The NYT reports on the battle over the Colombia trade deal between President Bush and the Democratic leadership in Congress. The article implies that the two sides disagree on the impact of trade on the U.S. economy, while the claims presented are not in fact inconsistent. For example, the article reports that opponents of recent trade pacts "say that trade has cost American jobs and led to wage stagnation." It contrasts this with assertions from Republicans that "whatever the losses from trade, the gains outweigh them." These two claims can be entirely consistent. Specifically, economic theory and much evidence suggests that non-college educated workers have seen their wages decline as a result of the growth of trade in recent decades. However, most research also suggests that the economy has grown somewhat more rapidly as a result of increased trade. The gains have gone to highly educated workers and corporate profits. It is easy to see how this can work. Suppose that our trade negotiators contacted the publishers of the NYT, WSJ, and other major newspapers and asked them why they don't hire reporters from Colombia, since they get much lower wages than their U.S. counterparts. Presumably the publishers would first point out that, under current immigration law, it is in general not legal to hire someone explicitly because they will work for lower wages. If anyone in politics was committed to free trade, this barrier would of course be eliminated. (Lesson # 1, no one is advocating free trade.) Then the publishers would explain that Colombian reporters generally don't speak fluent English and that they are not trained in the same way as U.S. journalists. If the government were as committed to eliminating barriers to trade in journalists' services as it is in manufactured goods, it would send consultants down to Colombia to improve the training process in their journalism schools. This would ensure that Colombian reporters were proficient in English and trained to meet U.S. journalistic standards. With the legal obstacles to hiring low-paid foreign journalists removed, and Colombian journalism schools training their graduates to U.S. standards, Columbian journalists would soon be flooding the staffs of U.S. newspapers and driving down wages for their U.S. born counterparts. This would be good news for the economy, since we would be getting our newspapers at lower prices and the cost of advertising would be reduced. However, it would be bad news for U.S. born journalists who would be receiving much lower wages. This more or less describes the situation with recent trade deals, although the losers have been workers without college degrees (70 percent of the workforce), not journalists. There is actually not much disagreement about the impact of trade deals, the main difference is between politicians who think that the upward redistribution that has resulted from recent trade deals is good and those who think it is bad. It would be helpful if reporters would clarify this point for readers rather than obscure it.
--Dean Baker
