Elizabeth Warren's Big Break From 30 Years Of Pro-Corporate Trade Policy

It's time to get over the 1990s.

Elizabeth Warren built her brand for the 2020 presidential primary on wonkery. From childcare to housing to higher ed, Warren has leveraged decades of economic policy expertise and a network of liberal intellectuals ― many of them former students in Warren’s law school classes ― to propose ambitious, meticulously detailed reforms.

The trade platform Warren unveiled Tuesday in Detroit is a little different. It retains Warren’s wonk-flair with a proposal to reorganize the disparate trade regulators currently scattered throughout the Washington bureaucracy inside a single, consolidated agency. But the heart of her proposal is ideological rather than technical. Warren is making a crystal-clear statement of principles, and an equally plain break with the past 30 years of American trade policy ― up to and including the presidency of Donald Trump.

“America chose to pursue a trade policy that prioritized the interests of capital over the interests of American workers,” Warren told a crowd in Detroit Tuesday. “We have encouraged companies to invest abroad, ship jobs overseas, and keep wages low. All in the interest of serving multinational companies and international capital with no particular loyalty to the United States.”

Sen. Elizabeth Warren (D-Mass.).
Sen. Elizabeth Warren (D-Mass.).

What matters in Warren’s vision is not the specifics of any particular trade tool or enforcement tactic. Warren isn’t pro-tariff or anti-tariff, for instance. It depends on the tariff. She’s in favor of international rules that are designed to achieve actual policy goals other than corporate profit. What we call “free trade,” she emphasizes, isn’t really a system where governments get out of the way. The rules of international commerce determine its outcomes ― and there is no such thing as a trade regime without rules. When governments agreed to grant 20-year monopolies on life-saving medicines under WTO treaties, for instance, they were not simply allowing nature to take its course — they were setting up a system.

In Warren’s telling, this was not an accident or a tactical failure. It was a deliberate ideological agenda. By the 1990s, a bipartisan consensus had emerged in Washington which maintained that global peace and prosperity were best supported by an international trade regime in which governments got out of the way and let markets work their magic. Trade would expand, wealth would accumulate, and international comity would ensue.

Trade did expand and wealth did in fact accumulate ― increasingly, in the hands of a narrow community of corporate shareholders, at the expense of public health, environmental conservation and worker wages. This was an act of geopolitics, not the verdict of natural science or the intractable demand of human progress.

“Globalization isn’t some mysterious force whose effects are inevitable and beyond our control,” Warren said. “The truth is that Washington policies ― not unstoppable market forces ― are a key driver of the problems American workers face.”

This is not an original observation. Over the past three decades, many of globalization’s early cheerleaders have reversed themselves, a set of thinkers which includes Nobel laureate Joseph Stiglitz, prominent economist Dani Rodrik and Martin Wolf, the most influential living British financial writer. Still others, like the economists David Autor, David Dorn and Gordon Hanson, have concluded that the costs of the free trade era for workers and manufacturing communities have been much more severe than experts anticipated during the 1990s.

But in the strange universe of American politics, criticizing globalization has become increasingly controversial over the past two years. As Donald Trump has broken with the World Trade Organization and openly embraced tariffs as a staple of his foreign policy, the global trading order that both Hillary Clinton and Bernie Sanders criticized on the 2016 campaign trail has become a source of nostalgia in elite commentary. If only we could get back to the good old days of 2015, the thinking goes, today’s chaos and instability would disappear. In Warren’s worldview, the trouble didn’t start with Trump.

It’s time to reject the excuses we’ve heard for decades about why we can’t do more to help American workers,” Warren said.

Warren calls her platform “economic patriotism.” Critics will be quick to deride it as economic nationalism. And in her speech Tuesday, Warren unabashedly leaned into rhetoric about American workers and American growth. But the villains in her story aren’t foreign workers or even foreign governments ― they’re corporate shareholders and corporate executives who have pillaged the planet in pursuit of their own narrow financial gains. Warren explicitly praises other models for economic internationalism, highlighting the German government’s ability to pursue foreign trade while supporting its domestic workers.

This is the weakest element of Warren’s trade pitch, as the German trade model has been disastrous for many of its neighbors (ask Greece). But the example is nevertheless illuminating. In particular, it’s hard to imagine Donald Trump praising Angela Merkel. And despite tactical differences with his predecessors, the ultimate aims of Trump’s trade policy have generally aligned with those of previous administrations. When the negotiating rubber hits the road, Trump still privileges corporate profit over other concerns. Where his steel tariffs appear to be boosting American steel output, American steelworkers are for the most part getting cut out of the deal. One of his top negotiating goals in talks with both China and Mexico has been the defense of intellectual property rules that benefit major pharmaceutical firms by enabling them to charge monopoly prices for prescription drugs.

As a matter of concrete policy, Warren wants to consolidate trade negotiation and regulation in a single regulatory agency. This appears first and foremost to be an effort to blunt the influence of the Office of the U.S. Trade Representative, which has long functioned as, in effect, a wholly-owned subsidiary of Big Pharma. As with any trade platform, the devil will be in the details. Warren is essentially promising to use all of the tools at the government’s disposal to reorient trade policy away from capital and toward labor. Any final evaluation of Warren’s platform should depend on how exactly she plans to use those tools, and what role she sees for U.S. allies and the legacy institutions of the old order, like the WTO.

But as a mission statement, Warren’s speech is important. Most politicians ― like most of the economists who helped make the world the mess it is today ― are reluctant to confront the profound intellectual failure of the 1990s economic project. Warren is calling for the next step.

Popular in the Community


What's Hot