Going with the Global Flow

Here's the globalization football to kick around for awhile. As usual, I'll come out in favor of free trade at the end to give you something to kick at:

On Lake Michigan, a Global Village, by Steve Lohr, NY Times: Gary Becker, this city's mayor, remembers ... the factories and the traditional blue-collar jobs that filled the streets of his childhood... [They] are mostly gone... Racine's future, Mr. Becker believes, lies in forging stronger links with the regional economy and global markets. Reinvention can be unnerving, he acknowledges, but he says it is his hometown's best shot at prosperity...

"If you're not somewhat anxious, you don't understand," Mr. Becker said... Talk to people here about their personal finances and the usual subjects come up. Higher interest rates have cooled the local housing market, and higher gas prices mean fewer weekend fishing trips and second thoughts about owning a sport utility vehicle. ...

"The Democratic challenge is to tell a global economic story about the future that is credible and positive," said Robert B. Reich ... who was labor secretary in the Clinton administration. "We haven't really done that." ...

Political and business leaders consistently advise ... a pragmatic blend of self-reliance and community support. To succeed, they say, companies and individuals must keep climbing the economic ladder to upgrade products, services and skills. But they also emphasize the importance of public investment in redevelopment projects, government training and education programs, and government courtship of new businesses. ...

Across Racine, the appeal to self-reliance ... seems to have sunk in. "One of the things we try to do is prepare people for this new world of work, where you have to keep reinventing yourself and it's all about lifelong learning and being able to adapt," said Alice Oliver, head of the Racine County Workforce Development Center.

The development center offers remedial math, science and English training for high school dropouts as well as job placement assistance in the region for unemployed professionals. ... Ms. Oliver defines the development center's role as "delivering services to the business community," an attitude that reflects the increasingly close cooperation between government and business here. ...

Olatoye Baiyewu runs a program to train young, inner-city men as apprentices to electricians, plumbers, carpenters and cement masons. A Nigerian who came to the Midwest in the 1970's as an agricultural export broker, Mr. Baiyewu eventually shifted his career to training programs because, he said, "we need to do a better job of exposing young African-American men to the opportunities of America."

Besides offering basic education on the construction trades, his six-week program requires his trainees to get a library card and to read books like "Animal Farm" and "Silas Marner." Workplace etiquette and personal finance are part of the curriculum. His training program is run on a shoestring budget with support from the city and state governments and local foundations.

Darnell Mason is a recent graduate. A 28-year-old father of three ... Mr. Mason, a high school graduate and a Navy veteran, seemed particularly impressed by the reading requirement. "They were real books that spark your intellect and get you thinking," he said. "In everyday society, all kinds of things are going to be thrown at you, so you have to be flexible, think things through and adapt."

Mr. Mason is now applying for jobs as an apprentice cement mason. The pay would start at about $14 an hour, plus benefits, and over three or four years could rise to $35 an hour — a long way, Mr. Mason said, from his $7-an-hour warehouse jobs.

"I got into this because I want a career, not just another job," he said. "I'm 28 years old, I'm not getting any younger and I've got responsibilities." With the region's construction businesses doing well, he has an excellent chance of being hired.

Manufacturing jobs are a different story. Although manufacturing still accounts for more than 20 percent of the employment in the Racine metropolitan area, about twice the national figure of 11 percent, the number of local manufacturing jobs has been falling for years as companies failed or fled to lower-cost production sites in the South or overseas. ...

Standing as proof that innovative manufacturers can still flourish here is S. C. Johnson & Son, the maker of Windex, Pledge and other household products. ... Since the late 1990's, the plant's production has jumped more than 40 percent, but the size of its work force has remained the same. "It's highly automated, highly competitive and works great for us," said H. Fisk Johnson, chief executive of S. C. Johnson.

Mr. Poole started working at [S. C. Johnson & Son] nearly three decades ago on the loading docks, and he marvels at how much things have changed. For one thing, machinery has supplanted much of the manual labor..., as his own history shows. He has become proficient in a new, computerized warehouse management system, which he mastered after a six-month training course. To help maximize efficiency, he works closely with planners, production-line leaders and others to refine inventory and manufacturing flows, notifying his team with instructions he transmits wirelessly from his computer to forklifts on the factory floor. Skilled jobs like his pay well, typically $60,000 a year or more. ...

Technology and economic change have caused the tides to shift on the political front as well. And [Democrat] Mr. Becker's hope is that Racine will become a more prosperous community... Help toward that goal should come from a planned 32-mile extension to a commuter railway, underwritten with public funds, that will link Racine to Milwaukee and Chicago. It is expected to be completed in the next few years. ... Projects like this, Mr. Becker said, are crucial if Racine wants to forge stronger links with the regional economy and global markets.

He says that even with the successful public investments Racine has made, luring new businesses has been a challenge. The unemployment rate in Racine County is declining, though at 5.6 percent it is above the national rate of 4.6 percent. In the city itself, unemployment hovers at about 9 percent. Parts of Racine are pocked with former factory sites, known as brownfields, which can take years to refurbish to meet strict environmental standards and to equip with new roads and utilities. ...

When Reich says "The Democratic challenge is to tell a global economic story about the future that is credible and positive," ... "We haven't really done that.," I think he's right. It's a big challenge to tell a positive story to people who are threatened by or have already felt the pressures of globalization. Saying "You'll get a better job" rings hollow. Saying "You'll get a worse job" is hardly a positive message.

I'm not sure how to convince individuals their futures are enhanced by putting their careers at risk even if collectively it is true. But I do know, as anyone in sales can tell you, that it would be a mistake for Democrats to over promise and under deliver once again on the benefits to middle class America from globalization. That will only increase the sense of betrayal that many feel already.

I believe along with most economists that free and open trade does, in the long-run, make us all better off, but somehow we have to do a better job of acknowledging and overcoming the transition costs and changing power relationships the reorganization of global production thrusts upon workers and business owners. We have to have policies in place to ensure that workers feel global competition is fair, that the playing field is level, something I don't think workers feel presently.

My preference is to protect workers but not jobs. We should have policies in place to protect workers who, through no fault of their own, are affected by structural change in the economy but do our best to retain the flexibility needed to respond to changing global conditions. That's why programs such as health insurance that moves with workers as they change jobs, unemployment insurance that allows time for search and adjustment, retraining, help with relocation, and other such programs must be an essential part of the policy.

But let me turn the tables on those of you who believe that free trade academic economists with tenure who talk about education and job retraining don't have a clue what life is like in the real world. What message would resonate with you? What do you want to hear in terms of economic policy and globalization?