But it’s also true that much of the elite defense of globalization is basically dishonest: false claims of inevitability, scare tactics (protectionism causes depressions!), vastly exaggerated claims for the benefits of trade liberalization and the costs of protection, hand-waving away the large distributional effects that are what standard models actually predict. I hope, by the way, that I haven’t done any of that; I think I’ve always been clear that the gains from globalization aren’t all that (here’s a back-of-the-envelope on the gains from hyperglobalization — only part of which can be attributed to policy — that is less than 5 percent of world GDP over a generation); and I think I’ve never assumed away the income distribution effects.I want to pick up on what Mark Kleiman noted:
So when the modern Republican Party (R.I.P), in the name of “small government” and opposition to “class warfare,” set its face against policies to redistribute the gains from economic growth, it destroyed the theoretical basis for thinking that a rising tide would lift all the boats, rather than lifting the yachts and swamping the trawlers. Free trade without redistribution (especially the corrupt version of “free trade” with corporate rent-seeking written into it) is basically class warfare waged downwards.Imagine an economy with two sectors. One benefits from free trade and the other loses. Let’s assume that the first received a 15% increase in income while the second saw a 5% decrease in income. Let’s also assume each sector has a 50% weight in overall income. Aggregate well being may have increased by 5% but when the elites say everyone gains from free trade – they display their total ignorance of international economics. Mark is noting that it is theoretically possible to impose a tax equal to 8% of the income of the winners and rebate it to the losers. The winners on net gain 7% and the rest of us on net gain 3%. Has this ever happened? Likely not. Will it happen under Republican rule? No – more likely Republicans will cut taxes on the winners and further punish the losers.