Raymond Richman - Jesse Richman - Howard Richman
Richmans' Trade and Taxes Blog
Trade imbalances, inequality, and the political pressure cooker
Michael Hirsh has an interesting analysis in the most recent Politico entitled "Why Trump and Sanders Were Inevitable." His argument is that failed US globalization policies (I would say trade policies), rising inequality, and increasing insecurity are at the root of the rise of Trump and Sanders. A few choice quotes:
Rubio, and many establishment Republicans, are currently in the midst of an all out war to stop Donald Trump. Whether they succeed or not remains to be seen. Clinton seems to be consolidating support versus Sanders. But not matter what the Super Tuesday returns reveal, one thing is certain. This isn't the last round of the struggle to reshape America's catastrophically bad trade policies towards something more likely to promote the general prosperity of its citizens, their security, and their freedom.
On this blog we have been attempting to promote and develop such policies for a number of years. Our 2008 book "Trading Away Our Future" outlined our thinking at that point in its final chapter: "A Program For a Strong America." Since then we have added the Scaled Tariff idea promoted in our second book "Balanced Trade".
It has become fashionable to dismiss the emerging "ideology" Hirsh refers to as populist. But there is room in the real response to these rising problems for effective, reasoned policies that promote prosperity, diminish inequality, and begin to restore balance to the U.S. economy. Whatever his faults and failings, Trump is right that the US must take steps to balance its trade with China. And with the rest of the world. And flawed though some of his prescriptions (and budget projections) are, Sanders is right that inequality is a problem that US leaders must begin to take more seriously.
Unfortunately, we are arguably now in an era Ray, Howard, and I predicted in our 2008 book, one in which polarization and radicalism are rising: "If Republicans were in power during the crash," we wrote "then the left-wing big-government enthusiasts at the fringe of the Democratic party would likely turn America into a socialist state that would sap American incentive." and "If the Democrats were in power, then the right-wing isolationists at the fringe of the Republican party would likely turn America into a country isolated as much as possible from the world economy." (p. 29) We lacked a crystal ball. Writing in 2007 for early 2008 publication on the eve of the 2008 crash we anticipated that one or the other of these scenarios would happen. Instead, perhaps because Obama's election in the midst of the 2008 crash divided and partially occluded responsibility, it seems entirely possible that both are happening simultaneously.
Journal of Economic Literature:
Atlantic Economic Journal: