Latest trade tidbits

1) Remember the hints of a trade deal that came out earlier this week? Over at US News and World Report's Capital Commerce blog, James Pethokoukis has more juicy details about the how this may or may not play out. As a general rule, if Dave Sirota is this exercised about it, then it must be a good thing for trade liberalization. 2) A point in the Democrats' favor -- a new WorldPublicOpinion.org Survey about trade and regulatory standards: Strong majorities in developing nations around the world support requiring countries that sign trade agreements to meet minimum labor and environmental standards, a multinational poll finds. Nine in 10 Americans also support such protections. Sounds good, but the survey question seems awfully vague ("Overall, do you think that countries that are part of international trade agreements should or should not be required to maintain minimum standards for working conditions?") 3) Brad DeLong links to subscriber-only stories about heterodox economic takes on trade, so I don't have to. First, there's Dani Rodrik's Financial Times op-ed: Which is the greatest threat to globalisation: the protesters on the streets every time the International Monetary Fund or the World Trade Organisation meets, or globalisation's cheerleaders, who push for continued market opening while denying that the troubles surrounding globalisation are rooted in the policies they advocate? A good case can be made that the latter camp presents the greater menace. Anti-globalisers are marginalised. But cheerleaders in Washington, London and the elite universities of north America and Europe shape the intellectual climate. If they get their way, they are more likely to put globalisation at risk than the protesters they condemn for ignorance of sound economics. That is because the greatest obstacle to sustaining a healthy, globalised economy is no longer insufficient openness. Markets are freer from government interference than they have ever been.... [N]o country's growth prospects are significantly constrained by a lack of openness in the international economy. Even if the Doha trade round fails, poor countries will have enough access to rich country markets to achieve what countries such as China, Vietnam and India have been able to do.... Globalisation's soft underbelly is the imbalance between the national scope of governments and the global nature of markets. A healthy economic system necessitates a delicate compromise between these two. Go too much in one direction and you have protectionism and autarky. Go too much in the other and you have an unstable world economy with little social and political support from those it is supposed to help. If there is one lesson from the collapse of the 19th century version of globalisation, it is that we cannot leave national governments powerless to respond to their citizens. The genius of the Bretton Woods system, which lasted for about three decades after the second world war, was that it achieved such a compromise. Some of the most egregious restrictions on trade flows were removed, while allowing governments freedom to run independent macroeconomic policies and erect their own versions of the welfare state. Developing countries were free to pursue their own growth strategies with limited external restraint. The world economy prospered like never before.I'm unpersuaded There are two huge difference between the 19th century version of globalization and the cuurrent era: there was much more labor mobility back then, but the size of government -- and welfare policies in particular -- were vastly smaller. As much as peopole like to fret about their disappearance, at best the growth of these measures are slowing. As Tyler Cowen implicitly points out here, the growth of markets has led to a corresponding growth in government. So even if I accepted Rodrik's premise, I think we're a long way from where he thinks we are. 4) DeLong also links to a Wall Street Journal front-pager from yesterday about Alan Blinder's fears about offshoring: Mr. Blinder... remains an implacable opponent of tariffs and trade barriers. But now he is saying loudly that a new industrial revolution -- communication technology that allows services to be delivered electronically from afar -- will put as many as 40 million American jobs at risk of being shipped out of the country in the next decade or two. That's more than double the total of workers employed in manufacturing today. The job insecurity those workers face today is "only the tip of a very big iceberg," Mr. Blinder says.... Mr. Blinder's job-loss estimates in particular are electrifying Democratic candidates searching for ways to address angst about trade. "Alan, because of his stature, provided a degree of legitimacy to what many of us had come to feel anecdotally -- that the anxiety over outsourcing and offshoring was a far larger phenomenon than traditional economic analysis was showing," says Gene Sperling, an adviser to President Clinton and, now, to Hillary Clinton. Her rival, Barack Obama, spent an hour with Mr. Blinder earlier in this year.... Mr. Blinder says he agreed with Mr. Mankiw's point that the economics of trade are the same however imports are delivered. But he'd begun to wonder if the technology that allowed English-speaking workers in India to do the jobs of American workers at lower wages was "a good thing" for many Americans. At a Princeton dinner, a Wall Street executive told Mr. Blinder how pleased her company was with the securities analysts it had hired in India. From New York Times' columnist Thomas Friedman's 2005 book, "The World is Flat," he found anecdotes about competition to U.S. workers "in walks of life I didn't know about.".... At the urging of former Clinton Treasury Secretary Robert Rubin, Mr. Blinder wrote an essay, "Offshoring: The Next Industrial Revolution?" published last year in Foreign Affairs. "The old assumption that if you cannot put it in a box, you cannot trade it is hopelessly obsolete," he wrote. "The cheap and easy flow of information around the globe...will require vast and unsettling adjustments in the way Americans and residents of other developed countries work, live and educate their children."... In that paper, he made a "guesstimate" that between 42 million and 56 million jobs were "potentially offshorable." Since then he has been refining those estimates, by painstakingly ranking 817 occupations, as described by the Bureau of Labor Statistics, to identify how likely each is to go overseas. From that, he derives his latest estimate that between 30 million and 40 million jobs are vulnerable. He says the most important divide is not, as commonly argued, between jobs that require a lot of education and those that don't. It's not simply that skilled jobs stay in the US and lesser-skilled jobs go to India or China. The important distinction is between services that must be done in the U.S. and those that can -- or will someday -- be delivered electronically with little degradation in quality. The more personal work of divorce lawyers isn't likely to go overseas, for instance, while some of the work of tax lawyers could be. Civil engineers, who have to be on site, could be in great demand in the U.S.; computer engineers might not be. Mr. Blinder's warnings, and his numbers, are now firmly planted in the political debate over trade. DeLong believes that Blinder "has very smart things to see about 'outsourcing.'" I think Blinder is unbelievably smart, but if he's basing his numbers on the same logic he applied in his Foreign Affairs essay, then with all due respect I don't think he has very smart things to say about outsourcing. In the FA essay, Blinder assumed that any job that could be done over the electronic transom: a) Will be done electronically; b) Will be done electronically by someone living outside the United States; c) This job shift will happen incredibly quickly; d) The U.S. economy will fail to create new jobs or job categories in response. Yeah, I got problems with just about all of these assumptions. Greg Mankiw, on the other hand, simply believes that Alan Blinder has been turned by the dark side of the force... which converts Greg into Luke Skywalker. UPDATE: Tyler Cowen's take on Blinder: "When our economists start preaching that we should look to economists and higher educators to predict the new, growing economic sectors, I again think that the Chinese are not the major problem."