To situate the ongoing debate over trade, let’s take a look at some of the key takeaways from Judith Stein’s book Pivotal Decade: How the United States Traded Factories for Finance in the Seventies.
Stein traces the evolution of American trade policy from Nixon to Clinton, and in particular she identifies choices that were made, across successive administrations on both sides of the aisle — and by Congress, that adversely affected U.S. manufacturing incentives.
Each of the eight takeaways is discussed in further detail here.
- Insanity is doing the same thing over and over again and expecting a different result: more agreements, more rules, same problems.
- There are eerie similarities to the collapse of Bretton Woods and today’s fight over the WTO.
- Our leaders prioritized foreign jobs over American jobs.
- So did our bankers.
- Our leaders thought hot money was a feature, not a bug….
- ….having gutted domestic investment incentives.
- Nixon’s advisors thought industrial policy was the answer. Carter’s didn’t.
- War-hero/President Dwight D. Eisenhower was left of today’s Republican party. Way left.
What does this mean for trade policy today?
- First, the prevalent view among many trade experts (and Econ 101 aficionados) that manufacturing jobs somehow naturally offshored themselves is not accurate. Some of the offshoring was the result of conscious policy choices, including tax policy.
- Second, the frustration with free-riding by our trading partners is not unique to this Administration.
- Third, that frustration led to a shake-up of the global trading system then, as it is now.
- And fourth, industrial policy has in the past been viewed — by Republicans, no less — as a necessary aspect of U.S. participation in the globalized marketplace we fostered.