Fareed Zakaria at PostGlobal

Fareed Zakaria

Editor of Newsweek International, columnist

PostGlobal co-moderator Fareed Zakaria is editor of Newsweek International, overseeing all Newsweek's editions abroad. He writes a regular column for Newsweek, which also appears in Newsweek International and often The Washington Post. He is a member of the roundtable of ABC News' "This Week with George Stephanapoulos" as well as an analyst for ABC News. And he is the host of a new weekly PBS show, "Foreign Exchange" which focuses on international affairs. His most recent book, "The Future of Freedom," was published in the spring of 2003 and was a New York Times bestseller and is being translated into eighteen languages. He is also the author of "From Wealth to Power: The Unusual Origins of America's World Role" (Princeton University Press), and co-editor of "The American Encounter: The United States and the Making of the Modern World" (Basic Books). Close.

Fareed Zakaria

Editor of Newsweek International, columnist

PostGlobal co-moderator Fareed Zakaria is editor of Newsweek International, overseeing all Newsweek's editions abroad. He writes a regular column for Newsweek, which also appears in Newsweek International and often The Washington Post. more »

Main Page | Fareed Zakaria Archives | PostGlobal Archives


The Democrats' Dangerous Rhetoric

Despite their spirited squabbling, the Democratic candidates are united in their view that one big benefit of electing either of them would be an improvement in America's reputation and relations with the world. Hillary Clinton promises to send special envoys to foreign capitals the day after she's elected. Barack Obama offers to reach out to America's foes as well as friends. Unfortunately, none of this will matter if they continue to spout dangerous, ill-informed rhetoric about trade.

What the rest of the world - particularly poorer countries - really want is for the United States to continue its historic role in opening up the world economy. For a struggling farmer in Kenya, access to world markets is far more important than foreign aid or U.N. programs. If the candidates think they will charm the world while adopting protectionist policies, they are in for a surprise.

Already the mood is shifting abroad. Listening to the Democrats on trade "is enough to send jitters down the spine of most in India," says the Times Now TV channel in New Delhi. The Canadian media have shared in the global swoon for Obama, but Greg Weston recently wrote in the Edmonton Sun: "What he is actually saying - and how it might affect Canada - may come as a surprise to otherwise devout Barack boosters." The African press has reported on George W. Bush's visit with affection and, in some cases, contrasted his views on trade with the Democratic candidates'. The Bangkok Post compared the Democrats unfavorably with John McCain and his vision of an East Asia bound together, and to the United States, by expanding trade ties.

The backlash could be greatest against Obama because he's raised the highest hopes. A senior Latin American diplomat told me, "Look, we're all watching Obama with bated breath and hoping [his election] will be a transforming moment for the world. But now that we're listening to him on trade - the issue that affects us so deeply - we realize that maybe he doesn't wish us well. In fact, we might find ourselves nostalgic for Bush, who is brave and courageous on trade and immigration."

The fact is, NAFTA has been pivotal in transforming Mexico into a stable democracy with a growing economy. And, in Lawrence Summers's words, it "didn't cost the United States a penny. It contributed to the strength of our economy because of more exports and because imports helped to reduce inflation." Trade between the NAFTA countries has boomed since 1993, growing by about $700 billion. No serious economists or experts believe that low wages in Mexico, China or India is the fundamental reason that American factories close. And labor and environmental standards would do very little to change the reality of huge wage differentials between poor and rich countries' workers.

The candidates' supporters often argue that they don't really mean what they say, that their proposals on trade agreements involve only minor tinkering. It is an odd defense of candidates promising change, honesty and a new approach to politics to say that they are being cynical and hypocritical. Besides, Obama and Clinton propose renegotiating NAFTA, which is a terrible idea. (And one that has prompted Canada's prime minister to retort that if that happens, his country would like to get more concessions from the United States.) Clinton also has proposed that free-trade deals be reevaluated every five years, which is absurd. The benefits of trade deals lie in their permance.

Both candidates surely know that it is their general attitude and rhetoric, not their policy papers, that matter. On this crucial topic they are pandering to Americans' worst instincts, encouraging a form of xenophobia and chauvinism and validating the utterly self-defeating idea of protectionism.

I know, I know. This is all about the Democratic primaries in states like Ohio and about union support. But you can't target messages so easily anymore. What is said in Ohio is heard in Ghana, Bangladesh and Colombia.

And isn't the point of leadership to educate and elevate people, not to pander and drag them into the swamp of ignorance and fear? There is a way to speak about the pain of globalization - and about the need for investments in retraining, education, health care and infrastructure - so that we can compete but also absorb the shocks of a changing global economy. Unfortunately, that is not what the Democratic candidates are talking about.

I'm not even sure that protectionist rhetoric works that well in a general election. Americans like optimists. Railing against Mexicans, Chinese and Indians for stealing American jobs smacks of anger, paranoia and fear of the future. Americans want hope, as Obama says, "hope in the face of difficulty, hope in the face of uncertainty, the audacity of hope." Where is that courage now?

Editor's Note: Fareed Zakaria is the editor of Newsweek International, and co-moderator of PostGlobal. His "World View" column and recent pieces for Newsweek can be found here.

Comments (57)

Muhammad Ali:

Mr. Zakaria I and my father watched your new show GPS and were pleased with topics you talked about and the guests that you had. We want to know what is country of origin that you are from? Please keep the good work we look forward to next sundays show.

Good Bye:

Progressives/Marxists are liars PERIOD. Now with that out of the way, isolationism in the US will return. And this time it may be for a long time. (yeah, I already hear the snotty comments "make it forever" - yeah what the FUCK ever.) The point is: we no longer care what the world thinks. PERIOD. If we rebuild our industries, while going into a depression while it occurs, so be it. If it means we as a people will have to scratch by while it occurs. so be it. I once was an internationalist, that time nows seems a LONG time ago. It's time to scream independance again...

Indiano:

FF: Read this: U.S. employers slashed jobs by 63,000 in February, the most in five years and the starkest sign yet the country is heading dangerously toward recession or is in one already.

http://www.iht.com/articles/2008/03/07/business/7econFW.php

Anonymous:
ff:

"I agree with Fareed. Free trade agreements are not the cause of unemployment in the U.S."

Hey B.M.: good post, but you didn't go far enough. There's no need to explain the cause of unemployment in the U.S. because the United States does not suffer from unemployment in the first place. We're pretty much at full employment, and have been for a long time. All the outsourcing/offshoring/factory closures people rage about haven't added up to any noticable drop in employment. On the contrary, we've been creating many more jobs than have been displaced for the past decades; how else could we manage to sustain full employment while simultaneously importing more than 1 million workers per year? The whole idea of an America that's hemmoraging jobs and generally going down the tubes is at complete odds with reality, where millions of people are clamoring to come here because of the abundance of jobs available. It's time people started calling protectionists on their reliance on a fantasy world to back up their rhetoric.

Wallace:

As a Democrat, I used to think Newt Gingrich had nothing useful to say. Now, I am not so sure:
http://edition.cnn.com/2007/POLITICS/08/08/gingrich/index.html#cnnSTCVideo

Anju Chandel, New Delhi, India:

You are right, Mr. Zakaria. America should understand that the best strategy to play any game - trade included - is to be aggressive. Defensive - protectionist - tactics only make the situation worse. There is no point in lamenting the emerging economies for their 'receding economy' with 'jobs lost' sobs etc. The ills plaguing their economy are widespread which have led to this almost imminent recession. They just need to 'see' them and then work towards weeding them out, intelligently.

Deb Chatterjee:

In my last post, the line:

"These softwares were hard engineering design/simulation tools."

should be corrected to read:

"These softwares were NOT hard engineering design/simulation tools."

Deb Chatterjee:

IndianO,

You *ARE* right on every count, though you may not have been poetically articulate. The only comment I have is as follows:

1. Salaries for Comp. Sci grads were simply sky high without any reason. It looks like that if you knew how to write some code/software, you could hog some hundreds of thousands of dollars without any question. The easy part was that this was "intellectual capital" and other than that no investment was needed in terms of real infrastructure. These softwares were hard engineering design/simulation tools. They were just for situations like creating a sexy webpage, making salaries and credit card bills, etc.

Now the above can be done in India/China are 1/40th of the cost with no real investment, but proper access to the host nation's intellectual capital. The quality remains almost the same and turnaround time is almost nil. With the 12 hour time difference between USA and India, a work order submitted via Internet to a company in India returns the job back the very next day when the US customer is just waking up. This generates euphoria for the US customer. Less cost and reasonable quality of the job. Depending on the service, the need for a high quality job is not that critical, and hence acceptable quality is OK given the price. Just like Walmart. Low prices for the garments made in India, whose durability is OK. They may not last a lifetime, but still fine.

Its a complex process: enormous corporate greed, no investment in hi-tech, and mediocre expectation from the home turf. All that gets you.

Jack:

Mr. Zakaria and his ilk should be outsourced, and would be in prison in a rational democracy. the publishers of toxic waste should join him.

Ali Ettefagh (PostGlobal Panelist):

America is beyond the point of return on global trade as it is addicted to cheap labour (via illegal immigration and cheap imports). If it were to shift production back to home turf, and let's assume that it will keep the same immigration policies), then inflation will shoot up to higher levels. That is already a worry for the population.

There is a doctrine in economics called The Dutch Disease, essentially what happened to The Netherlands in early 1970s when energy prices went up and Dutch industry was no longer competitive in 1980s. In case of America, the financial services sector has caused decay of the industrial base for many goods. The sale of air tankers by EADS to the Airforce, against Boeing, is one example.

So, the campaign slogans are just that. In the real world, if America restarts its industrial base with its current inefficient energy consumption, it will have a big inflation monster to deal with--as if the current stagflation monster is not a big enough problem.


The real problem with American economy is EDUCATION. We in India donot fear the protectinist RHETORIC of OBAMA because after all Americans know where the better is spread.EU is alsready introducing the BLUE CARD knowing Indian talent.
Americans want to sell missiles themselves by making North koreans stop. They have been selling weapons and for that they need conflict. As you rightly said globalisation is affecting Terrorism also along with communication.How to have conflicts without it affecting american mainland?
Even if OBAMA is elected will he be able to control the military industrial complex rrepresented by halliburons,BoeingHughes etc?If he controls them, how America can survive as a nation?

iece:

Rethoric or simply lies¿ ..more lies( Republican and Bush style or EEUU style?) made in USA for the world.
They lie to the EEUU people.., to the world and to themselves

Karim Sahyoun:

Mr. Zakaria,

You know as well as anyone that courage is fine, but is of no use whatever if you can't get elected. Given the fact that both parties are controlled by their most extreme elements (McCain was lucky that Romney and Huckabee split the traditional Republican vote) and that the press on the whole is lazy and pandering... well, you get the rest of my thought.

And to Mr. Pagliuca, as someone who has been involved up close as companies decide to close factories down and move abroad, I agree with you that those economists that Mr. Zakaria cites are, to put it nicely, deluded. Where labor is a major cost component and high skill is not a requirement, these companies move because of wage differentials. Lower environmental regulations are also a major factor. None of the companies that I have been involved with have done this out of pure greed, as portrayed by many. They have done it because they can't get their product into Wal Mart et al unless they are the lowest price. And low prices are what American consumers want.

Windfall:

If Obama, far and away the most liberal member of the United States Senate, is elected president, you will see runaway entitlement spending coupled with higher taxes, institutionalized racial discrimination and more onerous and unnecessary regulations that stifle innovation, raise prices and erect impenetrable barriers to entry for job-creating entrepreneurs.

You will see an all out attack on successful, responsible people as they are enslaved to subsidize irresponsible behavior such as dropping out of school and having babies with no means to support them.

You will see Asians and Caucasians discriminated against on an institutionalized basis in order to provide guaranteed outcomes to politically-favored minorities including criminal aliens.

You will see runaway environmentalism that makes it impossible to build any sort of power plant or refinery or drill for oil anywhere and that, together with a tax on all energy, in furtherance of the global warming/carbon credits trading scam, will raise the price of everything as well as result in rationing of fuel and other resources.

All lessons from the Great Depressions ignored, you will see protectionism that will raise prices for American consumers and cripple emerging economies throughout the world.

You will see government subsidies of biofuels that enrich the connected while raising both food and energy costs for everyone else.

You will see a government takeover of the healthcare system that will result in lower survival rates for common illnesses, rationing of treatment options, less innovation and death-by-delay in treatment delivery as is already the case in Canada, Europe and Japan.

You will see the appointment of activist judges that, as with prop 187, usurp all power and make it impossible for citizens to intervene to protect their interests even with direct ballot initiatives.

You will see a decimated military coupled with a naïve view of the world that results in both immediate and permanent damage to our national security.

In essence, it will be a return to Jimmy Carter and worse. Remember the stagnant economy with runaway inflation, gas lines and a 21 percent prime interest rate?

That’s the “change” that Obama is bringing.

You might call it “Back to the Future” except that this time, we will also have some 40 million (and counting) unskilled criminal aliens and their babies to support.

Hans B:

First comment: there is no such thing as "free trade". There are always rules and barriers, and when such barriers are not in the form of taxation, they are in the form of standards, environmental regulations, bureaucracy, or other. What seems clear from NAFTA is that trade has been selectively "freed" in a way that benefits the wealthy in all three countries, not the workers.

Second comment: I am really very, very surprised to learn that we foreigners are alarmed at the Democratic candidates' rhetoric, and reassured by that of Mr bomb-bomb-bomb-Iran. It seems to me that a continuation of Big Brother America which eavesdrops on us, which records our every conversation and email, which kidnaps and renders some of us with no court trial let alone an apology in the case of "mistakes", which bullies our governments to get its way on even the most trivial matters, which considers itself unbound by any law, and which even makes war to get its oil, is infinitely more alarming than anything any Democrat has ever proposed.

bruce:

This is all about the Democratic primaries in states like Ohio and about union support. But you can't target messages so easily anymore. What is said in Ohio is heard in Ghana, Bangladesh and Colombia.
------------------------------------------
Not to mention Iraq, Iran, Pakistan & Afghanistan.

As goes the QUESTIONABLE JUDGMENT about instant withdrawal from the War in Iraq, we can now add trade fiascoes as well.

AgentG:

This article appears hastily posted and needs to be reviewed for errors. In para 5, instead of:
No serious economists or experts believe that low wages in Mexico, China or India is the fundamental reason that American factories close.

I believe FZ meant to write:
No serious economists or experts *doubt* that low wages in Mexico, China or India *are* the fundamental reason that American factories close.

If I am wrong, then FZ has totally lost me in his self-contradictions.

Also permanence is misspelled in para 6.

Although usually eloquent and coherent, this piece by FZ is not representative of his work, and does not convey, IMHO, what the author intended. The argument for free trade needs more elaboration, in particular, what the alternatives are and what consequences those alternatives entail. This article is too piecemeal and does not connect the dots. I would have hoped that FZ had learned the lesson from Mr. Ghandi's overly hastily submitted piece several weeks ago, with tragic consequences.

I believe what FZ is trying to say is that attacking free trade policies to gain votes is a dangerous approach for the Democrats, and that the world is listening carefully. What I missed was a discussion of which policies we should consider to maintain free trade, but also maintain fairness to the American market and workers.

For example, eliminating offshore tax havens, food/drug regulation for imports, and eliminating tax breaks for firms who choose to ignore investment in human capital in the USA are all policies that should find rock solid majorities in Congress. Or finding some way to penalize corporations that eliminate their pension benefits -- poof! It's not about restricting free trade and competition, it is about stopping economic incentives to destroy the know-how and earning potential of the American middle-class. Another example, if we begin to promote clean-green technology with tax dollars, then we should rightly demand that those investments fertilize American market soil, and provide jobs and demand here, not abroad.

PS: Fareed, if you need a competent second pair of eyes to review your publications, I am glad to volunteer, write me: goel.tx@gmail.com !

Kevin:

When Fareed says:

No serious economists or experts believe that low wages in Mexico, China or India is the fundamental reason that American factories close.

He is arguing that "trade is not the cause of the problems of America's workers." It may not do them any harm (at least Mr Zakaria doesn't think it does), but he's not even arguing it does American workers any good. He doen't address the issue. So what do American workers get out of it? Actually, I don't think Mr Zakaria cares. That is the position of political elites. they don't care about "the great unwashed". That is why many others don't trust them. Globalization , or what ever you want to call it, is a fun thing to talk about if you like polysyllabic words for their own sense.

What Mr Zakaria cares about is what is good for foreigners. That may not be mutually beneficial, but as I said, Mr Zakaria doesn't care.

And actually, there are very few serious trade economists who completely dismiss the Heckscher-Ohlin Trade Model and the factor price equalization theorem. The theorem posits that if one opens economies to trade with the rest of the world, eventually factor returns (wages and profits) are equalized. That is to say that US wages fall and Mexican wages rise until they are equal. Not good for American workers. Mr. Zakaria's sweeping statements are not factually true.

Mark W.:

Yes, the world is listening my friend. A political tongue is often excused by some as being "lies of necessity". And yet if I am true to myself, then perhaps I need be true to you as well. However, a silent tongue is a threat to democracy itself. So why not sit back and enjoy the show ? There have been some setbacks in noble aspirations in the last 7 years like WTO Charter membership without a pre-requisite of democracy. And some States of the world are exempt from that political influence. Politics can ruin the best of lives for sure.

Indiano:

The talk about free trade and offshoring is all fine but who does it benefit most? I tend to agree with the view that offshoring is happening because of two main reasons: (a) lower cost, and, (b) corporate greed. But I guess B is a more prominent reason. That's how the British empire was made: greed, but now that the world is being run by the corporate and moneybags, and democracy is a highly manipulated game, things will keep getting worse for countries like America.

I have often wondered how could a country do everything possible to make itself poorer and others richer: Open your markets and universities for foriegn talent and let them stay on to join the workforce: what's more, the corporate ship out the remaining jobs to China and India, etc. I believe that the countries that stop using their own labout will see decline in the end. China is growing because it is using its labout force to the hilt. So, how could a country like America dig its own grave? I don't understand this. Meanwhile, Al Qaeda is draining the Us economy by engaging it in wars in several place and that was their stated goal. Can't the Americans see it.

As of offshoring, the trend will grow in America. Why? Just read this little piece of info:

Computer science class of 2007 smallest this decade

"Interest in computer science soared during the late 1990s and in early 2000, but with the dot-com collapse and the increasing use of offshore outsourcing, it slumped back. Vegso said the enrollments in computer science may be affected by interest in IT programs that aren't part of a computer science program.

What lies ahead for those grads? The CRA doesn't look at how well computer science graduates are doing upon graduation, but the general enrollment trend is often cited as an argument for increasing the H-1B visa cap, which is used by skilled workers. Microsoft Chairman Bill Gates has cited declines in computer science enrollment as a reason for opening up the U.S. to more skilled workers, and will likely make that argument when he appears March 12 before the U.S. House Science and Technology Committee."

More here

http://www.computerworld.com.my/ShowPage.aspx?pagetype=2&articleid=7795&pubid=4&issueid=131


All the internationalists here could be chuckling and what we read from Fareed .

1 NAFTA ,perhaps he doesnt know has not been booming prosperity but dictatorship of masses .And these orderlinesses of Nafdecs Naftas Septicas make family that will forever be unknown and in gloom of food and shelter in name of 'vote'. This is Americanism to the people but not a ticket to USA or more than a 8/9 photograph in life while secularism was a dictation and Tsunami had to get starlike reception in Newyork.

Mike G:

"For a struggling farmer in Kenya, access to world markets is far more important than foreign aid or U.N. programs."

Yeah, right. Unfortunately, the facts are the opposite. Countries where they are giving generous subsidies have health farm industries. One country as an example, is the US. In Africa, they are realizing that doign what we DO, not what we SAY, is more effective.

Zakaria was a secret advisor to the Bush administration as they "marketed" the Iraq War to the US population. Why does Newsweek employ these right-wing propagandists posing as journalists?

Deb Chatterjee:

Krishna wrote:

"I haven't seen any awakening in thi scountry with a push towards increasing domestic competency in this area."

That's a culture thing. Just as most Americans cannot swallow paying taxes for benefit of higher education. While, it is acknowledged that higher technical education is the key to get new hi-tech stuff around.

Similarly, that government and companies wont fund basic and applied research to beef up the hi-tech, is a perception problem. As you opined, "too many problems, too few solutions". Well, that's a nihilistic approach. What should USA do ? Just stand in the corner with hands folded ?

Diogo:

As a foreigner living in the US, I agree that in other countries people will not appreciate more American protetionism. But that is because of the double-standard more than anything else.

But to say that "What the rest of the world - particularly poorer countries - really want is for the United States to continue its historic role in opening up the world economy" - that's just not true. The poor farmer is not having access to more markets because of Free Trade - he is actually becoming unable to sell his products even in his local market.

And since when is Mexico a stable Democracy?? The last Presidential election was widely supposed to have been stolen and caused months of riot.

In fact, if you go to Southern Mexico you will see that Zakaria is wrong on these two points: a) Mexico is not a stable democracy; b) people do not like Free Trade.

Wake Up America:

In a globalized world, every nation for itself. America can no longer afford to lead the world, nor does the world want it to. The world wants to fool American into believing that it still has a role to play because they wish to milk us some more. They have benefited from our open policies for so long, while simultaneously haranguing us in a most crude fashion. America must look inward and focus on Americans. Our only hope is to become an isolationist country once again.

M Stratas.:

Zakaria Freedman and all these pundits who for one reason or another erred in their analysis of the Iraq war, outcome of the war, etc. should be taken with major skepticism. They are no more accurate about what they write about than our own judgments and opinions. Free trade has not been good for America in the past 6-7 years because the rules of the game have not been observed by our trade partners, such as Communist China, EU etc. Obama is right ot re-negotiate some terms as they should in order to allow our workers to compete fairly. Corporations that set up their HQ outside the States and outsource jobs do not deserve to get tax credits or tax reduction. It's like a man asking to be kick by the person he is feeding or supporting. Ordinary Americans have more common sense than any of these so-called experts.

Sara:

How typical. Criticize America while it is sustaining you unabashedly until America threatens to no longer support nations that wish to remain on the dole forever. When America decides to no longer provide support to ungrateful countries, criticize the hand that feeds you some more, in the hope that America one day, by means of exhausting itself financially, loses its prominence in the world. You can be sure that none of its beneficiaries will come to its aid or even voice appreciation. The Arabs do not even see fit to lower gas prices yet America is supposed to sustain Arab nations that will eventually prove its demise, as is happening with Iraq. I say it is high time we elected officials that will focus on AMERICA FIRST!

ff:

"Why, then, do American companies close factories in the US and open factories overseas, if not for "huge wage differentials between poor and rich countries' workers"? I find it difficult to believe that these wage differentials are not a major factor in the decision to outsource manufacturing. "

Outsourcing of manufacturing is a red herring. American manufacturing employment is down because of automation, not offshoring. While some particular factories have moved offshore, just as many have opened here in their stead. We can see this in America's manufactured output, which has continued to increase every year for as long as anyone can remember. That said, manufacturing *employment* is down. The reason for this is that the new factories produce much higher-end goods, and so use lots of advanced automated manufacturing processes, and so employ vastly fewer people (albeit at much higher wages; populist pundits always neglect to mention the explosiion in manufacturing wages that's accomapnied the decline in manufacturing jobs). Unfortunately, lots of people in the government and media seem happy to let people believe that it's the fault of foreigners, rather than automation, for obvious reasons.

At the end of the day, if you want to work in low-end manufacturing, why should anyone pay Americans more to do the same work? The only way to do that would be protectionist measures that screen out foreign competition. This amounts to a tax on everyone else (since the prices of the goods they buy goes up in order to pay for the inflated salaries) to support people who have few skills and can't be bothered to learn any newer, more valuable ones. It will be especially hard on poorer people who don't work in manufacturing, as their cost of living will explode and they won't get a boost in wages (plus, the loss of foreign markets will probably destabilize their jobs and salaries). It would amount to taking a baseball bat to the knees of the entire American economy, in order to shore up the job security of low-end manufacturing workers.

A much better idea is to keep the free trade (which generates massive advantages for everyone through lower-cost goods and expanded markets to sell to), and work to encourage employment stability, rather than job stability. The point being that a competitive, dynamic economy (which is the best way to enrich everyone) requires a flexible labor market. The idea isn't to stop people from changing jobs (what is this, France?), but to ensure that they have the skills and support to find new, better jobs in a timely manner. Obviously, this would include expanded lifetime learning support, and universal healthcare would be a huge step forward in reducing peoples' anxiety about losing a particular job. Such an approach would be the best of both worlds: a dynamic, open economy coupled with a secure, upwardly-mobile labor force.

Plus, it would provide us the credibility we need to call populist protectionists what they are: shiftless slackers looking for a handout from everyone else. If you want a secure, high-paying job, develop some skills that will allow you to produce high-value products.

Bodo:

Most foreigners vastly overestimate the power of a US President. Congress makes laws, the Senate approves laws, the President only signs them. To be sure, a President has many ways of making his wishes known to Congress, but the details of an international treaty are worked out in long and complex negotiations between all parties, discussed in committees and so on, long before either the President or Coingress get to see them. As to unilaterally violating the NAFTA treaty, for example, we should perhaps remember that Canada is our biggest oil supplier and Mexico is our second biggest oil supplier. Perhaps it is easier to promise Ohio voters all kinds of stuff than to actually deliver.

j2hess:

"No serious economists or experts believe that low wages in Mexico, China or India is the fundamental reason that American factories close."

Ok, I know you are used to writing succinct pieces. But what are your citations for this claim? If not for lower labor costs, why have production jobs moved abroad?


"And labor and environmental standards would do very little to change the reality of huge wage differentials between poor and rich countries' workers."

Insofar as they restrict low-cost production, they are likely to maintain wage differentials. And, as you know, that is part of the point. We have investments in social welfare and the environment that increase the near-term costs of production in the US, and we don't want to give them up.

Economists can be blinded by the conventional wisdom, like any of us. Ordinarily they would call environmental costs "externalities" - factors not included in supply/demand price setting because they are spread out across the population or over time. A more efficient or effective market for allocating resources requires the reduction of externalities.

Yet in international trade, they want to ignore such externalities and fight to keep them externalized. Sure, they complicate the picture - but in the long run they're going to come back and bite us in the behind if we ignore them now.

Another externality is political blowback - economic change causes political instability (Nobel Laureate O. Douglass North - there's my citation for you).

During the last wave of globalization, the blowback led to renewed protectionism (Jeffrey Williamson - another citation). That led to the creation of overseas colonies to secure markets for national producers and globalized political friction among the imperial European powers. A nationalist from one of the Balkan colonies of the Austria-Hungarian Empire set off the powder keg with a simple bullet, and we got WWI and millions dead. WWI didn't settle the issues, so we reprised with WWII.

So, don't treat trade in isolation from politics and politics by other means, i.e., war. A little moderation in pursuit of a good thing might help extend the trend by allowing economies time to adjust.

I recently read Harold James' The Roman Predicament. He summarizes Gibbon's analysis of the fall of the Roman Empire: mostly the unsurprising results of immoderate greatness. (There's a lot of good stuff in James; highly recommended.) Let us endeavor not to repeat all the mistakes of previous empires.

Krishna:

Deb Chatterjee,

The US has far deeper problems than it realizes; labor unions being able to pressure the next President being a mere blip. BTW, Ted Kennedy's endorsement doesn't make Barack Obama any more protectionist than he is, or doesn't take away the protectionist aptitude in Hillary Clinton.

American Dominance is a thing of the past. For the past 15 years software jobs are being outsourced, or grabbed by hordes of foreigners on H1-B visas. I haven't seen any awakening in thi scountry with a push towards increasing domestic competency in this area. Pumping money for basic reasearch is just about impossible in the current environment, when even applied research is suffering. The fact that the state and federal governments are facing severe budget problems doesn't help.

Maurice says "If the US is to remain a valuable trading partner, it has to find a way to balance its imports and exports".

Prefectly true, but it is too easily said and too hard to implement.

The US has a voracious appetite for cheap goods, and import away, it will. And export too. Sometime ago I read that the #1 and #2 items exported from NY are scrap iron and scrap paper.

The one reason things are going on as long as they have been with ever-growing and recurring annual deficits is that the foreign banks and govts holding American debt realize that if they stop lending money, their holdings will also lose in value! A situation analogous to riding on a tiger, and being afraid to get down.

Too many problems, too few solutions, not enough appreciation of the problem, and no serious desire for a solution; because any solution involves serious hardship and a lowering of the standard of living which no politician, democrat or republican is willing to prescribe (I am not even sure if they comprehend).

M. Stratas:

Zakaria Freedman and all these pundits who for one reason or another erred in their analysis of the Iraq war, outcome of the war, etc. should be taken with major skepticism. They are no more accurate about what they write about than our own judgments and opinions. Free trade has not been good for America in the past 6-7 years because the rules of the game have not been observed by our trade partners, such as Communist China, EU etc. Obama is right ot re-negotiate some terms as they should in order to allow our workers to compete fairly. Corporations that set up their HQ outside the States and outsource jobs do not deserve to get tax credits or tax reduction. It's like a man asking to be kick by the person he is feeding or supporting. Ordinary Americans have more common sense than any of these so-called experts.

dancewater:

"The fact is, NAFTA has been pivotal in transforming Mexico into a stable democracy with a growing economy."

So why are so many Mexicans risking their lives to come to the US to work at any menial job they can find?

BECAUSE THEY WANT TO FEED THEIR FAMILIES!!!!!!!!!!!

What planet are you living on - the "reality is what I say it is" planet?

Deb Chatterjee:

Anonymous wrote:

"As to your point about a scarcely noticible quality change, that's only so because people are idiots, by and large, and oblivious to anything beyond 3 months from now. I have noticed a clear reduction of the quality of goods coming from overseas. They break easier, don't work as well, and need replacement so much more frequently that the lower cost per unit to the consumer is nothing but a sick joke."

That's a real bummer. Japanese cars are inferior to GM, 'coz they break easily ? What planet you live in ? Regarding software(s), which don't break (??) like cars, I have never read anywhere that foreign generated softwares, especially by Microsoft which has massive operations in Bangalore, India, are not working - implying "broken". You must be one of those few who have a hatred for anything colored.

The offshoring is happening because of two main reasons: (a) lower cost, and, (b) corporate greed. The second, i.e. (b), is the main problem. Corporations are here to reap benefit. That is, they are offshoring jobs, and making huge profits which in turn helps their shareholders. But, they are NOT pumping those profits into new research and technology innovations, which one may recall what Ma Bell (original unbroken AT&T) did in the golden years till it was broken into Lucent and etc. That is the cause of decline of hi-tech jobs in USA. This is causing USA to lose its leadership position in the hi-tech world. The main difficulty is that routine "processing" jobs in USA are prohibitively costly. Many of them could be very well automated resulting in long term profits. This would be a major headache for the organized labor unions. So, the other cheaper alternative is to outsource/offshore these routine processing jobs. Unless something new in applied research areas in engineering come sup, these jobs will be lost.

There is another (third) thing. Manafacturing jobs are basically all connected to engineering. However a foreign-born legal immigrant, who has an engineering degree from an equivalent foreign university, can come here and join the workforce straight away without having to wait to prove his/her skills. Not so with medical and law professions. There a foreign-born doctor with a foreign degree can NOT join the medical profession right away. S/he has to pass the certification/accreditation board administered test, get certified and then start to work. The medical profession has more in-built protection than engineering (i.e. manafacturing) jobs. So, depending on the nature of the job, the market stability varies. However, all said and done, you cannot, like Barack Obama says, turn the tide now. Its too late. Its either you beat'em or catch'em. (BTW, read B.M.'s post on this thread. It makes a lot of sense.)

Do you understand now ?

MickeyONeill:

The world is hardly "flat" and as James Fallows wrote recently in the Atlantic Monthly.


(http://www.theatlantic.com - China Makes, the World Takes.)

"Global trade involves one great contradiction:

The lower the barriers to the flow of money, products, and ideas, the less it matters where people live.

But because most people cannot move from one country to another, it will always matter where people live.

In a world of frictionless, completely globalized trade, people on average would all be richer—but every society would include a wider range of class, comfort, and well-being than it now does.

Those with the most marketable global talents would be richer, because they could sell to the largest possible market.

Everyone else would be poorer, because of competition from a billions-strong labor pool. With no trade barriers, there would be no reason why the average person in, say, Holland would be better off than the average one in India.

Each society would contain a cross section of the world’s whole income distribution—yet its people would have to live within the same national borders."

This is a situation devloping all across the "old" industrial world however in Europe it is at least tempered by a solid social safety net, hard bargining by the EU as a trade block and a slower pace of free market deregulation (and slower economic growth)

wayne:

None of the Dems think trade is "bad". They're just making arguments for better agreements that take progressive issues into consderation. this whole thing is silly.

Anonymous:

Ho-hum. Same old Friedmaneqsue claptrap about free trade benefitting "everybody". Why isn't this more apparent? Why does free trade need apologists? It's hard to see how the average worker's salary remaining stagnant for the past 25 years is a benefit.

Free trade benefits the large companies and the people at the top in developed countries, and to a lesser extent, the developing countries as a whole. It does nothing by in large for the average worker in a developed country.

JimW:

Excellent post on a very serious topic. Protectionism has always resulted in economic pain for those who are the most vulnerable.

I am very impressed that a writer for Newsweek would have the courage to break with the left-wing viewpoint of that magazine and dare to disagree with the Democrats. That takes courage. Bravo.

B.M.:

I agree with Fareed. Free trade agreements are not the cause of unemployment in the U.S.

Let's take a clear example: car manufacturing. For many years, GM, Ford and Chrysler have been losing market share against foreign carmakers.

The problem? Foreign carmakers produce good cars, at decent prices, and American consumers buy them. Last year, sales for the Toyota Prius jumped 54%, while sales for the Ford Explorer dropped 36%.

In order to meet demand for their vehicles, Toyota, Honda, BMW, Hyundai, Volkswagen, are busy building new plants IN THE UNITED STATES that create thousands of new jobs IN THE UNITED STATES. Meanwhile, GM, Ford, Chrysler are forced to close some plants, which sends thousands of people to unemployment. It doesn't take a genius to guess which of these two developments will make headlines in the evening news!!!

Blame the Mexicans, the Chinese and the Indians. Blame NAFTA. Blame the yuan.

By the way.... where is American entrepreneurship these days? Where are Henry Ford, Alfred Sloan when we need them? Has any AMERICAN challenged GM or Ford in the last.... seventy years? In other industries you see Bill Gates turning the world around with Microsoft; you see Google dominating the internet era; you see Steve Jobs creating cute ipods and iphones. But in carmaking... all you see is a bunch of unionized autoworkers claiming huge benefits, and frightened managers trying to minimize loses. No creativity, no leadership, no vision, no risk-taking.

That is real problem. Americans have lost their most important virtues.

Blame the Mexicans, the Chinese and the Indians. Blame them for learning from America what it takes to succeed in the world.

Anonymous:

Deb Chatterjee:

"Mike Lang,

While your enraged lambasting of Zakaria is worth some amusement time, seriously, please convince me if you had a company which could do business at 1/40 th of the total the cost (expenses) in USA - say in India, wouldn't you go there if you knew that the quality of output would be scarcely noticeable ?

Please convince me that all things being equal your love for spicy chicken curry or lamb vindaloo would override your market senses. "

Deb,

The point is clearly that such companies DO ship their operations overseas because of drastic reductions in costs. This is contrary to Zakaria's point that "no serious economists or experts" think this is the case, or a problem. The point about liking the food is clear sarcasm, was that not obvious to you?

As to your point about a scarcely noticible quality change, that's only so because people are idiots, by and large, and oblivious to anything beyond 3 months from now. I have noticed a clear reduction of the quality of goods coming from overseas. They break easier, don't work as well, and need replacement so much more frequently that the lower cost per unit to the consumer is nothing but a sick joke.

Deb Chatterjee:

Krishna,

I am sorry but you are apparently misguided in your anti-Zakaria rhetoric. Zakaria is asserting exactly what you have stated. His overall view is that electing Democrats would pose a problem with US outsourcing, because of the possible objections from Teamsters and labor unions. It is too well known that Democrats are pro-labor unions, and Senator Ted Kennedy's endorsement of Barack Obama makes him a pro-labor (read protectionist) presidential candidate. Barack Obama has received the endorsement of the labor unions and if he lives upto that after elected, it would cause problems for USA's economy. Given that the "world is flat" (and now the change is irreversible), protectionism shall not help in any way - which is what you assert correctly. The way out to maintain American dominance in hi-tech sector, is to pump in money in basic and applied research, and hold granting organizations accountable for every dollar they spend. Thomas Friedman made this point in his book THE WORLD IS FLAT, and even intuitively arguing, Friedman is right on the money.

Deb Chatterjee:

Mike Lang,

While your enraged lambasting of Zakaria is worth some amusement time, seriously, please convince me if you had a company which could do business at 1/40 th of the total the cost (expenses) in USA - say in India, wouldn't you go there if you knew that the quality of output would be scarcely noticeable ?

Please convince me that all things being equal your love for spicy chicken curry or lamb vindaloo would override your market senses.

ff:

I think many of the Obama-boosters abroad will be in for a rude awakening regardless of their positions on trade. Generally speaking, foreign observers seem to view him not so much as a candidate but as a magical antidote for every complaint they have about the United States. The expectation seems to be that if Obama is elected, America will magically become a kingdom of peace and light that will somehow live up to all of the conflicting expectations and desires imposed onto us from the outside. While the whole "change" rhetoric has bolstered this perception, and there would certainly be some changes in the event of his election, he will still be beholden to the various domestic interests that have always influenced American policy. To put it simply, pleasing the voters in Canada or Europe isn't going to be a priority, cause they don't vote in the United States.

Krishna:

Pundit Fareed Zakaria is all wet.

Just for kicks, he starts with a gratuitous dig at Hillary Clinton; that she will send “special envoys” to foreign capitals the day after she is elected. This is the stuff normally reserved and expected of your opponent in a political race. Not from a columnist, however opinionated. It is imperative for the next US President to convince foreign governments that US will behave like a member in the community of nations, instead of dictating terms to them and that the Bush-Cheney policy of “if you are not with us, you are against us” is discarded. But if she is elected, she has to wait until she is sworn in, to dispatch envoys around the world.

The US no longer has a “choice” of opening up its markets or adopting protectionist measures. Zakaria and a whole host of commentatoros are oblivious to the underlying fallacy of this notion that the US is doing the rest of the world a favour by “opening up” its markets.

A generation of consumers who are addicted to buying stuff at Wal-Mart (Target is no better; just seems to be so benign compared to the evil Wal-Mart) will not be able to stomach any protectionist measures, even if they are clamouring for them at these campaign rallies.
What happens if the US markets are closed to the rest of the world, say, by instituting high tariffs on imported goods?

Shoes will cost more, clothes will cost more, the camera, the DVD player, the LCD television, the GPS device that goes in your car, just about anything you `buy in a store will cost more. It's been reported that the US is now, a net importer of food. Obviously that will cost more.

What does it do the “standard of living” of the US consumer? Are they prepared for this certain downgrade? Is Mr. Zakaria?

This rant is getting too long. I’ll just mention another of Zakaria’s implausible statements. He says -
“Clinton also has proposed that free-trade deals be reevaluated every five years, which is absurd. The benefits of trade deals lie in their permance.”

Where did Mr. Zakaria get his degree in economics? What is the basis of this assertion? Businesses routinely make deals with term limits, or with provisions for renegotiation after some time. Why are nations doomed with permanent deals?

rakesh wahi md:

Here is the crux of the problem with free trade -it is overall positive but disproportionately favors some and hurts a smaller but vocal minority. Unless the beneficiaries are willing to pay a small portion of their gain in higher taxes to be used for unemployment and retraining benefits the free traders will never find wide spread support.

center:


Zakaria wants to abandon US sovereignty. He condemns the least of what an independent country could do: renegotiate a flawed trade agreement. The only beneficiaries of NAFTA are foreign countries.

Zakaria is on the US side, or is he?

Michael Lang:

"No serious economists or experts believe that low wages in Mexico, China or India is the fundamental reason that American factories close. And labor and environmental standards would do very little to change the reality of huge wage differentials between poor and rich countries' workers".

Don't these two sentences contradict themselves. No I think the reason companies move production to China is because the people who run those companies love Chinese food. It has nothing to do with labor cost or the fact that the people in China who work in those factories get paid less than one twentieth of an American doing the same job or that you can employ 40 people in China for what it would cost you to employ one in the US. No its the food. They love the food.

Serious Economist Like Lawrence Summers who was fired from his positions as the Chancellor of Harvard college because he said women can't do science and mathematics as well as men because they are genetically inferior and do not rise to head of companies or universities because they just do not want to work as hard as men Replace women with "the niggers" and you really get a feel for how serious you should take anything this bigoted fool would say about anything. Seriously!

amir:

It's interesting how most people who responded just don't know how the world works today. We are living in a world with no economic borders, a result of less conflicts and less wars (yes, actually we're living in one of the most peaceful periods in the last thousand years).

Muscle jobs go to where muscle is cheapest, and that's not here and will never be here. America needs to train the muscle between the ears. That means better education, better teacher salaries, better universities and better research. It also means we need to figure out why it costs so much to give health insurance to our workers, a massive drain on our economy.

Changing trade agreements will never work, is an empty promise, and will solve nothing. It's going back against the promise of liberty which is what America is to the world.

Deb Chatterjee:

Dr. Zakaria,

I agree partly with you on the trade syndrome(s). What I do want to know is how to put US manafacturing and hi-tech jobs back on track in USA ? What, any future President of USA should specifically do to accomplish that ? My point is that most immigrants to this country, like you and me, came with the prospect of hope for gainful employment and a better life. That being said, I now see that now hi-tech jobs are shipped to India and China, aside the IT jobs, which are eventually eating away at the US hi-tech expertise. If tomorrow US has to ship its hi-tech defense contracts to India and China, and already such maybe in the works, then I would see it fair to label "the decline of the US hi-tech empire".

What do you (and other bloggers) think ?

P.S.: I am not voting for Dems. in this election.

leptus:

The Obama Problem in a nutshell is that he's lying to someone, probably the swing-cons. Or will he be telling progressives that the price of universal health care is a ban on abortions? I think not. Perhaps he can sell stoves at a shipwreck, perhaps not.

And so it will be with trade policy as well.

Rich:

Look, when you've been around the block a few times you know how to read the code; to pretend you can't when you're a journalist is just being disingenuous for the sake of producing an article. Did Obama's advisor tell the Canadians he didn't mean what he said about NAFTA? No, the words don't go there. But does Obama mean what he says about NAFTA? No, of course not. Nor does Hillary. And if McCain were still in a race he would be saying the same kind of things in Ohio. Why would none of these politicians be able to be honest about NAFTA? Because you have classes of deluded voters who take it as an article of faith that free trade has cost them their jobs and are determined to punish anyone who supports it. Are they right? Mostly not. And morally speaking, free trade is the only fair policy toward a world America has milked for so long. So no, none of the candidates mean the anti-NAFTA rhetoric they're putting out, but they're lying to people who have practically demanded that they be lied to. And all of us outside their Ohio/Michigan universe can see these facts, including you...

artistkvip:

while i agree foreign contries should expect a free and helpful trade atmosphere i think what non americans may not yet realize is that most..... let me say again most americans feel they have been sold out by thier representatives. they look at our system and quite correctly see that people are trying to buy our country and manipulate us like thier i guess used to operating in thier own contry but i sugest to them they might find like the japanese who bought america in the 80s and 90s .. you can buy the name and the building but the actual company that produces is the people of the united states of america.... and kind sir whether you be of any country whether china russia, arab israli, european, or eskimo .. we will throw your tea in the bay and start over. we are after all the people the rest of the world didnt want thats why they came to america..... we will work ... with anybody....we will not.. work for anyonone.. if everyone can understand this distiction and we get rid of all the idiots who want to lie cheat and steal and use violence and get back to doing business i think the world would work a little better. profit is not a dirty word.. a well run business inriches both the buyer and the seller its almost like magic ...obcene profit demanded by people who will not work or who are mentally ill and want more money than the could possibllyu spend.. now that should be a dirty word

Maurice:

Fareed,

What you say is all very nice but we have an $850 billion dollar trade deficit and it is rising fast. Of course everyone wants to trade with us since they usually (especially the Chinese, Europeans, and Japanese) gain an advantage from the deal while we often lose.

But how long do you think this nation and its economy will last with a trillion or two or three trillion dollar trade deficit? The dollar will be worth nothing when we get to that point and no one will want to trade goods for a worthless currency.

If the US is to remain a valuable trading partner, it has to find a way to balance its imports and exports.

Instead of worrying about what will happen to smaller nations if we add tariffs, how about proposing some solution as to how we can get some equity in our trade relationships? If tariffs are evil, give an alternative but do not implicitly claim we should continue what we have been doing.


Rick McDonald:

Mr. Zakaria,
I look to you to be an informed and reasonable voice on international affairs, but I am afraid I must concur with Mr. Pagliuca. While it is likely no serious economist felt the sting of NAFTA, many of my former neighbors in North Carolina certainly did. I would certainly like an explanation as to why there is no connection.

Revisiting NAFTA need not be a bad thing as the first draft contained as much protectionism as it did trade freedom, and a second round might iron out a few incongruities. For example, I cannot by drugs or financial services in Canada for 'safety" reasons yet sub-standard Mexican trucks can drive on our road system. No serious consumer believes these and other examples are helpful to their personal economy, and a "do-over" would be much appreciated.

Magi Bryan:

I have a split personality on the issue of trade. I can certainly see all the positives it has brought to both America and other countries. However, another part of me wonders why the guy in India is driving a new porsche and living in a great apartment and signing the praises of America for his good fortune being able to create software that was once made in Silicone Valley.

You know and I know that there is something wrong when the guy gets free health care, lower tax rate,, if any at all, and ability to buy that porsche for a price Americans could afford if it were offered.

Americans are very angry now and they will go after what it is they perceive to be the problem. Trade is seen as unfair and passed to purposely hurt American workers. A sell out of American ideals

It is much more complex than 'trade is good for the world'.

John Pagliuca:

Mr. Zakaria,

You say in your column that "No serious economists or experts believe that low wages in Mexico, China or India is the fundamental reason that American factories close. And labor and environmental standards would do very little to change the reality of huge wage differentials between poor and rich countries' workers."

Why, then, do American companies close factories in the US and open factories overseas, if not for "huge wage differentials between poor and rich countries' workers"? I find it difficult to believe that these wage differentials are not a major factor in the decision to outsource manufacturing.

Regards,

John Pagliuca

PostGlobal is an interactive conversation on global issues moderated by Newsweek International Editor Fareed Zakaria and David Ignatius of The Washington Post. It is produced jointly by Newsweek and washingtonpost.com, as is On Faith, a conversation on religion. Please send us your comments, questions and suggestions.