distribution of costs and benefits from globalization?

Question

The rise of China and India is fueling renewed debate about the distribution of costs and benefits from globalization. What are the arguments for and against free trade? To the extent that there are pressures on unskilled workers’ wages and progressively on the middle class, is protectionism a desirable response? What are the main counter-arguments? To what extent does the post- World War II bargain informing “embedded liberalism” continue to make sense?

Answer 1

From your title, I thought you were going to ask a much more interesting question.

In any case, protectionism is no answer to the imbalances introduced or exacerbated by globalization.

For one thing, it doesn't help the either the blue collar workers or the middle class.

For example, when the U.S. government passed regulations regarding U.S. content in cars in an attempt to keep out the Japanese manufacturers, the big three American auto-makers persuaded the government to consider Canadian-made parts and cars to be American-made. Did this help the U.S. auto workers?

On the other hand, what about the U.S. workers that started working for Toyota in the U.S.? Should we have prevented Toyota from building factories here?

Most of the pressure on the manufacturing sector workers has not come from overseas plants but from capital investment and improved technology. As the productivity of labor improves it takes fewer workers to produce the same goods.

Ditto for service workers - with ATM machines, the number of bank clerks needed to service the same number of customers goes down dramatically.

As for protectionism, that's what made the Great Depression great (i.e. so terrible)

http://en.wikipedia.org/wiki/Smoot-Hawley_Tariff

As for your mention of India and China, what is very clear is that the average standard of living in those countries has improved significantly. If you are going to take the view of balancing winners against losers, the winners world wide are far more numerous and have won a great deal.

There are good arguments against globalization and against the way globalization has been proceeding, but you are barking up the wrong tree.