Globalization and Technology Cannot Be Trumped

“For every two steps forward, it often feels we take one step back.” With this quote, President Obama’s farewell address highlighted the potential challenges that could roll back the economic progress of the last eight years. Marked by a tone of cautious optimism, his speech both acknowledged the economic progress we’ve made and offered a warning about the changes that will result from increased globalization and technological progress.

President Obama noted early on that the strength of our economy could be seen through a number of measures. From rising wages to falling poverty rates, there is good reason to be proud of the economic progress being made. However, to focus on these positive statistics alone fails to acknowledge the greater concerns about the future of the economy. For the Obama administration, and Democrats more broadly, the persistence of income inequality has and continues to be an issue worth addressing. For the incoming Trump administration and the coalition of working class citizens supporting it, maintaining U.S. jobs will be a priority. In fact, as President-Elect Trump has already demonstrated with the air-conditioning and heating systems company Carrier, he is more than willing to offer government interventions in the hopes of retaining jobs in the United States. Promising tax breaks for the retention of jobs, Trump was able to convince Carrier to keep a plant in Indiana instead of moving it to Mexico.

While many have applauded Trump for his negotiations with Carrier, it is Trump’s recent and proposed actions that the President seemed to warn against later in his speech. Maintaining the position that no major party nominee full-heartedly embraced on the campaign trail, the President spoke in favor of free trade and even noted that “there’s no quick fixes to this long term trend” of increasing globalization. Indeed, while Trump’s intervention with Carrier may have saved some jobs from leaving the country, these jobs dwarf in comparison to the jobs expected to be lost due to opportunities in foreign countries. Furthermore, by combining this type of government intervention with his proposed tariffs, Trump is likely to lead the economy down a path in which the gains from trade will slowly be chipped away. They could even deteriorate more rapidly if other countries were to impose economic sanctions in retaliation.

For all that the debate concerning free trade is worth, President Obama was astute to note another major trend affecting job growth: “the relentless pace of automation that makes many good, middle-class jobs obsolete.” As easy as it is for politicians to place the blame of job loss on other countries, the truth of the matter is that it is often our own innovative technological progress that leads to shifts in the job market. In fact, by some analyzes, about 87% of manufacturing job losses are due to advancements in automation, not because they’re moved abroad. Thus, considering that most of the money saved by Carrier will be put towards automation, Trump’s actions may not save as many jobs as originally projected.

Ultimately, combating the natural progression of both the domestic and international economies will do little to aid workers in the long run. Instead, as the President noted, we must recognize that “our economy doesn’t have to be a zero-sum game” and focus our efforts on forging ”a new social compact.” From providing our children the education necessary to obtain high-paying jobs to reforming our tax code, President Obama offered concrete propositions for the new social compact that can aid us in best positioning ourselves for the future. While some may disagree with his proposals, his overall contention was an important one: We must be adaptive, and not combative, in our responses to economic developments.

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