What is good to win elections is not always good for a nation. That often unspoken truth has been more apparent in America of late. It shows up in the short-sighted views surfacing in a presidential race that has got many hoping that both candidates will lose in tandem. Unfortunately, as seen in the first presidential debate yesterday, the two contenders for the post seem to think that trash talking globalisation is good for their election campaigns. Even more regrettably, they could be right.
A study done at the National Bureau of Economic Research earlier this year showed that speaking against free-trade agreements when low-skill jobs are under threat translates into demonstrable vote gains. If either candidate speaks like an adult on the truth about globalisation, all could be lost - especially if enough of endangered workers happen to be in the swing states of North Carolina, Ohio, Pennsylvania, Iowa, New Hampshire, Wisconsin, Colorado, Florida and some other places which were battleground states in previous presidential elections. That is probably why both Democrat Hillary Clinton and Republican Donald Trump have contributed to "the rawest debate in decades over trade agreements", as the Wall Street Journal observed.
With the political stakes high, it's no wonder that it took outgoing President Barack Obama to make the case for globalisation in his final address to the United Nations General Assembly, where he reminded the world that there is less cause now to be "filled with uncertainty, unease and strife" than during the Cold War years. Yet these are the sentiments stirred up by anti-trade politicians with an eye on the polls in many countries.
Such actions represent a flaw of the democratic system as national policy can wind up being skewed by the interests of a certain group of voters. Low-skilled workers are most certainly vulnerable - not just because of competition from abroad but also from smart machines and software. But protecting them by putting up walls, rather than training them, has wider effects that can harm other groups as well.
Quite apart from limiting the range of goods and the availability of cheaper prices, protectionism can work its way like a cancer running through an economy. Putting a price to the harm caused by trade barriers, the Organisation for Economic Co-operation and Development says a rise of US$1 in tariff revenues can lead to a US$2.16 fall in world exports and a US$0.73 drop in world income. On the flip side, opening up trade would help grow average real incomes in both developing and newly-emerging countries, with the latter seeing higher gains of 3 to 6 per cent of GDP. Sadly, though, some politicians more focused on short-term electoral gains think they can ill afford to take the long view.
