Trump shows globalization’s logic can be challenged
Give Donald Trump credit for this. The U.S. president-elect might not be everybody’s favourite person, but he is showing that governments can successfully challenge the logic of globalization.
In particular, he has demonstrated some of the world’s biggest companies can be strong-armed into repatriating high-wage manufacturing jobs.
Since November, when Trump won the U.S. presidential election by promising to tear up or renegotiate the North American Free Trade Agreement, companies ranging from Ford to United Technologies have backed away from plans to move production abroad.
Certainly, Trump has exaggerated his role in this.
But a Washington Post analysis calculated that he can be credited for keeping or creating 9,630 wellpaid American manufacturing jobs since the election – a significant win, particularly for someone not yet in office.
More socially acceptable politicians pat themselves on the back for doing much less.
Last year, for example, both Prime Minister Justin Trudeau and Ontario Premier Kathleen Wynne took credit for a General Motors decision to create 750 new research and development jobs in Canada.
Wynne crowed that her government had created the right conditions for a high-tech investment. Trudeau noted that during an elite conference in Switzerland earlier in the year, he had personally informed GM chief Mary Barra of Canada’s many virtues.
Trump’s style is different and arguably more effective. He
doesn’t charm CEOs. He threatens them - with high tariffs and other measures designed to eat into their profits.
What Trump seems to get - and what Justin Trudeau’s government seems to forget - is that globalization is not inevitable.
It is possible to operate a successful capitalist economy without embracing trade deals designed to drive industrial wages down to Third World levels.
The big car companies don’t have to move to Mexico in order to stay profitable. They simply would prefer to relocate there in order to become more profitable.
Up to now, governments in Canada and the U.S. have handled the Mexican threat by bribing the auto manufacturers with subsidies and low-interest loans.
Or, conversely, they have introduced so-called right-to-work laws to bust unions and push wages down toward Mexican levels.
The Trump-Lumley solution is much better: Recognize the fact profitable companies can afford to operate in high-wage North American jurisdictions and coerce them into doing so.
The Trudeau government doesn’t get this because it confuses unfettered free trade with tolerance - arguing that countries that open their borders fully to commodities, investment and labour are somehow more virtuous than those that do not.
In defending Canada’s Comprehensive Economic and Trade Agreement with the European Union, even someone as sophisticated as Foreign Affairs Minister Chrystia Freeland seems to be a captive of this 19th-century delusion.
Yet what she lauds about this pact is precisely what makes it so dangerous: It is not just about trade; it is about everything - including government’s ability to regulate in the public interest.
It is easy to see why the Trudeau government is so easily able to conflate free trade and tolerance.
In countries such as the U.S., France and Britain, the intolerant right has been far more successful in channelling anti-globalist, populist anger than the tolerant left. With his diatribes against Mexican migrants and Muslims, Trump has tapped into a dangerous strain of American xenophobia.
But that doesn’t mean everything coming out of his mouth is wrong. Trump is right about trade deals like NAFTA. They are bad news (a recent poll shows that even most Mexicans think the pact hasn’t helped them).
More important, he is showing that something can be done to rectify such deals. Like former Liberal prime minister John Turner, a fierce opponent of free trade with the U.S., Trump recognizes nations can thrive without embracing fullblown globalization.
Trade does not require free trade. Trump seems to get that.