For some bizarre reason the idea of "wage insurance" continually pops up in the discussion of trade. Wage insurance is a mechanism for replacing some of the wages that workers might lose if they leave a good-paying job and are forced to take a new one at a lower wage. Most proposls call for making up 20-25 percent of the lost wages, usually with a cap in the neighborhood of $5,000 a year. It is bizarre that wage insurance comes up in reference to trade because the overwhelming majority of people who are hurt by current U.S. trade policies do not actually lose their jobs. The current pattern of trade hurts most workers by putting less educated workers (those without college degrees) in direct competition with low-paid workers in the developing world, forcing down their wages. Trade insurance provides no benefit whatsoever to the workers who get lower pay at their current jobs or who enter the labor force receiving lower wages because of the impact of trade. It is understandable that the proponents of the current trade agenda would try to imply that wage insurance is an effective remedy for those who are harmed by their policies, but this is not true and reporters should not play along with this nonsense. This article also commits the cardinal sin of telling us what politicans believe about the world: "Democrats like Mr. Rubin and Mr. Schumer view global trade and open markets as sources of growth and dynamism." As they should tell reporters in journalism 101, we don't know what politicians believe about the world, we only know what they say. In this particular case we know with absolute certainty that Mr. Schumer doesn't always view open markets as a source of growth and dynamism. Just two weeks ago he was all over the media calling for weakening the Sarbanes-Oxley rules on corporate accounting because he claimed that they were causing business to go overseas. This is not a reasonable argument for someone who believes in "free trade." We should have accounting rules that make sense based on their merits. A true free trader would not care if such rules caused corporations to take some of their financial business overseas. This is not a reason to have bad accounting rules in the United States.
--Dean Baker
