Relieving Worker Anxiety

There is a paradox in the policy debate surrounding further trade liberalization and U.S. tax policy. On the one hand, so-called prescriptions to relieve worker anxiety toward job displacement as a result on international trade and technology are costly (kind of). Robert Rubin's group at the Brookings Institution has recently released several papers advocating the expansion of trade adjustment assistance to not only manufacturing workers, but to service workers as well. Additionally, recent wage insurance proposals which would subsidize the wages of workers who lose their jobs and are reemployed at a much lower salary would also cost money. The problem is that these programs, while relatively small compared to their European counterparts, are still a tough sell in the U.S. where neither party is advocating increasing worker adjustment assistance to anywhere near the levels currently present in some European countries. In essence, we look to countries like Denmark and want to learn from how they've coped so well with globalization, but then we look at our constituents and even our history and see that support for serious programs in the area of job displacement has always been small. We want to help workers but there's no support for the kind of spending necessary to do it well.

Harold Meyerson in today's Washington Post :

"The cost of creating this economic security while remaining globally competitive isn't cheap. In the March issue of the American Prospect (which I edit), my colleague Robert Kuttner calculates that these nations devote roughly 15 percent more of their GDP to governmental outlays than the United States does. That pencils out to roughly $2 trillion a year that we'd have to shift to the public sector to build an economy in which globalization wouldn't be viewed as so dire a threat. Neither Rubin, a true believer in balanced budgets, nor anybody functioning in the real world of American politics is calling for anything this far-reaching to reshape the U.S. economy."

So far, the U.S. has been able to get away with the consequences of capitalism on the cheap. At this moment, the U.S. is spending, say 1 percent of GDP on programs broadly fitting worker security (UI, worker retraining, trade adjustment assistance). In part, this is because we want help for some types of job loss but not others. For example, workers in the U.S. have demanded assistance when they lose out as a result of trade, but most workers don't worry as much if they lose their job as a result of a new technology that makes their job extinct. In Europe, workers are aided regardless of the cause of job loss. In other words, they don't care whether it's trade or tech leading to the loss.

I'm going to end here since I'm tired and bad at conclusions.