By Michael Lind, Tablet
Who benefited from the obvious nonsense that became post-Cold War America’s trade, foreign, and federal deficit policies?
In the three decades since the end of the Cold War, there have been three great public policy debates in the United States—one about trade, another about U.S. foreign policy, and a third about the federal deficit. In all three of these debates, the side that made the most plausible arguments lost and the side with the most illogical and factually unsupported arguments won. In all three cases, the misguided establishment position set the flawed and unstable foundations for the world we live in today—producing catastrophic and lasting consequences for Americans and others.
The first of these hugely consequential debates was one in the 1990s about “globalization” or the liberalization of trade and investment following the end of the Cold War. Skeptics raised two concerns about globalization. They warned that treaties like the North American Free Trade Agreement (NAFTA) that effectively merged the U.S. labor market with that of poor countries like Mexico would enable U.S. manufacturing firms to shut down production in the United States and transfer it to take advantage of low wages, sweatshop working conditions, and the lack of environmental laws and regulatory agencies. The skeptics also warned of the consequences of opening America’s markets further to mercantilist regimes like Japan, South Korea, Taiwan, and post-Maoist China. Individual firms in a liberal market economy like the United States, they said, could not hope to compete with foreign firms whose governments rigged competition on their behalf through tricks like currency manipulation, nontariff barriers to American imports, low-interest loans, and other tools from the arsenal of economic nationalism.