The Problem is not trade, Its how the gains are distributed

Free markets with wage protection benefits everyone.

Free Trade is on the ropes. Trump announced that he wants to pull out of NAFTA, avoid the TPP, and impose sanctions on China. Both Sanders and Clinton have spoken against the TPP, even if this is a newish position for Clinton. The Brexit and the existence of Donald Trump has deep roots in anti-trade and anti-globalization sentiments. Republicans in general remain bullish on free trade, but have learned not to talk openly about it. Even the Economist, a long-standing defender of free trade, is recognizing that there are problems.

Anti-trade sentiment is understandable, but misguided. Under free trade policies, from 2001 to 2015 the US GDP grew by 14%. This would be worth celebrating if not for the fact that so few people reaped the benefits: during the same period median wages grew by only 2%. When you factor in the fact that the cost of living, including housing, health care, food, and the like, has increased proportionally to GDP its not hard to see why anti-trade sentiment is on the rise.

But its important to observe that its not trade that ushered in the disparity, its how the gains from trade have been distributed. Instead of abolishing trade we should modernize or trade deals that ensure that gains is distributed equally between executives, shareholders, and labor; and tax policies that ensure everyone pays their fair taxes. Despite claims from industry, the government has a significant number of tools at its disposal to enforce international trade policies; for example, companies that don’t pay a baseline minimum tax rate, maintain representation from their employees, or maintain fair wages and wage growth could lose some of the benefits provided by patent protections domestically.

Those who object to the TPP and NAFTA are right that it does not go far enough to protect the average worker, domestic or abroad. But protectionist policies would be worse. We need modern trade deals that protect growth but ensure that the gains are distributed fairly, not policies that contract the economy to the detriment of everyone.

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