Generally speaking, candidates in tight elections stage speeches to highlight disagreements with their opponents. But in May 2000, George W. Bush, the presumptive Republican nominee for president, took the stage at a Boeing factory to declare his undying admiration for President Bill Clinton and the presumptive Democratic nominee, Vice President Al Gore. Clinton and Gore had been battling in Congress to grant China permanent normal trading relations (PNTR) and pave the way for its ascension to the WTO, and Bush wanted to make sure that everyone knew he concurred. On trading freely with an impoverished, communist regime—population one billion—there was no daylight, no debate. Back to privatizing Social Security, please.
However remarkable for a presidential campaign, Bush’s bipartisan display was entirely expected. At that time, a broad bipartisan consensus on globalization maintained an unquestioning commitment to free flow of people, goods, and capital around the world. They had crafted a set of arguments, each with its unique appeal, to persuade the American public that the nation must embrace as inevitable what was in fact a radical program of economic liberalization.
Each argument appeared sensible on its own terms, but each was built upon faulty premises or failed in the final analysis to support the ultimate agenda. With the benefit of hindsight, it is remarkable how hollow they ring. These are the four fallacies of globalization.
Part of Regaining Our Balance: How to Right the Wrongs of Globalization
The “End of History” Fallacy
The Cold War’s end brought forth an era of untempered hubris, in which American optimism transformed into delusion. Democratic capitalism had won the ideological struggle against communism, and thus its universal adoption was only a matter of time. Anyone exposed to American ideas would adopt them, so maximum exposure was the goal. Trade policy was enlisted in this campaign to accelerate the spread of liberal democracy around the globe, its use as an instrument of idealism superseding consideration of its basic economic effects. Economic and political liberalization were so inextricably linked that any nation adopting one would soon have the other. What would happen if nations adopted one but not the other was not, therefore, a matter of concern.
“Societies that open to commerce will one day open to liberty.”
—George W. Bush, U.S. President
World Trade Week (2001)
“I believe that having [China] in the WTO will not only have economic benefits for the United States and other countries […] but will increase the likelihood of positive change in China and therefore stability throughout Asia.”
—Bill Clinton, U.S. President
World Economic Forum (2000)
“Because of this agreement [PNTR], individual Chinese citizens, with a few clicks of a mouse, will be able to communicate with each other and with the outside world in a volume that nobody would have believed possible a few years ago.”
—Gene B. Sperling, NEC Director, Clinton Administration
Dallas Ambassadors Forum (2000)
“This is a time of great opportunity. What some call globalization is in fact the triumph of human liberty across national borders.”
—George W. Bush, U.S. President
Radio Address to the Nation (2001)
“International labor and environment rules are critically important. However, international trade shouldn’t be used as a pretext to force those rules upon other nations. Perhaps more important, trade sanctions should never be used as a tool of enforcing labor and environment standards. Trade itself creates the prosperity that leads to better working conditions and a better environment.”
—Chuck Grassley, U.S. Senator (R-IA)
Seven Principles of U.S. Trade Policy (2004)
“Open trade fuels the engines of economic growth that create new jobs and new income. It applies the power of markets to the needs of the poor. It spurs the process of economic and legal reform. It helps dismantle protectionist bureaucracies that stifle incentive and invite corruption. And open trade reinforces the habits of liberty that sustain democracy over the long term.”
—George W. Bush, U.S. President
The President’s 2001 International Trade Agenda (2001)
“Trade and investment help build democracies and trust.”
—Carlos M. Gutierrez, Secretary of Commerce, W. Bush Administration
Asharq Al-Awsat (2008)
“I also want to talk about openness as an essential antidote to the narrowness and extremism threatening peace, prosperity and security around the globe.”
—Josette Sheeran, Under Secretary of State, W. Bush Administration
The Brookings Institution (2006)
“Economic freedom is the best road to freeing the Chinese from the political control of the Communist Party. The U.S. should remain committed to its ideals of free trade and human rights not by imposing trade sanctions on China, but by reaching out to those Chinese who want freedom no less than do Americans. The best way to do this is to continue trading with China. China’s MFN status should be maintained without condition.”
—Brett Lippencott, Policy Analyst
The Heritage Foundation (1995)
“All sides would win: China as a responsible, disciplined trading nation, fully accepting its responsibilities, but also taking advantage of its WTO privileges; the U.S. and other nations having vastly improved and assured trading and investment opportunities in China; and the world as a whole knowing that exposure to the rule of law will inevitably affect personal, commercial and government conduct in China in a positive way.”
—Clayton K. Yeutter, U.S. Trade Representative, Reagan Administration & Warren H. Maruyama, Associate Director of Policy Development, H.W. Bush Administration
The Wall Street Journal (1997)
“The question raised by the McDonald’s example is whether there is a tip-over point at which a country, by integrating with the global economy, opening itself up to foreign investment and empowering its consumers, permanently restricts its capacity for troublemaking and promotes gradual democratization and widening peace.”
—Thomas L. Friedman, Columnist
The New York Times (1996)
“No nation on Earth has discovered a way to import the world’s goods and services while stopping foreign ideas at the border. Just as the democratic idea has transformed nations on every continent, so, too, change will inevitably come to China.”
—George H.W. Bush, U.S. President
Yale University (1991)
“Q: Does the geopolitical aspect worry you? Craig Barrett: Not particularly because, as pointed out by both the other panelists, capitalism has won and economy trumps all going forward. Q: You presume then that as China continues to open its markets and that economic development will tend to bring in its wake a freer political entity. To the extent they become more democratic, they become less challenging for us. Craig Barrett: You see it every day, that China’s entered the WTO. If you look at business startups, entrepreneurship, all you have to do is go to China if you want to see the leading edge on this. We are the biggest high-tech venture capital company in the world. Half of our investments on a runway, going forward are in Asia.”
—Craig Barrett, CEO, Intel
The Hoover Institution (2004)
“There’s no question China has been trying to crack down on the Internet. Good luck.”
—Bill Clinton, U.S. President
The New York Times (2000)
“[G]ranting PNTR to China represents but one of the aspect of the relationship with China that we will be pursuing in the years ahead—and one piece of the global economic system we would like to build. It will, however, be an exceptionally important piece—one that is fundamentally supportive of our broader long-term economic and broader national interests. Indeed, with due respect to all the other issues we work on, I believe this is the only vote that Congress will take this year that is likely to appear in a prominent way in history books 25 or 50 years from now.”
—Lawrence Summers, Secretary of the Treasury, Clinton Administration
The Wall Street Journal (2000)
“Free trade transmits more than just physical goods or services to people. It also transmits ideas and values. A culture of freedom can flourish whenever a great society, as 18th century economist Adam Smith termed it, emerges with the self-confidence to open itself to an inflow of goods and the ideas and practices accompanying them. A culture of freedom can become both the cornerstone and capstone of economic prosperity.”
—Denise Froning, Senior Fellow
The Heritage Foundation (2000)
“These are serious questions with no easy answers, but they start with a predicate—that American trade with China is a good thing, for America and for the expansion of freedom in China. That seems, or should seem, obvious. More trade makes China more connected to the rest of the world. China’s leaders have been very careful not to export their totalitarian ways to Hong Kong, because they do not want to strangle the goose that lays their golden egg.”
—Norman Ornstein, Senior Fellow
American Enterprise Institute (2000)
The “Can’t Stop, Won’t Stop” Fallacy
When not taking credit for effecting globalization, policymakers insisted the matter was entirely outside their control. Like a natural disaster, the free flow of capital and goods across borders cared little what the American people thought or how they might be affected. Appealing to democratically elected leaders to pursue a different course was futile.
“Because when it comes to globalization and the forces at work, we have to be realistic. There is no turning back.”
—Hillary Clinton, First Lady, Clinton Administration
The Sorbonne (1999)
“We all know about globalization. And we all have our own opinions of this historic trend that continues to bring nations, economies, and communities around the world closer together. Like death and taxes, in Ronald Reagan’s famous words, some things are unavoidable. We might add globalization to that list.”
—David M. Hale, Under Secretary of State, W. Bush Administration
American Chamber of Commerce in Jordan (2005)
“We are fortunate that, thanks to globalization, policy decisions in the US have been largely replaced by global market forces […] It hardly makes any difference who will be the next president. The world is governed by market forces.”
—Alan Greenspan, Chair, Federal Reserve
Tages-Anzeiger (2007)
“Globalization is a fact, not a policy option.”
—Xavier Becerra, U.S. Congressman (D-CA)
The Los Angeles Times (1999)
“Globalization will continue. It is a fact on the ground. As policymakers, economists, statisticians, political theorists, researchers, academics, and citizens—it is absolutely critical that accurately we model and measure the positive and negative impacts of globalization.”
—Susan Schwab, U.S. Trade Representative, W. Bush Administration
Woodrow Wilson Center (2008)
“We can no sooner stop globalization than we can stop winter’s giving way to spring.”
—Frank E. Loy, Under Secretary of State, Clinton Administration
U.S. Department of State (2000)
“What is the role of governments in shaping the new global economy? One role is to get out of the way—to remove barriers to the free flow of goods, services, and capital.”
—Joan E. Spero, Under Secretary of State, Clinton Administration
World Economic Development Congress (1996)
“Even as people take pride in their national independence, we know we are becoming more and more interdependent. The movement of people, money and ideas across borders, frankly breeds suspicion among many good people in every country. They are worried about globalization because of its unsettling and unpredictable consequences. Yet globalization is not something we can hold off or turn off. It is the economic equivalent of a force of nature—like wind or water. We can harness wind to fill a sail. We can use water to generate energy. We can work hard to protect people and property from storms and floods. But there is no point in denying the existence of wind or water, or trying to make them go away.”
—Bill Clinton, U.S. President
Hanoi National University (2000)
“In the world of the internet, information technology and TV, there will be globalisation. And in trade, the problem is not there’s too much of it; on the contrary there is too little of it.”
—Tony Blair, UK Prime Minister
Labour Party Conference (2001)
“Liberalising trade is like riding a bicycle; you keep moving forward or you fall over. This is quaint-and more accessible than most trade theories-but there is reason to think it captures something real.”
—Philip I. Levy, Scholar
American Enterprise Institute (2011)
“The new world of globalization—a world in which the integration of financial networks, information and trade is binding the globe together and shifting power from governments to markets.”
—Thomas L. Friedman, Columnist
The New York Times (1997)
“Protectionism is simply not an option because globalization is irreversible.”
—Bill Clinton, U.S. President
The New York Times (1997)
“We are moving toward a global economy. One way of approaching that is to pull the covers over your head. Another is to say: It may be more complicated—but that’s the world I am going to live in, I might as well be good at it.”
—Phil Condit, Chairman and CEO, Boeing
The Globalist (1999)
“U.S. leaders need to look past the November election. Beyond the borders of their congressional districts and the ‘blue’ and ‘red’ states of the electoral map is a constantly changing world to which the nation must adapt.”
—Craig Barrett, CEO, Intel
Foreign Policy (2009)
The “Benevolence” Fallacy
With peculiar frequency, globalization’s promoters would emphasize the benefits of their policy for the world’s poor, framing their economic policy as an act of benevolence rather than statecraft. Of course, alleviating world poverty is an admirable goal. But policy negotiations are traditionally an arena for intense back-and-forth between competing constituencies seeking to strike a balance that delivers mutual benefit. Benefits to the constituents of other nations are nice, but they aren’t supposed to dictate decisions. In some respects, this argument was the one that policymakers got right. Trade has delivered tremendous benefits to developing nations. But that result cannot justify a policy that did grievous harm domestically. If this is what policymakers understood they were doing, they were doing their jobs poorly. A trade negotiation is not a charity auction.
“We can give the world confidence that openness works. That openness creates jobs. That openness creates prosperity and openness leads to better lives in China and in the U.S. And, I believe the world would like to hear that message from us.”
—Carlos M. Gutierrez, Secretary of Commerce, Bush Administration
U.S.-China Joint Commission on Commerce and Trade (2007)
“Secondly, it is simply not true that trade has, on balance, been a negative for the United States or for other countries. Millions and millions, hundreds of millions of people have moved to middle class existences around the world because of more open borders and more open trade.”
—Bill Clinton, U.S. President
University of Chicago (1999)
“The global economy is giving more of our own people—and billions around the world—the chance to work and live and raise their families with dignity.”
—Bill Clinton, U.S. President
Farewell Address to the Nation (2001)
“Most of us agree, I suspect, with President Bush’s strong belief that expanding trade is in the interest of all nations and provides a route out of poverty.”
—Paul H. O’Neill, Secretary of the Treasury, W. Bush Administration
Globalization: Spreading the Benefits (2002)
“The complete elimination of barriers to trade in goods globally could lift an additional 300 million people in developing countries out of poverty by 2015—more than the entire population of the United States.”
—Robert B. Zoellick, U.S. Trade Representative, W. Bush Administration
Globalization, Trade, and Economic Security (2002)
“We regard it as our generation’s opportunity to attack the scourge of poverty by opening trade flows between all nations in agricultural goods, industrial products and services. Half-measures that would leave millions in poverty—people who might otherwise have been helped—and that would dampen potential economic opportunities for people in all countries, should not be acceptable.”
—Susan Schwab, U.S. Trade Representative, W. Bush Administration
The Wall Street Journal (2006)
“By knitting America to peoples beyond our shores, new U.S. trade agreements can encourage reforms that will help establish the basic building blocks for long-term development in open societies.”
—Robert B. Zoellick, U.S. Trade Representative, W. Bush Administration
The Wall Street Journal (2002)
“We must recognize we cannot lift ourselves to the heights to which we aspire if the world is not rising with us. I say again, the inexorable logic of globalization is the genuine recognition of interdependence.”
—Bill Clinton, U.S. President
Remarks on U.S. Foreign Policy (1999)
“In one recent three-year period, China used more cement than the United States used in the 20th century. That’s what’s happening out there. This is fast, and it is enormous, and it is wonderfully beneficial in Benthamite, utilitarian terms, greatest happiness for the greatest number. There hasn’t been anything remotely as good as globalization for increasing happiness and decreasing misery.”
—George F. Will, Columnist, The Washington Post
Amherst College (2018)
“Global trade agreements allow these scientific advances to create positive change around the world by removing the barriers that inhibit collaboration. Our work stalls when tariffs prevent us from transporting raw materials, for example, or conflicting regulatory processes impede a new product from going to market, or weak IP protections undercut the incentives for R&D. But when these barriers come down, sustainable technologies can be more easily developed and deployed across the world. It takes global collaboration to solve global problems. It is time we tear down the outdated and regressive barriers that obstruct progress. When we do, we can truly work together — across sectors and across national boundaries — toward a better future that is shared by all.”
—Andrew Liveris, CEO, Dow Chemical
Business Roundtable (2018)
The “Better Jobs” Fallacy
Of course, domestic constituents were not always satisfied by policymakers’ claims to be at once global liberators and helpless bystanders. Trade and capital flows would affect the American economy, and voters wanted to know how. Rather than acknowledge the tradeoffs inherent in the enterprise, policymakers instead relied upon economists to spin an argument that would make Pollyanna blush. Not only would free trade create more jobs, the story went, but also those new jobs would be better than the old ones. Americans were promised that they would “be leveling up, not leveling down.” Adam Smith and David Ricardo had said so 200 years ago, after all, and who would question Smith or Ricardo?
“In only two weeks, Congress will vote on what is probably the most important foreign policy and economic issue our country will face this year—and perhaps in recent years: whether to grant China permanent Normal Trade Relations (PNTR). Those who oppose the legislation don’t dispute its benefits for the American economy. Instead, they claim that PNTR will destabilize the well-being of some of our workers by throwing them to the vagaries of the global economy—or that PNTR will send the wrong signal to China about its poor human rights record. We certainly disagree.”
—Gene B. Sperling, NEC Director, Clinton Administration
Dallas Ambassadors Forum (2000)
“This Agreement [U.S.-China WTO agreement] will also strengthen our ability to assure fair trade and to defend our agriculture and manufacturing base from import surges and unfair pricing.”
—Lael Brainard, Under Secretary of the Treasury, Clinton Administration
Consumer Federation of America (2000)
“Chinese trade concessions will benefit the United States across all economic sectors in virtually every region of our country.”
—Patty Murray, U.S. Senator (D-WA)
Congressional Record (2000)
“Trade has brought untold benefits to our people not the least of which are high-paying jobs, increased consumer choice, increased economic competitiveness.”
—Phil Gramm, U.S. Senator (R-TX)
U.S. Senate Banking Committee (2001)
“Good jobs depend on expanded trade. Selling into new markets creates new jobs, so I ask Congress to finally approve trade promotion authority.”
—George W. Bush, U.S. President
State of the Union Address (2002)
“The more we expand trading networks with other nations, the more opportunities, better jobs, and economic growth we create at home.”
—Robert B. Zoellick, U.S. Trade Representative, W. Bush Administration
Globalization, Trade, and Economic Security (2002)
“Expanding free trade around the world is the way to grow the American economy and to grow the world’s economy. In fact, it’s the only way to do it. More trade among the nations of the world is the path to increased prosperity and job creation in the U.S. and all around the world. So we should do all we can to advance the free-trade agenda.”
—Barbara Franklin, Secretary of Commerce, H.W. Bush Administration
The Heritage Foundation (1995)
“Over the long term, it will ensure that Americans fully benefit from China’s eventual accession to the WTO. Membership in that body will require China to lower its current restrictions on many American products. The increase in demand for U.S. goods that results from this should lead to greater productivity, which in turn would mean more jobs and job security for American workers.”
—Larry Wortzel, Director
The Heritage Foundation (2000)
“First, the economic and commercial benefits of granting PNTR [to China] are significant and all on the side of US businesses and workers.”
—Lawrence Summers, Secretary of the Treasury, Clinton Administration
The Wall Street Journal (2000)
“[E]xtending permanent Normal Trade Relations (PNTR) status to China […] is an absolute priority for high-tech companies, and we consider it the most critical vote you will make in support of our high technology industries this year.”
—200 High Tech CEOs
Clinton White House (2000)
“[W]e need PNTR in order to ensure that our companies can fully engage on the ground in China, thereby exposing the Chinese to our American business practices, values and perspectives. PNTR will also facilitate the development and spread of information technologies, including the Internet, ensuring that American firms will be in a position to help shape the continued evolution of China’s economic and social environment.”
—200 High Tech CEOs
Clinton White House (2000)
“Passage of Russia PNTR legislation is our top legislative trade priority this year. Business Roundtable is playing a leading role in the U.S. business community to achieve this. Our overall goal is to restore the U.S. economy, so strong economic growth and job creation are ignited. Opening markets, like Russia, is an effective way to increase export sales of U.S. goods and services and thereby help strengthen the U.S. economy.”
—John Engler, President
Business Roundtable (2012)
“The same fear of loss of jobs and outflow of capital has been expressed over the years with respect to other Third World countries, to other poor countries, and here we are in the U.S. now with the lowest unemployment rate in God knows how long. China will compete for some low-wage jobs with Americans. And their market will provide jobs for higher wage, more skilled people. And that’s a bargain for us.”
—Robert M. Solow, Professor Emeritus, MIT
Clinton White House (2000)
“The success of globally engaged U.S. companies has a direct and very positive impact on Main Street USA. To encourage and enable our companies to seek new markets and succeed anywhere in the world, we need tax, trade and investment policies that reflect today’s competitive global economy. The benefits at home are enormous.”
—John Engler, President
Business Roundtable
“Today’s most successful American companies share a common trait: They invest, produce and hire from a dynamic, global perspective. The importance of demand from high-growth markets outside the United States, and of worldwide supply chains in meeting this demand, cannot be overstated. U.S. companies have to remain globally competitive in order to generate jobs at home.”
—Peter Robinson, President and CEO, USCIB
Business Roundtable
“Extrapolating the US ITC’s estimate of the one-time percentage import and export trade changes for 10 years, the EPI asserts another 817,000 US jobs will be eliminated through PNTR and Chinese membership in the WTO. The EPI’s calculations are built on an absurd extrapolation of an exaggerated bilateral trade deficit [….] A larger US trade deficit in manufactured goods is historically associated with higher manufacturing output [….] Even if, contrary to evidence, the overall US manufactures trade deficit was associated with lower manufactured output, the bilateral China deficit would have no independent significance [….] An open economy enables the United States to create better jobs, since US exports embody more skills and higher wages (about 15 percent higher) than US imports.12 US trade is a race to the top, not a race to the bottom.”
—Gary Clyde Hufbauer, Senior Fellow & Daniel H. Rosen, Visiting Fellow
Peterson Institute for International Economics (2000)
Dismissing Disagreement
American leaders saved their harshest words not for foreign nations who pursued unfair practices or for multinational corporations that betrayed American workers, but for their domestic political opponents. Globalization’s diverse array of skeptics—including labor leaders, heterodox economists, populist politicians, and religious organizations—found no audience in the halls of power. Instead, they faced ad hominem attacks and bad-faith rebuttals. So certain was the bipartisan consensus that its leaders maintained that there were, in fact, no valid counterarguments to speak of, no debates to be had. Expressions of skepticism disqualified speakers as unsophisticated and unqualified, leaving no sophisticated or qualified skeptics. How convenient.
“I’m worried about jobs. And I believe if you trade more, there are more jobs available for hardworking Americans. There are some who play politics with the trade issue. They want to shut down trade. I like to remind people, those who shut down trade aren’t confident. They’re not confident in the American worker; they’re not confident in the American entrepreneur; they’re not confident in American products.”
—George W. Bush, U.S. President
Remarks on International Trade (2002)
“It is hard to see how empowering communist hard-liners, slowing economic transition, and keeping American companies out of China will increase respect for human rights or lead to a more open society.”
—Gene B. Sperling, NEC Director, Clinton Administration
Dallas Ambassadors Forum (2000)
“Economic isolationists are too shortsighted to see the full mosaic of America’s interests. Their fight to defeat such trade agreements would rob the United States of one of its most powerful tools, just when we should be integrating trade and economic reforms with the struggle for democracy and tolerance that is vital to our security.”
—Robert B. Zoellick, U.S. Trade Representative, W. Bush Administration
The New York Times (2004)
“The North American Free Trade Agreement is vitally important to the development of North America. There is no enlightened argument against it.”
—Phil Gramm, U.S. Senator (R-TX)
The Heritage Foundation (1993)
“I realise why people protest against globalisation. We watch aspects of it with trepidation. We feel powerless, as if we were now pushed to and fro by forces far beyond our control. But there is a risk that political leaders, faced with street demonstrations, pander to the argument rather than answer it.”
—Tony Blair, UK Prime Minister
Labour Party Conference (2001)
“Obviously, America’s public and private school systems have failed to provide economic education in the classroom, and to explain to individuals what market capitalism is all about. When you combine the poll results with the very unhealthy trend in the United States now towards nativism, isolationism, and neo-protectionism, as espoused by a small but influential clique of Republican and Democratic elements in Congress, the climate clearly bodes ill for free trade. I think we’re facing a new crisis of confidence in the United States as to whether we’re going to be a player in the world scene, and whether we believe in sharing the fruits of democratic capitalism with those who have played, fair and square, by the rules.”
—Barbara Franklin, Secretary of Commerce, H.W. Bush Administration
The Heritage Foundation (1995)
“There is no rational economic case for the claim that selling at below cost is an unfair practice; in a free market, prices are determined by what consumers are willing to pay for a product, not by what producers spent on making a product. Proponents contend that anti-dumping law protects American consumers from the ‘predatory’ tactics of foreign firms.”
—Bryan T. Johnson, Policy Analyst & Robert P. O’Quinn, Policy Analyst
The Heritage Foundation (1995)
“We are closer than ever to redeeming the vision of Woodrow Wilson—of reaching his dream of a world full of free markets, free elections, and free peoples working together. But we’re still not there. And there are a lot of obstacles in the way, not least of which is the continuing bedrock of reluctance in our own society to pay our fair share and do our fair part on the part of some conservatives, and on the part of some progressives who embrace the change that is the global economy and shape it, instead of denying it and pretending that as if we were—that we can make it go away.”
—Bill Clinton, U.S. President
Conference on Political Tradition (2000)
“Political coverage has focused largely on public concerns surrounding these negotiations. This is expected, as new FTAs always bring back old debates about the benefits and drawbacks of globalization. But these conversations can be confounding to the business community and among economists, where the importance of trade has long been considered a settled question. Indeed, trade provides enormous opportunities to businesses large and small and to consumers as well: greater scale and more competition lead to lower-priced, more readily-available consumer goods, resulting in a higher standard of living.”
—Andrew Liveris, CEO, Dow Chemical
Business Roundtable (2018)
“The topic of outsourcing or offshoring is popular in the press today. You shouldn’t think of offshoring as a recent phenomenon. This has been happening for decades. It seems the press has just discovered it recently because it is an election cycle, especially in the United States.”
—Craig Barrett, CEO, Intel
NBC News (2004)
“An awful lot of the intellectual power of the economics profession has signed this letter. And it’s such a simple proposition it doesn’t really require that. You could not generate a hard exam question out of the material here. Just as economics, the U.S. stands to gain far more from China’s accession to the WTO and full entry into the world trade community. We stand to gain far more than the U.S. risks losing. China already has perfectly good access to U.S. markets because we are and have been, have a long tradition of being an open economy. Accession by China to the World Trade Organization gives us—gives American business—and indirectly, of course, American workers access to a market of —I don’t know what it is—a billion and a quarter people—the six or seventh or eighth largest economy in the world. It’s a poor economy; income per head is not high in China, but it’s growing very fast. And there is no doubt in anyone’s mind, inside or outside the economics profession, that China will be a large market, needing an awful lot of stuff for a very long time. The down side, the possible down side that you hear about, of course, is the possible movement of jobs and capital flow from the U.S. to China. Some of that will happen. There is no doubt about it. But, equally, there is no doubt where the balance of advantages lies. It’s not even close. What you have here is a good example of the standard politics of free trade.”
—Robert M. Solow, Professor Emeritus, MIT
Clinton White House (2000)
“The labor movement has always had a protectionist side to it. I have read statements that this time, it’s not protectionist. Last time it was. But in fact, I think the labor movement is subject to the political bind that I mentioned. If some group of workers will find themselves in stiffer competition, danger of losing their jobs to Chinese producers, they make a lot of noise. But the 90 percent or whatever the fraction is, of union members, of AFL-CIO members who won’t ever see, won’t ever be able to identify that this hour of work that I might not have had, or this wage increase that I might not have done is actually contributed to by the fact that my employer and I now have access to a bigger growing market; that will never be noticed. So I think that the labor movement is subject to exactly that political pressure.”
—Robert M. Solow, Professor Emeritus, MIT
Clinton White House (2000)
“This reinforces all the things we want to encourage in China—whether it is belief in markets, whether it is the freer flow of information; whether it is the Internet, which has the power to transform societies. You know, people used to judge how free countries were by looking at the ratio of TVs to telephones, and in free countries there were a lot more telephones than TVs; and in communist countries there were a lot more TVs than telephones, because TVs went only one way. If we want to be part of changing that in China, then openness to telecommunications, openness to the Internet is a central piece of that. On the other hand, if we want to repudiate all of those who are working in that direction, repudiate all of those who have worked out, reached out in favor of markets, then not taking the PNTR step is the way to do that.”
—Martin Bailey, Chairman, Council of Economic Advisors
Clinton White House (2000)
“In fact, the economic theory behind promoting global trade and investment was proven more than 200 years ago by an English economist named David Ricardo. The debate about global development is not an economic one; that was settled a long time ago. The debate about global development is a political, cultural, and social one. I would argue that it is a moral one, too.”
—Stephen Jordan, Executive Director, Business Civic Leadership Center
U.S. Chamber of Commerce (2012)
“On April 25, 138 economists, including 13 Nobel Laureates, released a joint letter to the American people strongly supporting China’s accession to the WTO on the terms that we negotiated last fall. It has sometimes been remarked that asking five economists a question will generate ten different answers. On this issue there has been only one answer: that welcoming China into the global economic system is right for the American economy and for the global economy.”
—Lawrence Summers, Secretary of the Treasury, Clinton Administration
The Wall Street Journal (2000)
“The essential things to teach students are still the insights of Hume and Ricardo. That is, we need to teach them that trade deficits are self-correcting and that the benefits of trade do not depend on a country having an absolute advantage over its rivals. If we can teach undergraduates to wince when they hear someone talk about ‘competitiveness,’ we will have done our nation a great service.”
—Paul Krugman, Professor, MIT
The American Economic Review (1993)
