Protectionism is a threat to the U.S. economy. Saving globalization requires that its gains are spread more widely. The best way: redistribute income, or at least so says Kenneth F. Scheve and Matthew J. Slaughter in the current foreign affairs.

Globalization has brought huge overall benefits, but earnings for most U.S. workers — even those with college degrees — have been falling recently; inequality is greater now than at any other time in the last 70 years. Whatever the cause, the result has been a surge in protectionism. To save globalization, policymakers must spread its gains more widely. The best way to do that is by redistributing income.

They claim that “there is greater support for engagement with the world economy in countries that spend more on programs for dislocated workers.” I am little unsure about this claim, since France, for example, has very generous social programs and they have a very negative view of globalization.

More to the point, there is another side of the opinion poles, which is that politicians both react to them, but can also affect them. Many people blame globalization for their situation in great part because government officials often say that globalization is to blame for the unpopular policies that they implement. Similarly, corporations regularly say that they have no choice but to cut wages or offshore their operations to make it in today’s global economy. Further, some democratic politicians reenforce that idea in the minds of their constituents. Globalization is the perfect scapegoat. This political reality would have been a potentially illuminated area to engage.

Having said that it is a a great article. The basic idea is that the vast majority of American are not enjoying a rise in income through globalization although it is crucial to continued growth. The public has an increasingly negative view of globalization and move to protectionism, despite their apparent understanding of the benefits. Their solution, which is worth quoting in full, is something new to consider.

Recall that $500 billion is a common estimate of the annual income gain the United States enjoys today from earlier decades of trade and investment liberalization and also of the additional annual income it would enjoy as a result global free trade in goods and services. These aggregate gains, past and prospective, are immense and therefore immensely important to secure. But the imbalance in recent income growth suggests that the number of Americans not directly sharing in these aggregate gains may now be very large. Truly expanding the political support for open borders requires a radical change in fiscal policy. This does not, however, mean making the personal income tax more progressive, as is often suggested. U.S. taxation of personal income is already quite progressive. Instead, policymakers should remember that workers do not pay only income taxes; they also pay the FICA (Federal Insurance Contributions Act) payroll tax for social insurance. This tax offers the best way to redistribute income. The payroll tax contains a Social Security portion and a Medicare portion, each of which is paid half by the worker and half by the employer. The overall payroll tax is a flat tax of 15.3 percent on the first $94,200 of gross income for every worker, with an ongoing 2.9 percent flat tax for the Medicare portion beyond that. Because it is a flat-rate tax on a (largely) capped base, it is a regressive tax — that is, it tends to reinforce rather than offset pretax inequality. At $760 billion in 2005, the regressive payroll tax was nearly as big as the progressive income tax ($1.1 trillion). Because it is large and regressive, the payroll tax is an obvious candidate for meaningful income redistribution linked to globalization. A New Deal for globalization would combine further trade and investment liberalization with eliminating the full payroll tax for all workers earning below the national median. In 2005, the median total money earnings of all workers was $32,140, and there were about 67 million workers at or below this level. Assuming a mean labor income for this group of about $25,000, these 67 million workers would receive a tax cut of about $3,800 each. Because the economic burden of this tax falls largely on workers, this tax cut would be a direct gain in after-tax real income for them. With a total price tag of about $256 billion, the proposal could be paid for by raising the cap of $94,200, raising payroll tax rates (for progressivity, rates could escalate as they do with the income tax), or some combination of the two. This is, of course, only an outline of the needed policy reform, and there would be many implementation details to address. For example, rather than a single on-off point for this tax cut, a phase-in of it (like with the earned-income tax credit) would avoid incentive-distorting jumps in effective tax rates. This may sound like a radical proposal. But keep in mind the figure of $500 billion: the annual U.S. income gain from trade and investment liberalization to date and the additional U.S. gain a successful Doha Round could deliver. Redistribution on this scale may be required to overcome the labor-market concerns driving the protectionist drift. Determining the right scale and structure of redistribution requires a thoughtful national discussion among all stakeholders. Policymakers must also consider how exactly to link such redistribution to further liberalization. But this should not obscure the essential idea: to be politically viable, efforts for further trade and investment liberalization will need to be explicitly linked to fundamental fiscal reform aimed at distributing globalization’s aggregate gains more broadly.

A more distributive fiscal policy and fairer rules will undoubtedly make globalization more politically viable and sustainable.

The article also makes me think about developing countries. I’m a sucker (perhaps knowing so much economics) for political liberty following from economic liberty. It’s breathtaking what’s happened in the last 20 years or less. It’s as though the whole world has changed its mind. Everywhere — in India, China, Asia, Latin America, Europe, North America, and above all in the communist world — governments have retreated from “the commanding heights of the economy.” The old debates were about what the role of the market was, what was the role of the state. I think it’s now generally appreciated that it’s the market that harnesses people’s initiative best. And the real focus of progressive thinking is not how to oppose and suppress market forces but how to use market forces to achieve progressive objectives. The article raised the same old argument against globalization: does it really work for lower class workers?

It appears we might have actually engaged in a multilateral action this comes after Tehran rejected Condi’s conditions for Nuclear Talks. I thought yesterday that it looked like Bush is bringing his foreign policy one step closer to the 21st century. It will be interesting to see how this works for them in the future.

9 of 10 Iraqi Sunnis approve of attacks on US troops, and as well as half of all Iraqis.

It’s a good thing so much of the State of the Union, and so much of our national media, are devoted to understanding their outlook on our war, and ways to end it amicably and completely.

Today in the Palestinian elections, Hamas won with an overwhelming majority. I think we today witnessed the end the to any likelihood of real peace in Israel. The possibility for moderation is now zero. This will lead an era where Israel will continue to build the wall and continue the process of withdrawal from the West Bank.

The acting Prime Minister of Israel had this to say:

If a [Palestinian] government should arise of which Hamas is a participant, the world and Israel will ignore it and render it irrelevant.

and in a statement

Israel will not negotiate with a Palestinian government, even if only part of it is an armed terrorist organization calling for Israel’s destruction, and in any case will continue to strenuously fight terrorism everywhere.

I think it would be well for the governments to realize that such words and rhetoric, can be inherently dangerous. Wars have begun that way.

Jack Balkin points out, via a friend, that the Iraqi Constitution guarantees liberties we do not enjoy. And, in spite of the obtuse commenter on that post, the Iraqi Constitutional provision in question does not change in the face of war.

In what other areas is our democracy deficient? We’re clearly exporting an inexpertly crafted good–though we tout democracy as the be-all and end-all of freedom, it’s far from perfected here. Some questions, then: What does ‘democracy’ mean? Ought religiously-based democracies and secular democracies to share the same word? How specific are we (or, perhaps, how specific was President Bush in his second state of the Union) in referring to the “spread of democracy”? Are we comfortable not having liberties guaranteed to citizens of other nations? Can we still be a city on a hill if we compromise our own liberties for security?

And, because I would hardly be a political blogger if I let this opportunity pass, what do we make of Ben Franklin’s assertion that “Those who would sacrifice permanent liberties for temporary security deserve neither liberty nor security?” Does that question fit here?

I obviously think so. How about you?

Food for thought: “Intelligence sharing between Europe and the United States certainly won’t grind to a halt but European political elites are coming under increasing pressure from their angry publics to distance themselves from any U.S. practices that infringe on human rights and international law. That spells trouble for European intelligence officers who cannot say with certainty how the intelligence they share will be used by their U.S. counterparts.” –democracyarsenal.org [emphasis mine]

Intelligence cooperation has apparently been the unspoken backbone of political goodwill between Europe and the United States, even during moments of tense policy debate. That our stance on human rights could affect that backbone is troubling as well as unforeseen.

I mention this merely to provide more context for the human rights/terrorism defense debate, which rages unabated–and apparently unprogressed–in the news. What other practical considerations ought to be included when we weigh the hefty philosophical and moral burdens of sullying our souls through torture? Such actions are, I believe, like abortion: even on those occasions when they are both permissible and better than the alternative, they are NEVER to be wished for. No one is ever either pro-abortion or pro-torture; such choices are merely, as Winston Churchill might have said, the worst options except for all the others.

As everyone may well know, the Iraqi Parliament extended the deadline for a constitution by a week. The Shiite, Sunni and Kurdish framers of the charter agreed on issues ranging from oil revenues to the country’s name but they put off decisions on women’s rights, the role of Islam and Kurdish autonomy. The last-minute postponement raises serious questions about the ability for the various factions, now and in the future, to reach the necessary compromises to have a unified state.

The Bush Administration contends that a compromise will be reached and as the American public continually polls against the war, they say they plan to “settle for far less than originally envisioned during the transition due to end in four months” (Washington Post).

Americans, if they still care, need to realize that Iraqi elected representatives that reflect more traditional Islamic values then Western ones. Democracy, as we know it, in unlikely to be planted in Iraq as this constitution comes into greater light. We are coming to realize that our vision of remaking the world in our own image will neither succeed nor particularly help in the “war” on terror.

Reading: Salon - Women’s rights groups in the Middle East fear that Iraqi women will be the biggest losers in the country’s new Constitution.

Publius contends that the people of Iraq are more liberal than there repersenatives and that time will allow that to come through.

Iraq the Model gives good updates on the constituional process.

Well, not really. The news from the Washington Post might lead you to belive we found those long lost WMDs, but not exactly.

U.S. troops raiding a warehouse in the northern city of Mosul uncovered a suspected chemical weapons factory containing 1,500 gallons of chemicals believed destined for attacks on U.S. and Iraqi forces and civilians, military officials said Saturday. Monday’s early morning raid found 11 precursor agents, “some of them quite dangerous by themselves,” a military spokesman, Lt. Col. Steven A. Boylan, said in Baghdad.

Truth of the matter, as the article continues is that Lt. Boylan believes that the:

suspected lab was new, dating from some time after the U.S.-led invasion of Iraq in 2003. The Bush administration cited evidence that Saddam Hussein’s government was manufacturing weapons of mass destruction as the main justification for the invasion. No such weapons or factories were found.

However, this still causes plenty of reason for alarm, where are these chemicals coming from, and where are they going; let us not forget that Al Qaeda has stated that it would look to obtain chemical agents for use against the West and its allies.

Prior to the US-led invasion Iraq was not the frontline in the War on Terror, but now it most certainly is, and to pretend otherwise and call for immediate withdrawal while these very dangerous weapons remain unsecured would be criminal.

The Washington Post, interviewed an unnamed military official who speculates that we can’t pullout of Iraq on the timeframe previously suggested. This is not really news per se, just the expected response. America is caught in a very difficult circumstance. Politically its becoming nearly impossible to keep troops in Iraq. So many are saying the war was a mistake, and I agree, unfortunately leaving Iraq does not change the mistake, it just creates a world of new problems. Unlike most administration policies, polling cannot dictate our actions. In a sense though, what do Americas care if Iraqis kill each other? That itself is the problem, when we retract our troops and their are startling economic and political results in Iraq and the region, most Americans will be woefully ambivalent.