OK, I’m just disgusted at the level of discourse about the beef protests in Seoul. Americans in their city on the hill have finally started to mouth off, and it’s not pretty. Mostly, it’s Doug Bandow bowdlerized into a spiteful "Well, let’s just take our marbles and go home!", and that’s the constructive part of the groaning.
The New Republic has a much more informative debate going. And, a debate it really is. Fortunately, the comments section to Josh Patashnik’s forgettable post skips Patashnik and debates the more useful tangle in the links, between Dani Rodrik and Tyler Cowen. Rodrik and Cowen present the antagonism between the two trade perspectives forming across the pond as well as possible.
Tyler Cowen is top of the refuse pile for the "I see crazy Koreans!" crowd (which also includes TMH‘s Robert Koehler’s sarcastic retort, that "If you’re bewildered, don’t worry — nationalism, anti-Americanism, democracy, frustration with Lee, nighttime entertainment… there are a ton of explanations of how these protests are about anything but US beef."). Dani Rodrik, who actually knows about economics, draws universalizable conclusions to save the free trade vision from both idealists and the Cowens of the world.
What I am referring to is the idea that successful markets need to be embedded in a larger set of man-made rules and governance structures. Markets need regulation, stabilization, and legitimation because they are not self-regulating, self-stabilizing, or self-legitimizing. The success of modern capitalism is due as much to the institutions that govern markets–political democracy above all–as it is to the power of markets themselves.
It is important to understand this because it provides an important clue as to why domestic and international trade are different. Domestic trade takes place within thoroughly embedded markets; there are clear rules and they apply to all transactions equally. International trade, on the other hand, is conducted in only weakly embedded markets: the rules either do not exist or apply unevenly. I believe this is the fundamental reason why their consequences are often perceived so differently.
(…)
The international trade counterpart of this hypothetical is the worker who loses his job because his company decides to move to a country where, say, labor rights are routinely violated. So the "us" and "them" characterization that Tyler attributes to irrational nativism perhaps has more to do with the absence of a common set of international rules on labor standards, environment, consumer safety, and so on.
By overlooking the problems created by trade in instances where regulatory arbitrage does play an important role, we miss the opportunity to celebrate the kind of globalization where such arbitrage doesn’t play a role. The latter type of trade probably constitutes the bulk of world trade. But because economists do not make this important distinction, they have no language or ability with which they can respond appropriately to the uneasiness out there–except for calling it irrational.
Rodrik also links to the abstract of his and Anna Maria Mayda’s research on attitudes toward trade. In addition to kyungho’s comment on the WaPo article, there is this one comment from singlespeed I want to add in full, because it’s from the TNR blog post.
Whether or not you think globalization is good or bad, I think what most people can agree upon is trying to provide an equalizing trade framework for international trade. But what complicates that is that trade treaties between countries is based on several factors beyond pure economics. People on the right tend to argue that pure market globalization raises standards in the poorer countries but that standard of living numbers used are skewed towards the actual individuals/investors/corporations/governments that are making money off of the trade agreements. The flip side is the itinerant farmer who raises a small but diverse selection of crops may not ever see part of that improved quality of life if his rice crop is competing against cheaper American subsidized import rice. One can argue that the farmer is forced to do something more productive but the question remains as to why he/she should be forced to give up his farm solely to the market benefit of a select few?
I think what we’re going to start seeing is a further nationalization of product identity (i.e. individuals will align themselves with domestic products as national pride) while at the same time a re-alignment of trade equity will occur as one-sided trade agreements will flatten out as the third and second world nations develop greater economic clout to negotiate fairer trade contracts than the apparent or perceived one-sided trade agreements with first world nations. So Koreans will protest over foreign beef as an affront to the national pride in Korean beef but they won’t protest the foreign car market. Much as Americans protested at one point over foreign car market infiltration while at the same time buying Japanese consumer electronics.
The localization of domestic manufacturing for specific markets will grow not just because of the backlash to globalization by multi-nationals but because of a desire to support domestic products out of national pride, economics, quality and for others because its more sustainable. The market might be smaller but more dedicated to supporting the niche of specific domestic manufacturing for local markets. Quality over quantity.
If nothing else, Lee Myung-bak was not the leader to guide South Koreans from protectionism to liberalization.
Infidelworld 