WINNERS AND LOSERS: THE DISTRIBUTIVE
CONSEQUENCES OF TRADE
● The promises made by globalization
were not realized
● The corporations only got richer
● Academics assumed that the winners
could help lift the losers up
SKILLED AND UNSKILLED WAGES
● An example of how globalization had
destroyed jobs rather than create
them
● Skilled Wages: Technician, Carpenter
● Unskilled Wages: Farmer, Janitor
● Unskilled workers everywhere would
get the same wages
● Unskilled wages in advanced
countries go down
● President Kennedy: “A rising tide lifts
all boats.”
● Trickle Down Economics
WEAKER BARGAINING POWER
● Worker’s wages lowered by weakened
bargaining power
● Changes in labor legislation under
President Raegan and Prime Minister
Margaret Thatcher
● Corporations outsourcing jobs from
other countries
● Workers felt forced to accept lowering
wages and worse working conditions
● Race to the bottom, a vicious
downward spiral
● Protectionist Mentality
DEMOCRATIC PARTY
● Responsible for advocating for the
working class
● Cost of election increasing → parties
cozying up to sources of money
(bankers, tech entrepreneurs)
● Regressive Tax System - the rich pay
a smaller fraction of their income
● “Corporate Welfare”: unwarranted
subsidies to banks and corporations
BALANCING INTERESTS UNDER
MANAGED TRADE
● Managed Trade: kind of globalization
at the end of 20th century - beginning
of 21st century
● Free Trade ≠FREE Trade
TECHNOLOGY OR GLOBALIZATION
● Optimists argue that globalization isn’t
the only reason for inequalities
● Technology is also to blame
● Productivity growth > growth in demand
● Antediluvians: people against
technological advancement
● Optimists equate technological progress
to increased living standards
● Technology and globalization are linked
NAFTA (North American Free Trade
Agreement)
● Reduced and eliminated tariffs on imports
and exports between US, Mexico, &
Canada
Loss of Sovereignty
● Trade agreements = giving up certain
rights
● International rule of law somehow
maintains order
● World Trade Organization (1995): global
rules-based system
○ Adjudicating disputes and
preventing trade wars
● Trade agreements can also be for:
○ Relations and friendship
○ Reduction in Immigration, etc.
New Trade Agreements
● Focuses on regulations rather than tariffs
(ex. Emissions of pollutants and safety)
● Subsidiarity: Responsibility for setting
regulations should be assigned to the
level closest to the people