The Hollow Order
Rebuilding an International System That Works
Trade policy is one of the hottest issues of the 2016 election, but throughout the campaign, the level of discussion about it has been abysmally low. This collection is designed to correct that, offering readers everything they need to understand the relevant facts and arguments and make informed decisions for themselves about what should be done in this crucial arena.
The central political fact about trade is that its benefits are generally indirect and diffuse while its costs are often direct and concentrated. All told, the material gains outweigh the material costs, especially over time. But it is hard to realize those gains because the policies required to do so are often blocked by those who stand to lose. Battles over trade policy, therefore, often follow the “double movement” that economic historian Karl Polanyi ascribed to capitalism more generally: the operations of unfettered markets produce economic dynamism and social disruption, which in turn produce a political backlash aimed at stopping or reversing the process.
During the second half of the twentieth century, the advanced industrial world resolved this dialectic through a sort of synthesis, for both trade and capitalism at large: markets would be allowed to spread, domestically and internationally, but they would be checked and regulated by political actors in order to limit or offset their costs. The result was decades of growth and progress.
In recent years, however, opposition to trade has risen once again, to the point where both the Republican and the Democratic candidates for president have now openly declared their opposition to the Trans-Pacific Partnership (TPP)—the Barack Obama administration’s flagship trade deal, which has been years in the making and still awaits confirmation. And it is now an article of faith for most supporters of Donald Trump and Bernie Sanders that preventing further global trade liberalization is crucial to restoring U.S. jobs and prosperity.
We at Foreign Affairs have been covering these debates closely for almost a century, and so we’re delighted to offer this volume to inform and provide context for the crucial decisions that need to be made. In the pages that follow, readers will find a broad range of pieces from a star-studded lineup of trade supporters and critics, including Nobel Prize–winning economists, labor leaders, U.S. trade representatives from both sides of the aisle, and many others.
The first section, “We Didn’t Start the Fire,” gives some historical background: the basic case for the benefits from trade, stated just as the Depression’s beggar-thy-neighbor policies led to a giant contraction of international commerce, followed by an update on the postwar policy consensus about the virtues of gradual, managed trade liberalization.
The second section, “Who, Whom?”—titled after the old Bolshevik adage that politics revolves around who wins and who loses—showcases the revival of U.S. trade debates in the 1980s and 1990s, when deindustrialization spurred fresh concerns that increasingly liberalized trade was hurting U.S. workers, particularly in the manufacturing sector. From Robert Reich to Paul Krugman, unemployment to wage stagnation to economic inequality, many of the authors and issues represented could be ripped from today’s headlines.
The third section, “New Millennium, New Era?” continues the story into the twenty-first century, as the spread of the digital economy and rise of China and other developing nations gave a new twist to old disputes. Does the traditional calculus of comparative advantage still hold. Are any jobs safe from outsourcing? And how did the TPP become the centerpiece of the global trade agenda?
The final section, “Today and Tomorrow,” takes stock of the current state of knowledge and policy, offering authoritative assessments of what has actually been learned over the years and putting the tussle over the TPP in its proper intellectual context. Just as war is too important to be left to the generals, so trade is too important to be left solely to the economists—or to demagogues and the uninformed. So read and decide for yourself!