Thursday, June 28, 2007

The protectionist tide gets noticed...

Even while I support globalization on the whole, I have become convinced that we could do better the alleviate the misfortune of the biggest losers in the changes. Telling a 55 year-old autoworker to become a RN is no help, and rhetoric like that is one big reason many are no longer listening to rational arguments about the manifold benefits of greater world trade and integration.

Surprisingly, many of America's financial leaders are agreeing.
More striking are the report’s recommendations. It makes a strong case for the benefits of globalization (no surprise), but goes well beyond the usual corporate pablum of needing to equip American workers through better education. Since upgrading skills is a process that takes generations, the report argues, it will do little to shore up political support for globalization now. Instead the focus should be on improving the distribution of globalisation’s gains and doing more to help the losers. And that requires… a more progressive tax code and more (and better) government schemes to help displaced workers.

I especially liked some of the suggestions in the report.
The report takes particular aim at the (enormously regressive) payroll tax. Either payroll taxes should be integrated into the ordinary income tax system or the wage-cap on payroll taxes should be lifted. It brims with ideas for government tinkering: trade-adjustment assistance and unemployment assistance should be morphed into a single programme that offers wage insurance, portable health insurance and retraining. Communities should be able to federally insure their tax base against sudden economic dislocation (when, say, a factory moved to Mexico). [More]

We can afford safety nets for people other than farmers. If we don't make the effort, many of our gains could be rolled back as trade barriers are rebuilt.

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