Dean Baker makes several important points in The End of Loser Liberalism: Making Markets Progressive, but one in particular is completely new to me. Free trade agreements such as NAFTA, he argues, are intentional efforts to redistribute wealth upward by exposing less-educated workers to low-cost foreign competition while retaining the protections enjoyed by highly-educated professionals.
It is important to realize that these deals have nothing to do with free trade, even though all the pacts are called free trade agreements to make them sound more appealing to the general public, or at least to the pundits who like to think of themselves as supporters of free trade. These agreements do little to undermine the legal and professional barriers that protect highly educated professionals from competing with their lower-paid counterparts in the developing world.
Just as trade models show that U.S. consumers can benefit from having work performed by low-paid manufacturing workers in the developing world, the same models show that U.S. consumers can benefit from having access to low-paid professionals from the developing world. The developing world has an enormous pool of highly educated workers, some of whom are already trained to U.S. standards, and many more of whom could and would be trained to U.S. standards, if there were a reason. Because these workers live in countries that are much poorer than the United States, they would be willing to work for wages that are far lower than their professional counterparts here, just as in the case of manufacturing workers in the developing world.
However, free-trade agreements are not designed to free trade in professional services. In drafting NAFTA, U.S. trade negotiators eagerly sought out the opinion of manufacturers, asking them to identify obstacles that prevented them from relocating operations to Mexico and other developing countries, but there was no comparable outreach to hospital administrators or law firms to determine the barriers that prevented them from hiring low-paid (but highly qualified) doctors and lawyers from India or Mexico. This apparent discrepancy was again the result of a conscious decision to design policy in a way that redistributes income upward.
