Free trade doesn’t work for the ignorant

by futurist Richard Worzel, C.F.A.

I’ve been a free trader all my adult life. I studied international trade in university, watched it develop with the collapse of the Bretton Woods Agreement in the early 1970s, and have seen the amazing consequences of globalization, which has lifted hundreds of millions of people out of desolate poverty. Moreover, it makes sense: free trade is merely an extension of occupational specialization, so that just as it makes sense for the cobbler to make shoes and sell them to the farmer in exchange for food, it makes sense for countries to do what they do best, and trade with each other.

Of course, freer trade (because we don’t really have free trade) has a downside. It creates winners and losers. Some folks do very well out of free trade, including consumers who get cheaper goods, plus those who are capable of competing and finding new markets. Some folks lose their jobs, as those jobs migrate to other places where the wages are lower, or there’s a natural advantage. I remember hearing one labor leader, who represented workers at GM when those workers were on strike, saying in a radio interview that “We’re not going to let workers in other countries take our jobs just because they’re willing to work for lower wages.” I thought to myself: here’s somebody who’s really out of touch with reality: why should you be able to keep a job if there’s someone else who can do it as well, but for less money? Of course, if you have the job and are losing it, you will naturally object that it’s unfair. But I can’t see as you can make a reasonable case to anyone not related to you that you are entitled to that job.

But my purpose here is not to defend free trade, but, perversely, to warn about one of its unintended consequences. The fundamental (and correct) premise of free trade is that it destroys older jobs, and creates new jobs that offer better pay and working conditions. But it does that only if workers have the ability to fill more demanding jobs that require more thought and higher levels of education. Otherwise, workers wind up competing by cutting their wages or taking poorer, less rewarding service jobs.Generally speaking, this means that free trade benefits developed countries because they usually have better levels of education than developing countries. It also benefits developing countries because less remunerative jobs migrate to countries where those jobs are not only welcome, but a distinct improvement on what those people had available before. Hence, both sides are better off.

But what happens when the students in developing countries are better educated than those in developed countries? In the past, this would have sounded nonsensical; education is expensive, and so is more likely to be available in rich countries. Yet, this pattern is changing, partly because of our own laziness, and partly because of our conviction that we are naturally superior, and hence naturally deserve higher paying jobs.

A recent column in The Economist newsmagazine, published on June 11th, 2009, and entitled “The Underworked American,” described the development of just this kind of situation. American children, the Lexington columnist said, do substantially less work – and presumably learn less – than their counterparts in Europe and Asia. Our children go to school fewer days a year – about 180 days compared to up to 220 days. Over a 12-year primary and secondary school career, this means that American children “lose out on 180 days of school, equivalent to an entire year” compared to their future competitors abroad. They also have school days that are two or more hours shorter, and far less homework. And the same is true in Canada as well, which tends to mirror the patterns of its largest trading partner.

It has been known for many years that post-secondary education in North America is the finest in the world, but that secondary and primary school education lag behind other countries, including most of the emerging Asian countries. And there are other indications that things are going wrong as well.

Indicators of trouble

The first indicator is that graduate schools largely could not function without foreign students filling their classes. In many graduate schools, including most of the best, foreign students fill the majority of spaces. Interestingly, when I recount that to American audiences, their almost knee-jerk reaction is that we should get those foreigners out of there, and make room for American students. I gently point out to them that the reason there are so many foreign grad students is that there often aren’t enough Americans to fill the classes – there aren’t enough Americans who go to the trouble to work through grad school, and those that do apply, may not be as well prepared as their foreign counterparts.

The other, and in some ways more worrying, indicator is the steady rise of cheating at the undergraduate level. I was at a party the other night, and met a very bright young women. She has a graduate degree, and has started her own business, but is finding it tough to make ends meet. This isn’t unusual: the early days of any new enterprise can be tough. What caught my attention is that she said that she could make a very good living off the Internet by writing essays for undergraduate students who are too lazy or too ignorant to write their own. And this is only one example. Anyone who wants to look can find lots of descriptions of how colleges and universities are struggling to cope with widespread cheating. In other words, while education is clearly the currency of the future, we are systematically cheating ourselves, first with inferior primary and secondary education, and then by looking for ways of ducking the hard work of post-secondary education.

“Yellow Peril”?

I was recently a panelist in a discussion about the problems of North American education on a public-affairs program called “The Agenda.” One of the panelists had written a book about the short-comings of the American education system, and his thesis was that while we are the best at the world in holding football rallies, our education is going to relegate us to second-class status (this is my summation of his work, not his). We also had panelists who had grown up in other countries, one in India, and one in China, and they both agreed that school children worked much harder there than they do here. And there was a representative from a teachers’ union, who was brought in from another city by a remote hook-up. I was there as a futurist who writes about education (I’m a columnist for Teach magazine).

After the moderator introduced the topic, and spent some time talking with the author, the gentleman from China, the woman from India, and me, asking us all what we thought, he turned to the woman from the teachers’ union. That was when things became decidedly sticky. She was most insistent that there was nothing wrong with our education system, it was the finest in the world, and that we were all preaching a racist doctrine that amounted to scaring people about the coming “Yellow Peril,” meaning a metaphoric invasion of Asians. The author and I just looked at each other in disbelief, then he commented that we weren’t talking about a yellow peril, but an intellectual peril, where we were rendering ourselves uncompetitive in a world where education standards were rising. She wasn’t having any part of it; it was all lies, foul lies, and we should be ashamed of ourselves.

At that point we ran out of time, which ended the discussion, but off-camera, the host apologized to us for the unreasonable attitude of the union representative. I took it as yet another sign confirming my concerns about education and our future.

So the bottom line is this: Free trade is good for a country and a people if they are prepared to step up to more challenging, and more rewarding, work that requires better education and deeper thought and insight. Instead, we are trying to see how little work we can do. We idolize Homer Simpson instead of the author of the Iliad, and look for short-cuts instead of digging in to see much we can learn. In the short run we can get away with this. Eventually, it will mean a long slide into (relative) poverty, with our children and grandchildren having more and more difficulty finding meaningful work.

Free trade doesn’t work for the ignorant.

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© Copyright, IF Research, June 2009.