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Fear and Looting in America: Krugman Takes on Globalization?

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"Sooner than most people think, countries that refuse to limit their greenhouse gas emissions will face sanctions, probably in the form of taxes on their exports. They will complain bitterly that this is protectionism, but so what? Globalization doesn't do much good if the globe itself becomes unlivable." http://www.nytimes.com/2009/05/15/opinion/15krugman.html

Paul Krugman argues that China must do something about its carbon emissions or we're all cooked. And he is willing to support carbon taxes on imports to get there, even if it violates free trade rules. This separates him from most economists and columnists who promote globalization at all costs.

The proponents of unfettered globalization look upon "Buy-American" proposals with great disdain. They argue that tariffs merely raise the price of imported goods and in effect subsidize a few workers' jobs. Also, such protectionist tariffs supposedly will lead to retaliatory actions on our exports and thereby cut back the jobs of those who work in export-related industries. So overall, in theory, protectionism hurts more people than it helps, both here and abroad. (In practice, we're losing millions of manufacturing jobs while ballooning our financial sector that turned out to be full of... hot air.)

In addition to climate change, Krugman is willing to make other exceptions as well. For example, he argues that protectionist measures may be necessary to ensure that stimulus money is spent at home. This will also force other countries to improve their stimulus efforts and this will have a positive impact on fighting the recession globally. http://krugman.blogs.nytimes.com/2009/02/01/protectionism-and-stimulus-wonkish/

It would be good if he took the next step: recognizing that dislocated manufacturing workers in the Midwest have their own definition of an "unlivable globe." If you lose your job to low production costs in countries where workers have no unions, no health and safety protection, no environmental controls and where workers may get shot or arrested for organizing, you might question the wonders of free trade. If you lose your job and if you can't provide for your family, global warming may not be your first priority.

Of course, we should embrace Krugman's proposal to tax imports from countries that don't reduce their carbon footprints, assuming that we finally start to do so as well. But we will also have to challenge the alleged blessings of free trade in order to support those who have been creamed by globalized production. In theory, those workers are supposed to find new work in new higher-value industries. In practice they end up, if they're lucky, stocking shelves at Wall Mart. In Denmark, such dislocated workers are given nearly full pay to go back to school for several years to prepare for new jobs. Here, they're on their own. They have a right to ask for tariffs to protect their livelihoods.

But won't new green jobs create a new competitive industrial base? Won't workers be hired to build new wind turbines, solar panels and to construct a new smart electrical grid? Won't we need to manufacture high speed rails and trains in America? Won't we need to manufacture goods to weatherize homes? Surely, this will create more than enough high-paying jobs.

Maybe. It's certainly possible, but right now there is no guarantee such production will take place in the US. Green manufacturing might also go off-shore to take advantage of low-wage labor. Don't be surprised if you see cargo ships carrying giant wind turbine blades chugging into port from around the globe... and belching up a lot of carbon to get here.

We need to a new way to look at protectionism -- one that both protects the globe and that protects jobs. We should use precise boarder adjustment taxes to enhance home-cooked green industries. After all, "Globalization doesn't do much good if the globe itself becomes unlivable," either for the polar bears or for unemployed steelworkers.

Les Leopold is the author of The Looting of America: How Wall Street's Game of Fantasy Finance destroyed our Jobs, Pensions and Prosperity, and What we can do about it. (Chelsea Green Publishing, June 2009)

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