It Isn’t a Zero-Sum Game

Peter Wallison, fellow at the American Enterprise Institute
The U.S. Constitution created the world's first free trade zone when it prohibited the states from imposing duties or otherwise restricting trade with one another. The free movement of goods and people among the states, the framers of the Constitution had concluded, would create a more perfect union. And so it has. More prosperous, too.

What if the Constitution had instead permitted industrial states like New York, Illinois and Ohio to prevent the outsourcing of jobs to the more agrarian southern states of Texas, Georgia, and Oregon? The northern states probably would have kept their industries, but their sales down South would have suffered because people there would be producing low-value agricultural products and thus be unable to afford more expensive manufactured goods. Wages in the industrial states would have been suppressed by poor sales and by the influx of southerners looking for better-paying jobs. So the northern states would probably have sought to prevent migration from their agrarian neighbors.

If this sounds vaguely familiar, it should. It's what the world would look like if the anti-globalization policies advocated by Barack Obama and Hillary Clinton in the primaries were ultimately adopted. These sound like economic issues but they have a moral core. Despite the growth in India and China-the result of opening their economies to trade-billions of people still live in poverty because they do not have the skills to produce high-value products. If the opponents of NAFTA and other trade pacts succeed in the next election, they will not only keep these people in poverty but ultimately suppress the wages of the very Americans they are appealing to. For every job that could be performed as well at a lower wage in Mexico, India or Nigeria, there is a person in that country who is not learning a marketable skill, a person in that country who wants desperately to get into the United States, a U.S. wage earner who is not meeting his potential and a U.S. consumer who is paying more than necessary for a product. How is it that the framers in 1789 knew more about economics and morality than some of today's politicians?

Isabel Sawhill, co-director of the Center for Children and Families at the Brookings Institution.
A nation that neglects its young is, arguably, a nation without much of a future. The choice is ours. We need to invest more, and more smartly, in the education and training of the current workforce and the next generation, to provide excellent early education for every disadvantaged child, dramatically improve the quality of teaching, and establish national standards for what all children should know. To fund these goals, we need to gradually reallocate public spending from the elderly to the young. Almost half of current federal spending is dedicated to the elderly, and seniors could absorb virtually all federal revenues in just a few decades. We need to rein in the growth of Social Security and Medicare in order to invest in early childhood education and health programs, some of which have a track record that would make a venture capitalist drool.

Diane Swonk, chief economist of Mesirow Financial
Globalization has become an easy scapegoat in an economy that is evolving too quickly for many to adjust. Rapid technological change and the ensuing surge in productivity have cost the United States more manufacturing jobs than all our free trade pacts. Then consider the skills required to operate the complex machinery that now makes up the average production line.

In the move from an industrial to a knowledge-based economy, wealth has pooled at the top of the income ladder. (Something similar happened when we shifted away from agriculture). The recent housing market bust has only exacerbated the reality of growing income inequalities in the U.S, and the sense in middle income households that they are being left behind.

If you add in the impact of those who were born since 1980, it's hardly surprising that populism is on the rise. These are the same kids who drove their BMWs to protest World Trade talks in Seattle in 1998, and ironically, drive Toyota Prius' as they bemoan corporate layoffs and outsourcing today. I can't say I blame them, given the mistrust surrounding multinationals and the Bush Administration, the main proponents of free trade. The bright spot is their propensity to stay in school. The tendency to achieve higher levels of education than their parents will help reverse the decline in living standards their families may have experienced, and education also could enlighten them on the benefits of globalization, especially for the world's poor.

Jim O'Neill, head of global economic research at Goldman Sachs
The bizarrely common idea that the United States is a victim of globalization is simply wrong. U.S. exports are growing at 11%, taking inflation into account. If you exclude oil, exports are bigger than imports and that gap is widening sharply. When I started analyzing trade data 27 years ago, I was taught that U.S. exports are-and always will be-only half of imports (this figure includes oil). Today, exports are 75% of imports. If exports continue to grow as quickly as they did this spring, the boom will contribute about three points to real Gross Domestic Product this year. This growth has prevented a formal recession and is helping many sectors of the economy, from agriculture to heavy manufacturing. Unfortunately, export industries are not the biggest employers, but I would say that their high productivity demonstrates the enduring success of the United States.

Jeremy Siegel, finance professor at the Wharton School of Business
Our economic slowdown stems from two sources: the housing crisis, which has "Made in America" stamped all over it, and the oil crisis, which has hit us badly because we import over 60% of our oil consumption.