I grew up in an era when almost every major political party in the world embraced globalization as a way to raise the standard of living for every person. The situation today is very different.
Although that time is not so long ago, protectionism is on the rise in most wealthy countries, including Canada. Tariffs are rising and there is a growing consensus among the population that immigration policies that have recently welcomed large numbers of newcomers need to be reconsidered.
The liberal left has been seduced by the argument that raising tariffs would bring manufacturing jobs back to a strong middle class, or at least mitigate their disappearance. But that is unlikely to happen.
Globalization, and competition from imports from China in particular, has certainly played a key role in the decline of manufacturing in rich countries, but technological change has also played an important role.
Manufacturing is now much more capital intensive than it used to be, which means it requires fewer workers than it used to. Unless we want to turn back the clock technologically, protecting ourselves from Chinese competition will not bring manufacturing jobs back, or at least not without paying a huge cost in government subsidies for capital investment.
It is also unlikely to have a major impact on China’s geopolitical power, as its companies increasingly look to markets in the Global South for business opportunities.
The argument for restricting immigration assumes that reducing the number of job seekers will lead to higher wages, particularly in low-paid occupations. But the economic literature on this topic has mixed findings.
Immigrants also contribute to the economy by consuming goods and services, thereby stimulating demand. Furthermore, they often do not compete directly with native-born citizens for jobs, but rather fill complementary positions to those of native-born citizens, thereby improving their productivity (for example, by allowing the latter to focus on more specialized roles).
Yet opening borders to trade and immigration promotes a country’s economic prosperity, while also producing winners and losers. Economists have known this for a long time.
Other methods
Raising tariffs and restricting immigration means giving up the benefits of a stronger economy. As the left gradually moves away from its founding ideals of universalism, it seems increasingly willing to abandon these principles in the hope that redistribution will come about solely through the power of free domestic markets.
So are there other ways to improve the living standards and wages of people at the lower end of the income scale? I think so. We should focus first on the service sector.
Elder care, retail and hospitality account for the bulk of low-wage jobs, and technological advances, including artificial intelligence, can be harnessed to make them more productive, thereby boosting wages.
Wealth redistribution should be improved through existing non-market mechanisms, including expanding union representation in low-paid service jobs and ensuring that immigrant workers are included.
Moving in this direction could prove difficult and fraught with uncertainty. It is not a simple task, but a globalist and universalist left should commit itself to it with determination.