What fuels backlash on global trade?
ROTTERDAM, Netherlands — For as long as ships have ventured across water, laborers like Patrick Duijzers have tied their fortunes to trade.A longshoreman here at Europe’s largest port, his black Jack Daniel’s T-shirt, hoop earrings and copious rings give Duijzers the look of a bohemian pirate. His wages put him solidly in the Dutch middle class: He has earned enough to buy an apartment while enjoying vacations to Spain.Lately, though, Duijzers has come to see global trade as a malevolent force. His employer — a unit of the Maersk Group, the Danish shipping conglomerate — is locked in a fiercely competitive battle with giants scattered from Dubai to South Korea.He sees trucking companies replacing Dutch drivers with immigrants from Eastern Europe. He bids farewell to older co-workers reluctantly taking early retirement as robots capture their jobs. Over the last three decades, the ranks of his union have dwindled to about 7,000 members, from 25,000.“More global trade is a good thing if we get a piece of the cake,” Duijzers said. “But that’s the problem. We’re not getting our piece of the cake.”Far beyond the docks of the North Sea, such laments now resonate as the soundtrack for an increasingly vigorous rejection of free trade.For generations, libraries full of economics textbooks have rightly promised that global trade expands national wealth by lowering the price of goods, lifting wages and amplifying growth. The powers that emerged victorious from World War II championed globalization as the antidote to future conflicts. From Asia to Europe to North America, governments of every ideological persuasion have focused on trade as their guiding economic force.But trade comes with no assurances that the spoils will be shared equitably. Across much of the industrialized world, an outsize share of the winnings have been harvested by people with advanced degrees, stock options and the need for accountants. Ordinary laborers have borne the costs, suffering joblessness and deepening economic anxiety.These costs have proved overwhelming in communities that depend on industry for sustenance, vastly exceeding what economists anticipated. Policymakers under the thrall of neoliberal economic philosophy put stock in the notion that markets could be entrusted to bolster social welfare.In doing so, they failed to plan for the trauma that has accompanied the benefits of trade. When millions of workers lost paychecks to foreign competition, they lacked government supports to cushion the blow. As a result, seething anger is upending politics from Europe to North America.In the United States, Republican presidential aspirant Donald Trump has tapped into the rage of communities reeling from factory closings, denouncing trade with China and Mexico as a mortal threat to American prosperity. The Democratic nominee, Hillary Clinton, has done an about-face, opposing an enormous free trade deal spanning the Pacific that she supported while secretary of state.In Britain, the vote in a June referendum to abandon the European Union was in part a rebuke of the establishment, from laborers who blame trade for declining pay. Across the European Union, populist movements have gained adherents as an outraged response to globalization, imperiling the future of major trade deals, including a controversial pact with the United States and another with Canada.“The trade policy of the European Union is paralyzed,” the Italian minister of economic development, Carlo Calenda, said during a recent interview in Rome. “This is a tragic situation.”‘There are going to be losers’The North American Free Trade Agreement, or NAFTA, exposed workers in the United States to competition with Mexico, but its passage came in the mid-1990s, just as investment was pouring into the web, creating demand for a range of manufactured goods — office furniture for Silicon Valley coders, trucks for the couriers delivering e-commerce wares. China’s entry into the World Trade Organization in 2001 unleashed a far larger shock, but a construction boom absorbed many laid-off workers.The dot-com boom is now a distant memory. The housing bubble burst. Much of the global economy is operating free of artificial enhancements. Lower-skilled workers confront bleak opportunities and intense competition, especially in the United States. Even as recent data show middle-class Americans are finally starting to share in the gains from the recovery, incomes for many remain below where they were a decade ago.“The debates that we are having about globalization and the adjustment cost, these are the conversations that we should have been having when we did NAFTA, and when China entered the WTO,” said Chad Bown, a trade expert at the Peterson Institute for International Economics in Washington. “There were people talking about these things, but they weren’t taken very seriously at the time. There’s a lot of policy regret.“We do need to have these trade agreements,” Bown said, “but we do need to be cognizant that there are going to be losers and we need to have policies to address them.”Growing skepticismThe extent of the damage suffered by these “losers” has accelerated an erosion of faith in the wealth-creating powers of free trade. A profound skepticism has taken root in some of the largest trading powers, notably the United States, France, Italy and Japan.Successive administrations in the United States, led by Democrats and Republicans alike, have embraced liberalized trade as a central component of the nation’s foreign policy. Yet 19 percent of American voters said trade with other countries creates more jobs in the United States, according to a New York Times/CBS News poll released in July.Even among those who support trade, doubts are growing about its ability to deliver on crucial promises. A 2014 Pew Research Center survey of people in 44 countries found that 45 percent of respondents believed trade raises wages. Twenty-six percent believed trade lowers prices.In the fallout, the United States maintained limits on unemployment benefits, leaving American workers vulnerable to plummeting fortunes. Social welfare systems have limited the toll in Europe, but economic growth has been weak, so jobs are scarce.All the while, automation has grown in sophistication and reach. From 2000 to 2010, the United States lost some 5.6 million manufacturing jobs, by the government’s calculation. Thirteen percent of those job losses can be explained by trade, according to an analysis by the Center for Business and Economic Research at Ball State University in Indiana. The rest were casualties of automation or the result of tweaks to factory operations that enabled more production with less labor.At APM Terminals, where Duijzers works, a symphony of motion greets every arriving container ship. Cranes rev, lifting containers. Trucks drive themselves. But people are scarce. “Robots Running Things in Rotterdam,” proclaims an article on the company website. “Of the 74 machines operating in the yard, 63 run on their own with no human intervention.”Yet if robots are a more significant threat to paychecks, they are also harder to blame than hordes of low-wage workers in overseas factories.“We have a public policy toward trade,” said Douglas Irwin, an economist at Dartmouth College. “We don’t have a public policy on automation.”Out at the Rotterdam docks, the longshoremen fret about robots.John Arkenbout remembers working through ceaseless wind and drizzle when he started at the port 25 years ago. Now, many longshoremen sit in glass-fronted offices set back from the docks, controlling robotic arms via computer terminals.“Before, it was physically taxing,” Arkenbout, 51, said. “Now it’s more mental.”Most longshoremen earn about 50,000 euros a year, or $56,000. Arkenbout works a maximum of 40 hours a week.Arkenbout scoffs at the notion that automation and trade are separate. The shipping companies are deploying robots to cut costs.Trade deals, immigrant labor, automation: As Arkenbout sees it, these are all just instruments wielded in pursuit of the same goal — paying him less so corporations can keep more.“When they don’t need me anymore,” he said, “I’m nothing.”