Adam Posen on the next president


Adam Posen writes:

Unfortunately, a new US president of either party is likely to be more antiglobalization, or at least take a more defensive approach to it, than either of her or his predecessors was.

There are many reasons why. First, now that unemployment is rising, the US workforce has finally reacted to the economic insecurity caused by its lack of health insurance and job protections, all curtailed further by the Bush administration. Second, both parties have moved away from the center, especially in Congress, and it was always a coalition of moderates from both parties which supported trade liberalization. Third, the foreign policy misadventures of the Bush administration have fed isolationism and fear of the openness among the US electorate. Fourth, in the United States just as in Western Europe, there is a seductive—though fundamentally unfounded—belief that the economic emergence of China, India, Brazil, and the former Soviet Union has shifted the relative advantages of globalization away from the rich countries, so their approach to trade and investment should be more defensive.

American antiglobalization, however, will take different forms depending upon which party captures the White House. If a Democrat wins, there will be proposals to impose “minimum labor and environmental standards” on future trade agreements, and perhaps unilaterally on current trading partners. While these can be benignly motivated, in practice they will likely be hijacked by outright protectionist interests and used as an excuse to block imports or trade deals. In any event, such measures are likely to escalate a number of conflicts with major emerging markets and interfere with economic growth in the developing world…

If a Republican, particularly from the conservative majority wing of the party, wins the White House, then the new American antiglobalization stance will likely first take the form of anti-immigration measures…

Initially, such a Republican anti-immigration stance will be less directly disruptive of the global trading system, and less broadly confrontational with the developing world, than the Democratic labor standards for trade agreements would be. Ultimately, however, it will be more harmful to the US economy, which is increasingly short of labor at both the high- and low-ends of the skills distribution, will be even more encouraging of isolationist sentiment, and will be more likely to divide the United States from the rest of advanced economies as well as from it developing neighbors…

[W]hile outright protectionism and head-on assaults on economic integration thankfully are not in the cards, and whoever succeeds George Bush will inherently be an improvement in most areas, the United States probably will be moving backwards on globalization initially in the next administration.