Trade and the Second Renaissance



Dr. Chris Kutarna

It is stunning that neither nominee for leadership of the country long regarded as global trade’s chief architect dares to utter publicly a compelling case for why trade matters. And yet, it is also unsurprising.

The bald, aggregate argument ought to be compelling without any rhetorical flourishes. American real income (GDP) per capita is 44% higher today than it was in 1990-which is to say, 44% higher than before the founding of the WTO and China’s entrance to it, before NAFTA and before “offshoring” entered English-language dictionaries. Over the same time period, the developing world has achieved the biggest poverty reduction in history.

In 1990, almost 2 billion people worldwide lived in extreme poverty. Now it’s fewer than 900 million. That lifts everyone, first because poverty is a blight and eradicating it is a moral imperative. Second because the billions who are emerging from poverty into a global middle class create a new market for present and future generations of American economic growth. It’s an over-simplification to attribute these gains to flourishing trade alone (other transformations, not least digitization, have been vital), but trade has been integral.

That final caveat is partly why we never hear this argument on the campaign trail. The link between rising trade and rising levels of well-being resists distillation into 140 characters. But the fatal flaw is how deaf the macro-truth sounds in answer to the personal grievances that voters have come to associate with trade: job losses, wage stagnation and deepening domestic inequalities.

However, this association, too, is an over-simplification. In policy forums, we’re aware (or should be) that how society creates wealth and how society distributes it are separate questions. If trade helps to grow the national economy but creates more losers than winners along the way, that’s not only an economic consequence; it’s a political choice. But in public forums, that distinction has been blurred away. For three decades, trade has been presented to voters as one aspect of “globalization” – an ultimately progressive mega-trend that constrains public policy choices down to a subset that only those who understand the mega-trend are qualified to define.

For many people, “trade” isn’t working. And they’ve been schooled to think that it cannot work any other way. So we are stuck: populism is on the rise across the developed world, and many voters wish to break with the status quo rather than maintain it.

To get trade agendas moving again, politicians and policy makers first need a replacement discourse of trade’s place in our ever bigger, ever more complex world – a discourse that amplifies, rather than suppresses, public choice-making. It should have three components.

A new lens

The first is a new lens. Successive shocks, from the financial crisis to Brexit, have stoked or been stoked by anxieties and anger at the status quo. These shocks have eroded public trust in institutions and elected officials, and shifted decision-makers’ focus from the bold leadership that their responsibilities demand to the fear of leading wrongly. Society is dangerously adrift. We need to comprehensively challenge such perceptions with a fresh, wider perspective on this global moment that makes sense of the shocks, makes the stakes plain and urgent, and revalidates courageous agendas on trade, but also on many other stymied public policy issues.

I argue in a new book with Ian Goldin that we are living through another Age of Discovery, a second Renaissance. Mega-trends similar to those upending our present (globalization and digitization) collided in Europe five hundred years ago (the voyages of discovery by Columbus and others, and Gutenberg’s printing press). And they catalyzed similar shocks: financial crises, pandemics and populist uprisings against establishment powers (from the Bonfire of the Vanities to Martin Luther’s Reformation). The implication can be powerful, if we choose to recognize it – we have been here before. Once again, genius and risk are both flourishing. Once again, this is the best and most fragile moment to be alive. That’s what gives this moment its schizophrenic feel, and makes its stakes genuinely historic.

The same lens also reminds us of the bigger “why” that ought to drive vibrant 21st century trade agendas. Historically, trade has always forged links across the gulfs that divide peoples (when Columbus “discovered” America, his primary motive was trade), and we urgently need those links now: to grow economies, obviously, but also to grow capacities at home and abroad to cooperate on a host of transnational dangers: terrorism, cybercrime, money laundering and tax evasion, pandemic threats and climate change.

New maps

The second component of a revitalized trade discourse must be new maps. Renaissance Europe completely redrew their maps of the world to conform to a new global reality. We still have some ways to go. “Developed” and “developing” worlds, “rich” and “poor” countries, “advanced” and “emerging” economies: so much data, analysis and opinion is trapped in these crudely drawn dichotomies that it is hard to discuss trade meaningfully without invoking them. Yet they all deeply mislead public understanding. “Developed” countries have their own urgent development needs; the big “emerging” countries are already at the center of world affairs; and all the above groupings gloss over diametric differences in governance regime, population and resource endowments.

Our political maps, too, will need updating if we are to make new choices about the distribution of trade’s costs and benefits within our communities. Republicans are right. Regulatory environments are evolving too slowly to keep up with the technological and business transformations being worked upon society. Individuals do need to bear more personal responsibility for creating economic opportunity as fractional, global labor markets develop. And Democrats are right. Welfare systems do need to compensate and cushion households for the additional uncertainty they bear by supplying labour in a more flexible form that makes the overall economy more productive. On this and other trade-related domestic issues, the right policy solutions will blur classic party lines.

New language

The third aspect of a fresh discourse on trade must be new language.

“Globalization” is a dead-end term. It was always a word that obfuscated more than it clarified; that squashed many difficult political choices together rather than give each its own public space. Now is the time to unpack “globalization” into its constituent parts: trade development, financial integration, regulatory harmonization, for starters, so that we may air the implications of each.

Framing trade as progress toward an “open” world, as some now advocate, also does our discourse a disservice. Its positive connotation rings as naïve to the risks and complexities inherent in the economic systems we are stitching together. Now, and for the future, trade development doesn’t “open” societies. It doesn’t “connect” us.

Instead, it “tangles” us together. This simple shift in language is how we begin to better acknowledge and include in public deliberations the unintended consequences of trade: the global contagions from which we cannot disentangle ourselves; the bads that, like the goods, flow more readily into and through our societies; the complication of causes and effects, which has made it so much easier to blame whomever we want to be at fault for our injuries than to explore their root causes.

First, it will take fresh discourse to unstick the global trade agenda, and second it will take courageous leadership to articulate it against the anti-trade rhetoric of hostile populists.

Fortunately, the time we live in freely supplies the first. It is our great fortune, and test, to be alive in a second Renaissance. That is not exaggeration: it is the best lens to fit the facts of our present. Trade motivated the voyages of the first Renaissance and tangled the world together, for good and ill. Our task today is to stoke that same courageous spirit, but with better politics at our disposal, to broaden the population to whom the benefits of trade extend.

The second is up to us.

Dr. Chris Kutarna is author with Ian Goldin of Age of Discovery: Navigating the Risks and Rewards of Our New Renaissance, published by St Martin’s Press and Bloomsbury. He is a Fellow at the Oxford Martin School at the University of Oxford and can be reached on Twitter @ChrisKutarna.


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