There is something that bugs me about articulate people who get things profoundly wrong. Perhaps it is because I normally associate the ability to say something well with having something to say.
Naomi Klein bugs me for this reason. But her transgressions are all the more apparent for her newly minted status as The Nation‘s replacement columnist for Christopher Hitchens. Hitch famously fled for more rational pages, so perhaps it is telling to see Klein at The Nation now.
In her inaugural column, Klein invites comparison to her predecessor by opening with an anti-Clinton screed. This, of course, is a game perfected by Hitchens, but he never broached the topic without first having a point and a purpose. Klein has neither. In three short paragraphs an off-the-cuff remark by Hillary Clinton blooms into premeditated fear mongering in the cause of an aggressive regionalist trade stance. You’d be forgiven for thinking Hillary herself fabricated the hoax she referred to.
None of this has anything to do with the main thrust of her article, which is that regional trade agreements (or Preferred Trade Agreements, PTAs) are bad. She happens to be right, but only on this narrow point and for reasons opposite to those she argues. Regionalism, whether expressed through NAFTA or EFTA or Mercosur, is a sub-par trading strategy. In their current form, these trade agreements lead mainly to trade diversion, which amounts to protectionism for larger regions. PTAs are only useful insofar that they are building blocks to true multilateralism — where there are no trade barriers whatsoever.
Klein, however, dislikes regionalism because it is not protectionist enough. Not that she would ever tell you outright — the closest she comes to admitting this sentiment is in her rendition of a conspiracy the rest of us are either too stupid to notice or else part of:
“First you expand the perimeter [of a trading bloc]. Then you lock down.”
Our differences are this: I have a problem with locking down. But Klein has a problem with expanding the perimeter in the first place.
Klein’s argument falters at the very beginning, when she lumps “free-market economists” in with military strategists and politicians as the bugbears of “Fortress NAFTA”. I can’t speak for the latter two groups, but if by “free-market economists” she means the ones that work at the World Bank, IMF and WTO, and such notable ones as Jagdish Bhagwati, then she is being dishonest. For this group is among the most aware of the shortcomings of PTAs.
These shortcomings are not the ones Klein lists, however. She objects to including Mexico into NAFTA and Eastern European countries into the EU on the grounds that they are being exploited:
But if a continent is serious about being a fortress, it also has to invite one or two poor countries within its walls, because somebody has to do the dirty work and heavy lifting.
And why would they agree to such a scheme? Apparently, these countries realize that it is better to be exploited than not:
For locked-out continents, even their cheap labor isn’t needed, and their countries are left to beg outside the gates for a half-decent price for wheat and bananas.
The shocking notion that perhaps, just perhaps, Mexico is exploiting the US, and Slovakia the EU, even just a little bit, does not seem to occur to Klein. But how could it not? The very foundation of trade theory is that all countries benefit from trade, even if the terms of trade are not equal. Counterintuitive at first blush, perhaps, but hardly controversial.
Who could possibly object, besides Klein? Trade alters opportunities for workers everywhere, but such change is not always welcomed by those who see their opportunities diminished — not the poor unskilled workers in the developing world, of course, but the rich unskilled workers in developed countries’ trade unions. And students with po-mo skills, unmarketable in any economy. These, then, are her partners in ideology. Some of them, I hesitate to note, ardent Clinton loyalists.
Klein’s other beef is with the notion of more secure borders. One would think that in her eagerness to protect poor would-be immigrants from landing low-paid jobs inside trade blocs, she’d applaud a secure border, so as to save them from their deluded selves. It would have been better to point out, as Bhagwati has done, that it is nigh impossible to stop economic migration, and that the best solution is to develop a coping strategy. Klein also glosses over a major problem with her “Fortress NAFTA,” described as “a continental security perimeter stretching from Mexico’s southern border to Canada’s northern one.” A security perimeter on Canada’s northern border? How exactly? NAFTA itself is in part a coping strategy for the flood of illegal Mexican labor into the US. If you can’t beat them, join them.
Klein’s moral outrage depends on a Marxian explanation for the emergence of PTAs — they are inevitable because of the dynamics of capitalism, whereby rich countries need to exploit poor countries. Her outing of the “social hierarchy” of the EU is quite galling:
Inside Fortress Europe, France and Germany are the nobility, and lesser powers like Spain and Portugal are the sentinels. Poland, Bulgaria, Hungary and the Czech Republic are the postmodern serfs, providing the low-wage factories where clothes, electronics and cars are produced for 20-25 percent of what it would cost to make them in Western Europe–the EU’s own maquiladoras.
But to make her point stick, Klein has to forget that most PTAs in existence are by developing countries, for developing countries: Mercosur, ECOWAS, SAPTA, CACM, LAFTA, CARICOM, ACS, ASEAN, GCC, SACU, CBI… and others. It would be quite the coincidence that PTAs only become exploitative when one or more members are rich.
In fact, in the case of the EU, Klein’s “nobility” are responsible for net cash injections into the economies of the “sentinels” and “serfs”. Some sentinel economies, such as Catalonia, are richer than the nobility, while the serfs have some of the fastest-growing economies in the world, with productivity growth to match. The only people complaining are Klein and French farmers, who fear for their livelihood now that Eastern European farmers are being exploited so.
The worst is that there is nothing that these European “social engineers” can do to please Klein. She admits to no empirical test that would determine the truth or otherwise of her assertions. For example, let us fast-forward to when the EU admits Turkey. Guess which version of events Klein will subscribe to: Is it proof that the EU is not a fortress after all but instead genuinely interested in the mutual benefits of free trade with more and more countries? Or, is Europe merely letting another poor country into the enclosure, to be exploited? I dare Klein to argue that the popularity of EU accession among Turks should not be misconstrued as an indication of who stands to gain.
If it was up to me, of course, there would be no tariffs, no quotas, and free movement of labor for all. It is a pipedream, somewhat, because the rich world fears the destabilizing effect of the coming surge of cheap and productive labor. Naomi, it’s not that the poor are exploited; it’s that the rich are overpaid.
Oh boy oh boy, do I get to do this every week?
