saving globalization from the hoi polloi

[Eugene Coyle <eugenecoyle@xxxxxxx>]

The July/August issue of Foreign Affairs has an article recommending
a way to stop the backlash in the USA against globalization.

"A New Deal for Globalization" was written by a two full professors,
one a political scientist at Yale, the other an economist at
Dartmouth.  They assert that globalization has brought large benefits
to the USA -- citing an estimate (as they put it) of " ... between
$1,650 and $3,300 a year for every American."  What they mean is per
capita, which is different than every American getting it.

Their concern is the backlash against Globlization, which they
attribute to workers not doing well, in fact doing poorly.  They have
a graphic which might be useful to academics.  It shows that for 2000
through 2005, only 3.4% of US workers had positive changes in mean
real money earnings.  They break this out by education level, and of
course 96.6% of the total had real money earnings drop.  Those with
"some college" and "college graduate" had larger percentage drops
than did high school graduates, though high school dropouts faired
worst of all.

What is glaring from their emphasis on educational level is the de-
emphasis on who the real gainers are, though they do briefly mention
that the share of national income taken by the top 1% reached 21.8%
in 2005, " ... a level not seen since 1928."

       Their concern is to defuse the backlash coming from those not
getting anywhere financially.  They want to keep the gains to the
rich coming and their remedy is a raid on the Treasury.  They would
defuse the backlash by cutting, for some, the payroll tax.  Keep the
money from globalization flowing to the rich by buying off the poor
with some crumbs from the Treasury.  Talk about your earmarks!

       A very interesting statistic they provide is that the Payroll tax,
which they note is regressive, produced revenue of $760 billion,
" ... nearlyas big as the progressive income tax ($1.1 trillion).

       Al Gore wants to cut the Payroll tax as an offset to a new carbon
tax.  I have other plans for that money.  But let's not use it to
protect the rich from a backlash against "free trade."

Gene Coyle