Trade policy has ignited passions in the U.S. since even before John C. Calhoun railed against the “Tariff of Abominations” in 1828. Detractors see “free trade” as a con that promises prosperity while destroying national industry, jobs, and communities for mere profit. Trade enthusiasts, in contrast, believe freer trade is not just a universally profitable economic policy, but also —and more so—one that encourages world peace, inter-cultural understanding, open-mindedness, and human connection. Here is how one attendee at a 1915 international trade conference expressed his pro-trade position:
I am filled with the spirit of the export trade. I love to do business with the big importing houses of the world … and I know that when the day comes when we can better understand one another and realize that, after all, the race is one, with fundamental interests identical, we will usher in the millennium.
As this quote suggests, trade represents much more than economic policy; it is a concept that defines how Americans see themselves and their nation.
In his good-humored and highly readable book, Trade is not a Four-Letter Word, businessman Fred Hochberg embraces the role of trade evangelist, even noting (like the globetrotting salesman quoted above): “For all its economic benefits, the greatest argument for trade is that…it quietly connects us, warms us, and draws us closer to the rest of the human race.” The former chair of the Export-Import Bank under Obama,1 Hochberg seeks to convince readers that if they really understood how trade worked and what it can do they too would see that its advantages far outweigh the problems and that the problems themselves could be easily addressed with smarter, more targeted policies. To that end, he writes in a sunny, jokey style that avoids jargon and employs a trove of persuasive anecdotes and personal stories.
If there was ever a need for Hochberg’s pro-trade evangelizing it is right now in 2020. Against prevailing economic wisdom and on-the-ground realities, the Trump Administration has resurrected the tariff, of all things, a regressive tax found mostly, until recently, in history textbooks. Trump’s tariff fetish is partner to the physical wall he seeks to build on the U.S.-Mexican border; what are tariffs but a way to wall in a nation and keep out the world? The Trump Administration pulled the U.S. out of the Trans Pacific Partnership (TPP), a trade agreement crafted to counter China’s rising economic dominance. His advisers have blamed corporate greed and China for the shortage of face masks and other protective gear, stoking resentment of “global elites” and “outsiders.” Trump’s anti-trade, anti-globalist, economic nationalist policies propagate an “us vs. them” view of world trade and go hand in hand with his America First isolationism, which, according to Hochberg, wreaks havoc on America’s international economic and political position.
Hochberg opens the book with the story of his grandparents’ flight from Nazi Germany, his then eleven-year old mother in tow. Eventually his mother, Lillian, started a mail-order catalogue business from her kitchen table that became Lillian Vernon Corporation, the first woman-founded company to be publicly traded on the New York Stock Exchange. Hochberg got his start in his mother’s company, which was among the first to import Chinese products for the benefit of American consumers. Right there in this little family biography are the recurrent themes of globalization: the opportunities, innovations, and dynamic energy created by open borders and creative people, the specific opportunities for the persecuted or excluded, Jewish refugees and women. The benefits that come from cultural interaction and diversity. Affordable goods. China. Trade is about real people and families, not faceless corporations; it is about exchange, not exploitation, growth, not limits.
Hochberg’s arguments are standard pro-trade fare. Trade creates competition, which leads to innovation, higher productivity, and goods we never could have imagined but are now central to our economy and lives, such as the iPhone and Google. Trade in the form of imports lowers the cost of all kinds of products, from fruits and veggies to laptops and iPhones, rendering them more affordable for more consumers. Trade creates new industries and jobs. It fuels economic development, which lifts poor countries out of poverty and raises living standards for people around the world. Trade deals might destroy some jobs, but they also create new jobs, better jobs, more creative jobs. All of this means more wealth, more opportunities, and more appreciation for the common interests that tie us together.
Much of this is familiar, but Hochberg’s details are fresh and so smartly presented with such good stories and data about products we use and consume (cars, iPhones, avocados, higher education, and TV shows) that readers (at least this reader) see anew the beauty of international supply chains, markets, and the global institutions that support them. Hochberg is also just so informative in a how-things-work kind of way; there is a primer of often confusing terms and a curio-cabinet of obscure factoids, like how the corn chip came to be. Even if you remain critical of (or impatient with) his bright neoliberal perspective, there is much to learn here about how the things we consume end up in our graspy little paws.
NAFTA looms large in this book, probably because so many of the arguments Hochberg is rebutting were honed in the anti-NAFTA movement of the 1990s that pitted globalists like him against isolationists, union workers, environmentalists, and Ross Perot. Hochberg reminds us that NAFTA did not kill U.S. manufacturing. Manufacturing’s share of nonfarm employment had been in decline since the 1950s, plummeting from a high of 32 percent in 1953 to just over 20 percent by 1974, and continuing downward since then. This was less the result of off-shoring and “trade” than it was automation, technology, and the rise of the service industries. If anything, globalization—that is, “cheap” imports and, yes, trade deals like NAFTA—saved American manufacturing by streamlining it, making it more competitive, and tying it to international supply chains that made it more productive than ever before. So much so that “foreign” companies such as Honda, Volkswagen, and many others opened plants in the U.S., employing almost seven million American workers—which is why the most “American car on the road,” in terms of where its various parts are made and assembled, is the Honda Odyssey.
For many Americans, of course, all this innovation and dynamism is akin to a death sentence. Hochberg acknowledges trade’s negatives. He understands the pain of a lathe operator whose job disappears and of a community that loses a factory. Here, too, he offers familiar—if under-implemented—solutions: for example, hearkening back to the Kennedy Administration, whose Trade Extension Act provided money to retrain workers affected by imports and aid to communities dealing with factory closings. For a variety of reasons, this kind of aid has been less effective than it might have been, but Hochberg remains open to it.
While supporting government aid to communities and people disadvantaged by trade, Hochberg is most interested in what people and communities can do themselves to get on board with new innovations and global trade. Here he tells the story of a former coal miner named Rusty Justice, who saw the writing on the wall and worked with “business partners” to train others in the area in coding, which led to new tech start-ups in Pikesville, Kentucky, now known as “Silicon holler.” The government can help here, but not so much with welfare as with infrastructure, particularly broadband access for rural communities (which incidentally was one of Hillary Clinton’s 2016 campaign promises). He has other remedies too, such as Opportunity Zones, employer-led training programs, and re-imagining higher education. Hochberg wants to disconnect employment from college-degrees, which 70 percent of American adults do not have and don’t actually need. Yes, today’s jobs require special skills, whether they are in manufacturing, service sector, or in cultural production, but those skills can be learned outside a traditional four-year college or university BA or BS program. These are all sound, practical suggestions, but very much dependent on the public’s confidence in, and election of, moderate, centrist Democrats of the Clinton/Obama sort. Otherwise known as neoliberals.
Hochberg amicably admits he is a capitalist (as if it’s not obvious). He is also a progressive liberal, who, like most progressive liberals, has a deep appreciation for diversity and difference, cultural, sexual, or otherwise. His best stories are about the fruits of cultural mixing, sharing, exchange. Our worlds grow larger, he says, when creative folks borrow and incorporate different foods, spices, ideas, styles, business practices, to create something new and fun and profitable. His metaphors emphasize the free flow of ideas and peoples; he embraces immigration as something that makes us stronger, calling to mind Steve Earle’s wonderful lyric, “Livin’ in a city of immigrants, I don’t need to go travelin’, open my door and the world walks in…” This kind of border-crossing undergirds the original ethos of international institutions that facilitate trade—the United Nations (wherein WHO and the International Court of Justice lie), the World Bank, IMF, OECD, EU, even the WTO—which liberal internationalists like Hochberg regard as progressive institutions that bring peoples together to solve problems and elevate humanity. It is these institutions, which facilitate international cooperation, where real solutions for climate change, poverty, and, perhaps, even a pandemic could be developed. So, while Hochberg wrote this book before the pandemic and current recession, one can surmise that he would advocate a return to a pro-trade agenda, one rededicated to international institutions, cooperation, and human connection and diversity, one that would recalibrate broken supply chains and enact his policy recommendations to make trade work better for all people, not just the rich.
The opposite is the case for those on the left who will likely see Hochberg’s arguments as, basically, so much neoliberal claptrap—including, I suspect, some readers of this very publication. For them, U.S. trade policy and the international institutions that support it serve international capitalism and prop up American empire, contributing to record levels of economic inequality, while stifling real solutions to existential threats such as climate change and now a pandemic. The world was already facing disaster before Trump. To continue with more of the same would be a complete and deliberate misunderstanding of our current woes. The left has long condemned trade and globalization as a betrayal of democracy. Galvanized by the Vietnam War, the New Left taught a generation of historians (including myself) that American Empire had its roots in a search for markets, i.e. trade. This is the view of Bernie Sanders, certainly, who has also called for tariffs to preserve American jobs and undercut corporate off-shoring. It was also the view of those protesting the WTO in Seattle in 1999, the Occupy Wall Street movement, and those who see internationalist institutions as the infrastructure of neoliberal capitalism.
These arguments are very compelling at an intellectual level. The best scholarship on neoliberalism reminds us that “free trade,” like the “free market,” cannot exist without government, laws, and regulations, which means they are not as natural and free as imagined in their legitimating mythologies. It shows how “free trade” is a creature of the state, of ostensibly liberal democratic governments, but in fact under the control of investors, bankers, and multinational corporations. It reminds us that international rules and regulations for streamlining trade impinge on national policies that aim to protect the environment, local economies, and workers’ rights. Scholarship is able to draw upon critical theories of power and race to show how international institutions designed “to bring the world together” actually deepen and exacerbate racial divisions and global inequities, particularly the global north-south division, in which global capitalism has fostered a kind of neo-colonialism.
This work on neoliberalism is instructive, eye-opening, and per-suasive, but it is also beside the point in the actual world we live in now, where globalists have lost control in ways not predicted by the scholarship. If globalists were as powerful and coordinated as all that, how does Trump get elected? I’m sorry, “elected.” Nor do I see any kind of organized left ready to take advantage of the disruption that has revealed global elites’ contradictions and vulnerabilities. What I see is social and economic chaos that has already been exploited by bad, illiberal actors. The BLM movement is (as I write in August 2020) making gains in the fight against police brutality, and though it has been embraced internationally, it is not a movement designed to deal with the confluence of crises we face this summer, which demand international cooperation.
But neither is Hochberg’s high-on-trade perspective the answer here. To be sure, he wrote the book before all of this, so I don’t want to score him on this. But is there a globalist position that can help us? Or do we stand idly by as the world tries to stuff itself back into national economic boxes as it did in the 1930s? Is there a way to embrace the existing institutions of globalization and even America’s outsized role in maintaining them and perhaps point them in a different direction? What if we could refit those institutions so they weren’t so much focused on trade and investments, but rather actually solving problems?
That is the argument of Dani Rodrik’s recent article in Prospect, “Globalisation after Covid19: My Plan for a Rewired Planet.” A professor of international political economy at Harvard’s JFK School of Government, Rodrik is a globalist, but he is also an academic whose work explores the failures of – and alternatives to – neoliberal economic and trade policy. Rodrik is a policy guy who uses the scholarship on neoliberalism to re-imagine the old liberal internationalist dream of a connected, cooperative world, still led by the leaders of the G-7, but committed to, as he says, “public health and the climate” rather than investment and trade efficiencies (that Hochberg celebrated). Had more of globalists’ political capital been dedicated to public health, for instance, we might have limited the scope of the economic shutdowns and would not be facing economic catastrophe and the steepest decline of global income in recent memory. In this article Rodrik reviews how the UN attempted – and failed – to mediate between national policies that protected national industries and environments and the prerogatives of efficiency and easy flow of goods and services (again, that Hochberg celebrates). The capitalists won out, in part for reasons Hochberg shows.
Rodrik’s proposals will not likely be embraced by the American Enterprise Institute, but the current crisis creates an opportunity. While recognizing the mythologies of neoliberalism, Rodrik pragmatically outlines how an international infrastructure built for trade might be recalibrated to deal with current emergencies, not unlike how General Motors and Ford Motor Company pivoted to bombers and tanks during the Second World War. But that requires real leadership and authority, such as that once provided by the United States. Rodrik suggests President Macron might be interested. Stay tuned.