If I had started reading the recent column by Financial Times columnist Rana Foroohar, “Free trade has not made us free,” in the middle of the piece, I would have first come across this sentence: “Our system of neoliberal globalization has created more wealth at a global scale over the past half-century than ever before.” And based solely on that powerful—and accurate—assertion, I might have assumed the column was a stirring defense of “neoliberal globalization,” and how supporters need to push back against those who would undermine it. 

But as the column’s headline suggests, I would have been wrong. Foroohar nestles that almost concessionary—almost boilerplate, really—sentence inside a broader argument that suggests a need to move beyond “neoliberal globalization” due to the “huge growth in inequality within many countries.” Well, that and the new need to “friendshore” supply chains to strategic allies. Also, climate change is in there, too. Foroohar:

The point here is that the current system of economic globalization isn’t going to magically dissolve political differences. We are heading towards a new, post-neoliberal paradigm in which values, rather than just “everyday low prices” as the Walmart retail slogan goes, become a more important consideration in economic policy decisions.

A few points:

First, let’s not downplay that bit about “wealth at a global scale.” While that phrase might make you think of Apple shareholders, I think of this wondrous fact from Our World In Data: “There are more than a billion fewer people living below the International Poverty Line of $2.15 per day today than in 1990. On average, the number declined by 47 million every year, or 130,000 people each day.”

Second, let’s be parochial. How have American workers been doing since 1990? Analysis by my AEI colleague Michael Strain—which can be found in his 2020 book The American Dream Is Not Dead (But Populism Could Kill It)—finds that over “the past three decades, wages for typical workers have grown by 20 percent using the CPI. And using the PCE—the better measure of inflation—finds a one-third increase in wages.” And with stronger productivity growth, wage growth might well have been even stronger.

Third, while Foroohar might hope that this “new, postliberal paradigm” will mean a greater commitment to “values, including human rights and commitments to climate change,” I would note that the right-wing populists who are also pushing for a new paradigm care nothing about those values. Be careful what you wish for. Populists want iPhones made in Cupertino, not Bangalore.

Fourth, about this “friendshoring” thing, I would refer to an excellent piece by FT columnist Alan Beattie. Here’s one of many strong points:

. . . the tools authorities have to refashion supply chains along strategic lines are clumsy and expensive. On the export side, governments can restrict sales of sensitive technology, as the US and EU have done over semiconductors and other products for Russia and China. But with imports, companies will go for cheap inputs and it will take serious fiscal or regulatory effort to make them shift suppliers on a large scale. That has implications for public finances or product prices, or both.

Fifth, markets work. As Cato Institute trade scholar has pointed out, “Many large chip-consuming companies are already adjusting their supply chains to account for geopolitical tensions.” And incentive-driven market moves are going to be a lot more effective than government mandates.

Finally, many globalization skeptics are still stuck in “China trade shock” mode. So let me highlight this 2017 podcast chat I had with Gordon Hanson, one of the author along with David Autor and David Dorn of the paper, “The China Shock.” Hanson:

If you wanted to say that trade with China has been bad for workers in Southern Ohio, parts of Tennessee and North Carolina, parts of Pennsylvania, that would be hard to argue with. But you can’t go from that conclusion to say trade’s been bad for the United States as a whole.  … And so if we want to embrace globalization, we’ve got to make sure that we’ve got the policies in place that help workers who are the losers from expanded international trade. And I think what we’ve learned after the fact and what we’ve learned from many folks’ perspective too late is that we have a counter set of policies in place when it comes to helping labor markets adjust. … So on the trade agreement side, that’s not where the failings were. The failings were that we didn’t appreciate the importance that China was going to mean for a relatively small number of places in the United States that were directly in line of competition with low-wage economies in the rest of the world.

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