When two feet of snow slowed DC life to a crawl last week, I started catching up on old New Yorker’s. In an interesting December article on China’s “crash program for clean energy,” one paragraph caught my eye:
[a] message is gaining currency in Congress; it frames American leadership as manifesting not so much the courage to seize the initiative as the determination to prevent others from doing so. Senator Charles Schumer, one of several lawmakers who have begun to cast China’s role in environmental technology as a threat to American jobs, has warned the Obama Administration not to provide stimulus funds to a wind farm in Texas, because many of the turbines would be made in China. (“We should not be giving China a head start in this race at our own country’s expense,” Schumer said in a statement.) Senators John Kerry and Lindsey Graham, in an Op-Ed in the Times, vowed not to “surrender our marketplace to countries that do not accept environmental standards,” and suggested a “border tax” on clean-energy technology.
Obviously we want to create more good jobs, especially good green jobs, for folks in the US. But if you’re a progressive, jingoistic nationalism is a nonstarter. So how do we deal with this tension?
If the economy is like a game where players get to set some of the rules, then when choosing these rules we should go back to our core values. As a Christian, I’d put it this way:
Thou shalt love thy neighbour as thyself. There is none other commandment greater than this. (Mark 12:28-31)
Or as Rabbi Hillel said:
If I am not for myself, who will be for me? If I am not for others, what am I?
What does this mean in practice?
- For Americans, it means that we have to create good jobs in the US in such a way that our brothers and sisters in China can also end up with good jobs
- For policy wonks and op-ed writers who aren’t worried about having their lives destroyed by outsourcing, just saying “free trade will create good jobs for everybody” or saying the environment comes first — in short, treating working-class families like widgets instead of their brothers and sisters — doesn’t cut it
So where does this leave us? Creating rules that are based on the principles that all countries:
- have a right to encourage good jobs for their folks
- have a moral interest and a self interest in encouraging trade that creates good jobs at home through exports and good jobs abroad
If we set aside the Econ 101 fairytale that “free trade” — a.k.a. a form of trade that hasn’t ever existed and that no politicians will ever vote into reality — will magically solve the problem, then we need to use trial and error to figure out how to make this work.
For starters, we need to stop talking about companies and start talking about jobs. Take what the article called the “Apple model”:
So far, many of the most promising energy technologies—from thin-film solar cells to complex systems that store carbon in depleted oil wells—are luxury goods, but the combination of Chinese manufacturing and American innovation is powerful; Kevin Czinger, a former Goldman Sachs executive, called it “the Apple model.” “Own the brand, the design, and the intellectual property,” he said, and then go to whoever can manufacture the technology reliably and cheaply.
That’s a good deal for Apple’s executives, shareholders, and a handful of skilled professionals, and — hopefully — it creates decent jobs in China. But it’s an example of why US median wages for working families have stayed flat.
Conversely, if a foreign company creates good jobs here, they’re still good jobs (obviously it’s a problem if most US companies are wiped out by competition, but we are a long, long way from there).
Some concrete proposals:
First, we should do everything we can to encourage the rise of strong unions working together around the globe. Without strong unions, a broad-based white US middle class wouldn’t have developed after World War II. Even though the profit pie was growing after World War II, corporations didn’t just hand over a decent-sized slice of the bounty workers had helped produce — workers had to fight for it. The same is true today for global trade.
And if we want to make sure that US and Chinese workers end up better off, there’s nothing like fighting together for justice for all to get folks to truly see each other as neighbors, as brothers and sisters, to understand what it’s like to struggle to get by in Tianjin and Detroit, to give both a chance to have a real voice in the solution.
Second, any government should be able to say that a certain percentage of the work done for their contracts should create jobs in their country. Not too high a percentage — then there’s no pressure for local/national companies to become more competitive. But enough to make sure that folks in their country benefit, both from the wages and from the skills & knowledge that come with new markets like clean energy.
Finally, countries should try to figure out a reciprocal way to discourage the Apple model. It won’t be straightforward to do. If, say, we just added a small tax on US companies that followed the Apple model, their global competitors would get a significant advantage. And whatever disincentives we put in place need to be moderate enough so they don’t kill off any incentives to create better jobs in China. So long as our Chinese neighbors make one seventh the income that we do, we have a moral obligation to help them.
Ditto for Kerry’s and Graham’s idea of a border tax on “countries that do not accept environmental standards.” It’s not good for anybody to when countries compete for jobs based on lowering environment standard. But any proposed solution has to take into account the needs of our Chinese brothers and sisters.
This answer isn’t as neat and simple as “unleash free trade, and everyone will have more milk & cookies.” But it’s also not based on a fairytale about how the economy actually works. So long as our attempts to tweak the economy’s rules are based in our core values, and so long as we are humble/smart enough to not pretend we can figure out the answer without real-world experience I think we will find the right balance and the mutual prosperity and care that comes with it.
NOTE: In discussing this issues, I didn’t talk about any of the other values we have — that anybody who’s willing and able to work hard should be able to make it, that we are stewards of the earth — that also address them. They’re important, but it was too much to try to address in one post.
