Washington Post Editorial Board: Out of Economic Touch with Working Americans

The Washington Post ran an editorial on 4.4.2007 criticizing Democrats in Congress for opposing free trade deals. The editorial contained this concluding sentence: If the Democrats do not wish to be known for standing against the prosperity brought by globalization, they should pocket the concessions the administration has offered and make some compromises of their own. The question isn't whether globalization has brought prosperity, but how and for whom has it brought prosperity?

In 2003 the Economic Policy Institute did a study on how many jobs had been lost since the adoption of NAFTA. The EPI concluded that NAFTA had displaced production that had the net effect of costing 879,280 American jobs. The study put it this way: Between 1993 and 2002, NAFTA resulted in an increase in exports that created 794,194 jobs, but it displaced production that would have supported 1,673,454 jobs (see figure). Thus, the combined effect of changes in imports and exports as a result of NAFTA was a loss of 879,280 U.S. jobs.

What was true in 2003 is still true today: the rewards from globalization aren't spread throughout the economy equally. There are winners and losers in globalization. Whether you support trade agreements depends on how you see yourself and others like you faring under globalization.

Here's another fact from EPI released this week: Newly released data on income inequality reveal that all of the gains in 2005, the most recent year for data of this type, went to households in the top 10%. Moreover, those even higher up the income scale—say, the top 1% and above—saw the largest gains of all.

Our guess is that the economic elites who support globalization are people who live in the top 10% and most likely the top 1% of American households. People like the owners of the Washington Post. That's why those people support globalization. The Democratic Party, however, represents a lot of people who don't fall into the top 10% of American households. That's why a lot of Democrats oppose globalization.