This may be well and good, but why do you implicitly assume that regulatory arbitrage is pushing business away from the U.S. rather than towards it?

In today's Washington Post:

http://www.washingtonpost.com/wp-dyn/content/article/2008/06/11/AR2008061103569.html

"There's a strong sense in Europe and the world at large that America is letting the market have a free ride," said Sheila Jasanoff, professor of science and technology studies at Harvard University's John F. Kennedy School of Government. "The Europeans believe . . . that being a good global citizen in an era of sustainability means you don't just charge ahead and destroy the planet without concern for what you're doing."

[notsneaky]

By the way, Anna and Dani's research, linked to above in the post, pretty much says it's both economic factors and nationalism. Which is sort of what I said/meant. There is a large number of people who are protectionist because trade threatens their livelihood directly. But there is also a lot who simply just don't like them foreigners. And of course there's overlap between the two.

[Mike Moffatt]

"2. China and the United States have vastly different labor and environmental standards, whereas Canada and United States have fairly similar standards."

I guess you can quibble about how similar is "fairly similar"... but unless you define the term very, very loosely I don't see how you can come to this conclusion.

In a similar vein.. compare the US's 30-year old TSCA to EU's REACH and tell me that they're 'fairly similar'.

[wjd123]

Mike Moffatt,

Thanks for the link to the Washington Post article "Chemical Law Has Global Impact."

This is exactly the kind of give and take I would expect if we are to have our rights expanded. Even if business values here are getting a free ride--they have a lock on the ear of our legislatures-- they can be challenged by consumer values in the EU. In this case business values are not only being challenged by consumer values in the EU but by those in our own states.

This is an example of a greater balance of power that can lead to expanded freedoms and rights.

"In the absence of strong federal regulations in the United States, a patchwork system is emerging. Individual states are banning specific chemicals, and half a dozen lawmakers on Capitol Hill have introduced bills aimed at shutting down production of various chemicals.

"Sen. Frank Lautenberg (D-N.J.) introduced a measure last month that would overhaul U.S. chemical regulation along the lines of the new European approach. It would require the Centers for Disease Control and Prevention to use biomonitoring studies to identify industrial chemicals present in umbilical cord blood and decide whether those chemicals should be restricted or banned. A study by the nonprofit Environmental Working Group found an average of 200 industrial chemicals in the cord blood of newborns.

"Said Denison: "We still have quite a ways to go in convincing the U.S. Congress this is a problem that needs fixing." But new policies in Europe and in Canada push the United States closer to change, he said. "They show it's feasible, it's being done elsewhere, and we're behind."--Washington Post

[wjd123]

From reading comments on different blogs it seems that the main argument between Dani Rodrik and Tyler Cowen has been lost.

This is Dani Rodrik's argument:

"Domestic trade takes place within thoroughly embedded markets; there are clear rules and they apply to all transactions equally. International trade, on the other hand, is conducted in only weakly embedded markets: the rules either do not exist or apply unevenly. I believe this is the fundamental reason why their consequences are often perceived so differently."

This is Tyler Cowen's argument:

"What’s really happening [the backlash on trade] is that many people, whether in the United States or abroad, are unduly suspicious about economic relations with foreigners. These complaints stem from basic human nature — namely, our tendency to divide people into “in groups” and “out groups” and to elevate one and to demonize the other. Americans fear that foreigners will rise at their expense or “control” some aspects of the economy.

"ONE approach is to appease these sentiments by backing away from trade just a bit, or by managing it, so as to limit the backlash. Giving up momentum, however, isn’t necessarily the right way forward. If we are too apologetic about globalization, we can feed core irrationalities, instead of taming them. The risk is that we will frame trade as a fundamental source of suffering and losses, which would make voters more nervous, not less."

Dani believes that in matters of international trade workers can understand the concept procedural fairness. Tyler Cowan believes that the concept of procedural fairness escapes most workers when it comes to their feelings about trade and that they are basically xenophobic.

If Dani is right then the way ahead to appease fears about free trade would be to address matters of procedural fairness. If Tyler is right then, according to him, the way ahead is not to inflame "irrational fears."

Tyler doesn't want to slow down the momentum of trade so his rational solution is to dumb down the bad stuff such as questions about procedural fairness and play up the good stuff such as savings at Wal-Mart and expanding markets.

We have been on this route before--NAFTA--where economist decided to hide the bad stuff when arguing for free trade so as not to give ammunition to those who opposed it. Tyler has gone a step further he would deny the rational feeling of those Americans who believe that they are being hurt by free trade and tar them with feelings that he sees as irrational.

I think Dani is right on workers feelings about procedural fairness, but even if he isn't, I can't understand Tyler's approach. To assuage American fears about the benefits of free trade by de-emphasizing their rational feelings while playing up their irrational ones is only rational in it's Machiavellian logic. In other words, when it comes to facing problems, it's dishonest. It's not a good faith approach, and it should be rejected.

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Angela Engel gave me permission to post the following. Lots of propaganda coming from Secretary Spelling who, by the way, is not an educator. Go to: http://www.youtube.com/watch?v=5zSJexw0Gvs

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Dear Education Week,

I’ve been following your articles for over two years now. On several occasions I have found your columnists’ coverage of complex and important educational issues to be shallow and often innacurate. I’ve come to believe that Education Week is promoting a political agenda, rather than an effective educational system and children who are prepared as democratic citizens, economic contributors, and developed human beings. Todays article, “Since NCLB Law, Test Scores on Rise”, illustrates this position. All independent and professional research organizations have confirmed the opposite of what this article has claimed. Test scores have stagnated or decreased and overall achievement has declined since the implementation of NCLB. What has risen are drop-out rates and juvenile incarcerations, which none of your articles have conveyed. Review of the Center on Education and Policy quickly disclosed that John Jennings, the CEO and his staffers were instrumental in the passage of NCLB. It makes sense then that their “conclusions” would support NCLB and counter all other reseach studies challenging the law. The fact that Ed Week published this information without acknowledging the Center’s role in the authorization of NCLB, and without mention of any other studies, which all refute the Center on Education Policy, demonstrates journalistic fraudulence. It is the responsibility of media organizations and editors to do their homework. Our fragile democracy demands media sources dedicated to getting the whole story, accurately representing the truth, and willing to challenge and ask hard questions. Please remove me from your subscriber list. I do not believe Education Week to be a credible news source.

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