The Financial Services Forum, a purportedly nonpartisan organization of CEOs from top banking, investment, and financial firms, has released a new study, “Succeeding in the Global Economy: A New Policy Agenda for the American Worker.” As the Wall Street Journal reported, “The effort marks one of the first times top business leaders have sought to weigh in collectively in the globalization debate.” It is a story worth examining. Running the organization is Donald Evans, a long-time Bush insider who played a prominent role in his 2000 presidential campaign and, until 2005, was his commerce secretary. Two of the three economists Evans commissioned to write the study–Matthew Slaughter and Grant Aldonas–also served in the Bush Administration. The third, Robert Lawrence, worked under Clinton. On cue, they received endorsements from Congressmen on both sides of the aisle–Barney Frank (D-Massachusetts) and Spencer Bachus (R-Alabama). (Nonpartisan, remember.) And they continue to lobby Capitol Hill successfully.
All three are experts on trade policy, with a history advising high-level officials. They regularly turn up in the financial press and have attracted some attention for their joint effort. In particular, Matthew Slaughter, an op-ed page fixture and perhaps the most visible economist in the group, was so happy with the report that he just had to ensure it reached all the right policy analysts and intellectuals. Open the July/August issue of Foreign Affairs and you’ll see the major findings republished under the thundering title, “A New Deal for Globalization.” What a way to lure a target audience!
For many political leaders, the apparent breakthrough is that the views of globalization’s defenders and detractors are becoming more compatible. Smaller now, they say, is the divide that has made it difficult for stakeholders across the political spectrum to reach a consensus on policies that could boost incomes and allay the fears of vulnerable workers. Of course, differences remain–spirited disagreement among knowledgeable parties being more productive than anodyne uniformity. Yet a broad coalition from government, business, and finance may bring economic issues into sharper focus in time for the 2008 elections.
The study exudes all the urgency and feeling of a well-timed political tract, fueled by the worry that protectionism, unless defeated soon, will dwarf other key issues in the national conversation ahead. “Left unaddressed, the trends in public opinion,” the authors warn, “will gather momentum and will shape the economic policy debate into the 2008 presidential elections and beyond. There is a real risk that, absent an effort to clarify and address the real economic challenges at hand, policies will be implemented that isolate the United States from world markets and thereby undermine the ability of U.S. firms and workers to remain competitive in a global economy.” The latest data supports their entreaty. A recent Financial Times/Harris poll shows majorities in the US and Europe wholly unconvinced that freer trade can serve as a bulwark against economic instability, with many citizens firmly supporting increased taxation on the rich. For their part, the three economists predict the grip of protectionism will tighten so long as workers at the bottom fail to see the benefits of global engagement translate into higher incomes and job security.
“Growth in real income,” they acknowledge, “has been extremely skewed to very high earners, with little or no growth for most workers,” but not without emphasizing, of course, that the results of trade liberalization across borders have been higher aggregate productivity and living standards for the United States. Big-picture analysis usually only comforts disinterested economists. To politicians and their constituents, clinical talk of aggregation does not sound especially soothing, for it raises awareness of abnormality, an undiagnosed illness, even, among those who don’t exactly fit the profile. If everyone else is really doing better, what is wrong with us? Why aren’t we earning more and living better? Where is the medicine?