Stop the World! Second Thoughts by a First Rank Economist OR The Case for Free Trade Crumbles

Unsustainable.org ^ | 9/17/2004 | Eamon Fingleton

[curiosity]

When the 1970 Nobel laureate Paul Samuelson was asked what it takes to win a Nobel Prize, he volunteered, "It doesn't hurt to have good students."

But even Samuelson's overachieving students -- he has taught economics at MIT for six decades -- sometimes need to be put in their place. At least that seems to be the subtext of a new Samuelson paper in the Journal of Economic Perspectives.

Samuelson argues that, far from representing an unmitigated boon, free trade may in some circumstances prove a net loser. Among countless globalists who stand duly corrected, not the least chastened are two of Samuelson's own former students: Jagdish Bhagwati and Gregory Mankiw. Noted for their ardent embrace of globalism, the pair are identified by name as purveyors of "polemical untruth" in Samuelson's opening paragraphs.

Samuelson's insight is that if a low-wage country like China suddenly makes a major productivity leap in an industry formerly led by the United States, the result can be a net negative for the American people. Although American consumers may benefit via low-low prices at Wal-Mart, their gains may be more than outweighed by large losses sustained by laid-off American workers.

This conclusion, coming as it does from the pope of economic orthodoxy, is already (even before its official publication) causing a sensation in the economics profession.

Mainly the reaction is positive. Certainly this sudden flash of the obvious has come not a moment too soon for many of Samuelson's fellow liberals.

According to Jeff Madrick, author of Why Economies Grow and editor of Challenge, the take-home message is that the United States needs to do much more to support workers thrown on the scrap heap by globalism.

"The Samuelson paper is a strong argument from the most illustrious of neoclassical economists for a much stronger safety net for American workers," Madrick says. "The price being paid for free trade is falling on many workers, and there's little empirical doubt of that anymore. Moreover, I think the bias among free-trade advocates has skewed the empirical research in the field. Claims of finding that gains from free trade are many magnitudes larger than the losses have been based on extraordinarily poor studies that have hardly been criticized. Maybe some serious sense -- I would ask only for balance -- will now return to trade economics."

For James Fallows, a liberal-leaning critic of Washington's blink-first style in trade diplomacy, Samuelson's analysis is a call to policy-makers to break free from utopian theories and, instead, take a hard look at the real world.

"The great problem in Western discussion of trade theory has been its simpleminded Panglossianism," he says. "The main thing that has supported globalism, apart from the self-interest of many powerful participants, has been the idea that economic theory was 100 percent on the side of Dr. Pangloss. To have the most esteemed of all modern economists say that things are not this simple is a very important step."

On the moderate right, Pat Choate sees Samuelson's paper as essentially defensive, less a confident breakthrough than the correction of an embarrassing mistake.

“At the age of 89, Samuelson is finally stepping onto the road to wisdom,” says Choate. “It is a road where uncertainty prevails over the certainty of the ‘laws’ of economics, which are not laws but ruminations by closeted academics. His article is important, for it effectively gives permission to his disciples to begin to think about the real world, rather than try to postulate assumptions and develop elegant models which ultimately are irrelevant.”

Paul Craig Roberts, a fiercely anti-globalist economist who served as President Ronald Reagan’s assistant treasury secretary, puts it even more pointedly. Samuelson’s rethink, he suggests, is merely an attempt to patch up a leaking, and ultimately doomed, vessel.

As he points out, the paper is in large part a reaction to arguments made by Ralph E. Gomory and William J. Baumol, who in Global Trade and Conflicting National Interests have mounted a powerful challenge to the orthodoxy's utopian take on international trade. Roberts adds, “Gomory and Baumol show that, in the relevant zones, free trade is characterized by conflicting interests -- not by mutual benefit, as economists unthinkingly assume."

In Roberts' view, though the Samuelson paper is an important modification of free-trade theory, Samuelson has chosen his assumptions carefully to avoid any frank discussion of the widespread damage being caused by outsourcing.

If Roberts is disappointed by the narrowness of the Samuelson modification, many on the globalist side of the trade argument are evidently worried. A leader of the damage-control effort is none other than Bhagwati, the former Samuelson student singled out for obloquy in the paper.

Already Bhagwati, a Columbia University professor, has collaborated with two allies in a hastily written response that will be published in the same journal.

Judging by a bad-tempered recent contribution to The Wall Street Journal, Bhagwati is clearly rattled. Describing John Kerry's trade policies as "voodoo economics," Bhagwati embarrased his cause by hurling juvenile personal abuse at the anti-globalist CNN presenter Lou Dobbs.

What is clear is that Bhagwati has plenty to be rattled about. As one of the earliest and most extreme globalists, he has offered several hostages to fortune over the years, most notably in his indecent embrace of the Japan trade lobby in the 1980s. Blaming "bullying" American policy-makers for most of the tension at the time in U.S.-Japanese relations, he exonerated Japan from charges of protectionism. Writing in Fortune magazine in 1989, for instance, he argued that the evidence was "slim" that nontariff barriers significantly reduced Japan's appetite for American exports.

In what must have been the ultimate bad hair day for Bhagwati, one of Japan's leading spokesmen has now admitted that Tokyo's 1980s denials of protectionism were poppycock. The admission came from Mitsubishi Corporation President Minoru Makihara, who told the Tokyo foreign correspondents' club that the Japanese market in the 1980s was "still closed and tightly protected.”

Bhagwati's demeanor cannot have been improved by the realization that Japan’s continuing trade surpluses (they never went away) are likely soon to re-emerge as a hot-button issue in Washington. The reason: Japan’s current account surplus is headed for a record $170 billion this year. By comparison, in 1989 -- which was both the last year before the Tokyo stock-market crash and the year of peak Washington lamentation about Japan’s “juggernaut” trade strategy -- Japan earned a current surplus of a mere $57 billion.

Under the circumstances, Bhagwati seems a weak candidate to lead what will obviously be a hard fight to defend academic orthodoxy. Certainly only the first casualty will be Henry Kissinger's cruel witticism about academic life: that the fights are so bitter because the stakes are so low. This is one dispute where the stakes justify the bitterness.

[Arizona Carolyn]

A couple of months ago a top economist was in a townhall discussion on cSPAN and he said their economic models never anticipated the internet revolution and how quickly jobs and money could be moved around the world; having a devestating effect on American jobs. His feeling was everyone needed to sitdown and re-think this thing before it gets farther out of control.

They may laugh at Lou Dobbs, but I think he's more right than wrong on this particular issue. I just hope someone wakes up before it's too late and does re-evaluate this. One reason I think a NRST could help return some sanity -- if it really does lower cost of goods sold -- and we get some sort of tort reform and even do something about OSHA we could potentially start to remove some jobs back to the USA.

[Arizona Carolyn]

Then explain this to me: American's have traditionally been among the biggest consumers of goods around the world -- with protectionism many countries have generally made it very difficult for people in foreign countries to purchase from the USA -- while we make it very easy for people to sell their goods TO us -- so if we put everyone out of a good-paying job so they can only afford WalMart, Target, etc., and you have the upper class who will still shop at Bergdorfs -- you are going to do away with the middle class who consumes the goods they used to make (dishwashers, refrigerators, etc.)

An example is Maytag leaving USA where the average employee made $15 to Mexico where the average is $.50 cents an hour. That .50 employee isn't going to be able to afford that dishwasher he's making. The $15 employee could afford the dishwasher, a home, car, etc... so how long before these companies put themselves out of business because of outsourcing?

I know this is an over-simplified example, but hopefully you get the gest of my question?

[Arizona Carolyn]

California is a prime example of democrats gone mad. As an ex-Californian I can attest to that. No, what we do is keep the jobs here and work on the issues facing companies that's driving them elsewhere -- Nevada or China. It's not just the high cost of Workers; Comp, but certainly in California that's part of it -- in some ways companies brought the W/C situation upon themselves and could have easily solved the problem without government intervention or high w/c claims...

The proverbial "we" have to look at the things adding tons of un-necessary cost to operating businesses in this country... and work for change.

[Arizona Carolyn]

And David Drier had the audacity to say people were being "re-employed" because most were now selling on eBay!

How many people aren't showing on the unemployment rolls? The reason the President wants this immigration bill is so employers can import cheaper labpr. I voted for the President, but I'm not going to be a Stepford when it comes to reality.

[Arizona Carolyn]

Amen...

[curiosity]

It was you that brought up assumptions, so let's assume that you are correct and that the Japanese, in fact, sell at below cost. That would mean that the more they sold the more money they'd lose - and for two reasons if you consider the law of diminishing returns on the factors of production as output increased.

Your first mistake is your assmption that the law of diminishing returns holds for all industries. In fact, it doesn't always hold. Some industries exhibit scale economies, i.e. marginal costs continue to decline with scale until you reach a large very market share. In such industries there is room for only a handful of producers, which gives rise to a natural oligopoly. Consumer electronics is just such an industry.

So what the Japanese did, temporarily, was to subsidize their producers and protect their domestic market so they could (collectively) undercut American producers and gain market share. Once they had gained sufficient market share, they were in a position to exploit the scale economies, whereas American producers were not. That enabled them to underprice American producers while making a profit. Once American producers were driven out, they captured the market, raised their prices, and now earn the oligopoly rents. The fact that the industry has large scale economies enables them to deter new entrants, who necessarily cannot produce on an effecient scale. The fact that their government is committed to protecting their dominance of the industry further discourages entry.

The final assumption is that the American consumer gets no utility from the below cost products that the Japanese producers made.

I made no such assupmtion. Sure, there was a time during the late '70's and early '80's when American consumers derived utility from the dumped products. But that was a temporary phenomenon. Once the Japanese had entrenched themselves in the market, that ended and now they enjoy the economic rents that come with oligopoly.

Two answer your questions, then:

1) We're worse off in the long run becuase we permanently lose the oligopoly rents associated with the industry.

2) The Japanese economy now benefits from those rents.

[curiosity]

What on earth does that mean And "come" to whom?

Firms entrenched in an oligopoly earn rents, i.e. charge prices above marginal cost. This is a well-established fact in the I/O literature. Thus the firms, and the Japanese government via taxation, now benefits from oligopoly rents that American firms and the American government used to benefit from. In the Japanese system, rents often get passed on to workers as well.

This quasi-scientific statement does not explain the absence of this industry in the U.S.: new firms could've been formed.

No, they could not be formed because a new firm cannot, at least initially, produce on the kind of scale necessary to compete in this industry. Economies of scale are what create and sustain oligopolies. Furthermore, the Japanese government is committed to protecting Japanese global dominance of certain oligopolistic indsutries, which prevents firms from executing the same strategy of market penetration through dumping that Japanese firms once practiced.

It is also not true that we lost these jobs due to dumping or some such actions of the Japanese: we were less productive --- as measured by the ratio of costs, particularly labor, to revenues.

Not initially, as far as I know. It only started happeneing once we lost market share and could not longer exploit economies of scale.

what happened to workers when those industries went into decline? And the answer is that they find other jobs.

No one disputes the fact that the vast majority found other jobs. This issue is whether those workers were able to find jobs with comparable pay. It is a documented fact that a large number of them did not. Sure, if you're in your twenties, it's easy to retrain. But if you're in your 40's, you're still a long way off from retirement, and you've your whole career acquiring industry-specific skills, it's a lot harder. If the whole industry just up an moves oversees, you're going to have to take a big pay cut because you cannot transfer many of your skills to a new industry. And that's in fact what happened and continues to happen.

Sometimes the benefits to consumers of this move outweigh these lost wages and/or retraining costs. But there's no guarantee that they will, and sometimes, as Gomory and Bomoul and other show, they do not.

The real question is optimal in terms of what?

Maximizing the present value of real per-capita national income.

If the current state of the art is any indication, new models still deal with at most two periods, two countries, two commodities, etc. So much for impeccable credentials.

That's not true. Gomory and Bomoul, for instance, generalize their model to include an arbitrary number of countries and industries, varying degrees of scalability, and the like. Several of the papers listed above have dynamic models with several periods.

The models do not prove that free trade is never advantageous. What they prove is that the optimal trade policy w.r.t. national income (both long-term and short-term) is highly sensitive to your assumptions.

[curiosity]

See post 131. It's a dirty little secret that mainstream trade economists have identified many instances in which free trade can hurt a country. Unfortunately, the popular press continues to act as if the optimality of free trade is as certain as the proposition that the earth is round.

[curiosity]

When the Japanese lose money to sell us cheaper goods it's obviously good for Japan.

They only lost money the short run while they fought to gain market share. Once they acheived dominance of the oligopolistic consumer electronics industry, they raised prices and profited hansomly, as they continue to do until this day. MITI is always ready to step in when someone threatens their entrenched position, so no one attempts to dislodge them the way they did to RCA and their other American competitors.

You're obviously not familiar with such concepts as economies of scale and oligopoly. You need to take a class in industrial organization.

[spintreebob]

You're obviously not familiar with such concepts as economies of scale and oligopoly.

You are soooo right. The article, and this discussion, need to realize that the meaning of words has been twisted.Free-Trade is not the same as Globalism, WTO, NAFTA, etc. Free-Trade is the absence of government involvement in the trade activity. Globalism, WTO, NAFTA is the micro-management of trade by elite groups to which nations cede their sovereignty. In the name of Free Trade they impose complicated regulations of environmental law, labor law, humanitarian concern and political correctness.

BTW gay is no longer gay. cool is no longer cool. Orwellian speak is not longer Orwellian. The truth is now Orwellian.

[TopQuark]

Simple. It always is when you one does not appreciate the depth of the problem.

Winnebago is fabulously successful...sales AND profits have been increasing exponentially. They are run by the "old" business model

You are absolutely correct: I really do not know what YOU mean by the old vs. new business models. These terms have been used, and misused, in many different ways, and one must clarify any particular use. The onus is actually on you to do so.

it's telling that you have no idea to what I'm referring); their CEO has a two-year degree, started on the production floor and has worked his way to the top spot. That you fawn over this is hardly surprising: all people who celebrate ignorance view as heroes those that achieved much without education. It "proves" to them that education in unnecessary and is not useful.

This is in part what Dostoyevsky called arrogance of ignorance.

The old business model also included making a quality product, selling it at a reasonable price, and advising your investors that they could expect modestly good, steady profits.

Really? Why is it, then, Nike successfully sells at premium prices? What is the difference between cigarette brands? (Hint: hardly any; it's just positioning).

If you did bother to get at least tiny-tiny bit of basic knowledge --- from a book store, if not in the classroom -- you'd know that what you describe is so-called product concept. There are other orientations towards the marketplace: production concept (successfully practiced by Texas Instruments, for example), marketing concept (practiced today by most firms), and some others. No, these are not business models: they are orientations towards marketplace adopted by the firms. If interested, a good reference is P. Kotler, "Marketing Management" (try to get older, 5th edition).

Maytag (back when they were worth a crap) followed the same model. They strayed from the model drastically with their first MBA-made-delegate-while-I-run-my-fiefdom-and-collect-my-stock-options-CEO ("new" business model) and have continued with this same failed disastrous plan.

You continue to scream at the top of your lungs that you know not what you are talking about. Firstly, Maytag appears to have done as well or better as Winnebago --- up until the end of 1999:

As I said earlier, I do not know what specifically precipitated the drop. What I do remember -- and that was well known in the industry at the time --- that Maytag was being squeezed in mid 1990s on both sides by those concentrating at the high end of the market and the low-end brands of Sears and GE. Their current problems may therefore be intrinsic. If they persist, the company may indeed be acquired, but this is not necessarily an indication of anything wrong done by the management. Again, you simply do not understand what is involved here: if you work for a company, it does not mean that you kbow how the company functions (as you assume). This is much the same as driving a car: you may drive for decades still have no clue as to how the car works. And when it comes to management, you clearly don't know what you are talking about.

Incidentally, you also could've noticed that a comparison between Maytag and Winnebago is not quite legitimate: the latter is diversified, whereas the former is not. It is easier for a diversified company to withstand mishaps with one line of products.

The new business model is: profits, profits, profits... More ridiculous stuff that you'd never say if you just opened a book -- any book --- on business.

Top managers that devise and implement a company's strategy are not kings: they are employees just as you are. And just like all employees, they are given a task. Managers are hired by the owners of the firm and charged with a single task: to produce profits, return on the owners' investment. If the managers stray from that task, therefore, they are not doing their jobs and should be fired. This has been the foundation of law and corporate life since time immemorial --- way before our country became one. Open a book, please; any book.

...at the expense of quality, repeat business, employee loyalty...on and on. Again, one of the first things you'd hear in a marketing course if that it is impossible to produce profits at the expense of quality. In any course on Organizational Behavior you'd hear that it is impossible to achieve, or once achieved to sustain, success without employee loyalty (if tasks are complex). No idiot would therefore propose such a "business model." Most certainly even the worst of MBAs would know better. In other words, while it may appear to you that this is what management pursues, the truth is elsewhere. You can find, but that is not easy: in your case, it requires admission that education --- even simple reading --- is valuable.

As Nietzsche said, "If only he could shake his head, his burden would roll off his shoulders. But who can shake his head?" If only you could open your mind to knowledge, a few minutes of your time devoted to reading would produce amazing results. But who can pick up a book after spending her life holding reading and education in contempt?

[TopQuark]

How many people aren't showing on the unemployment rolls?

Many. Great many of then start their own businesses --- and not only on eBay. Some others retire a bit earlier than they have planned. What's wrong with either? They are not on welfare, they have what to eat.

And, what is the alternative? If a person was making $50,000 a year and now --- because (s)he chose not to broaden his/her skills in the past, not to continue to improve --- gets only $30,000 in some other job --- should the rest of us make up the difference? Why? Since when has job become a welfare payment, Ms. Socialist?

The reason the President wants this immigration bill is so employers can import cheaper labpr. I don't know: unlike you, I've never spoken with the President. I don't know what is on his mind and only know what he says in public. To the best of my knowledge, he never said that he wants cheap labor.

Next, which emloyess want that cheap labor? Construction and lawn care? Certainly not Intel or IBM, certainly not any of the law firms, school districts, etc.

Further, who are "employers?" As many so-called conservatives, you are spewing anti-corporate sentiment: it's evil corporatons that put pressure on the president through lobbying. Poor President indeed: according to the Leftists, it is the Jewish lobby that made him go into Iraq, and the corporate lobby makes him root for illegal immigration. Poor guy: he is being swindled on all sides.

The truth is employers are interested in cheaper labor because those who hired them want profits. And those who hired them --- owners of the corporate America --- are most Americans. You, if you have anything in a 401 plan. Your mother and father, if when retired they put their savings into mutual funds. Your brother and sister, if the companies they work for have retirement funds. That is who benefits from cheaper labor and this is who puts pressure on the spooky corporations.

Like you I am vehemently opposed to illegal immigration. Whatever the benefits to the nongovernmental segment of the economy, they are more than offset by the drain on the services provided by the government, hence on us who pay for them through taxes. I too am deeply disappointed that Bush did not do anything so far to deal with the issue. But, as you can see and in contrast to yours, my reasons for this position have nothing to do with the socialist, anti-corporate propaganda that you have accepted.

I voted for the President, but I'm not going to be a Stepford when it comes to reality.

I respect you for that position. But, when it comes to reality, movies are not the best source of benchmarks.

[TopQuark]

Many thanks; this was very informative.

Thank you also for the conclusion,
What they prove is that the optimal trade policy w.r.t. national income (both long-term and short-term) is highly sensitive to your assumptions.
which is at the level I expected it to be. It is not entirely unexpected, under any given set of assumption, to find that the outcome is not completely robust to those assumption.

It is difficult for me state my concern better without reading the papers you suggested. Buy vaguely, it is that, as I suspect, the models do not take into account changes in the labor force itself and merely take the net of the benefits of winners and losers. But the whole point is, that the agents too respond to changes by (re)educating themselves. In the end, what one has to offer finds its best use. My hunch is that it amounts to simply to the following: a constrained maximum cannot be better than an unconstrained one. That is, if you impede the matching of labor with its use in productive activities, your (second-best) welfare maximum cannot be greater than the (first-best) maximum attained in the absence of impediments. I know, this too is imprecise, but to advance the point any further, I would have to take up a particular paper in the list and show that it does not incorporate that aspect. (If I am wrong, then I'd be glad, of course, to adopt a different view).

I have one question to ask:

This issue is whether those workers were able to find jobs with comparable pay. It is a documented fact that a large number of them did not. Why is this an issue? Surely you will agree that, while it is expressed in economic terms and has economics consequences, it is not an economic one: for it to become an issue, we must agree that it is the responsibility of society, rather than of the individual him/herself, to ensure that his stream of wages is a nondecreasing sequence.

Since when has this become axiomatic that a decrease of wages in a particular sector is a policy failure? Can it be, as is hte case in the IT sector, that rationing resulted in elevated wages? If so, their decline is a normal adjustment. Why is it the responsibility of society as a whole to continue paying programmers extra-high wages (speaking of rents) just because they once attained them?

This is precisely what socialist values dictate: a guarantee to a job -- Article I of the constitution of the Soviet Union. I believe that whatever monotonicity of labor you want to guarantee yourself, it is primarily your own responsibility.

Sure, if you're in your twenties, it's easy to retrain. But if you're in your 40's, you're still a long way off from retirement, and you've your whole career acquiring industry-specific skills, it's a lot harder.

Absolutely. But this presupposes, and excuses the absence of, foresight on the part of the agent. It is you, as an individual, who has a responsibility to better yourself and make yourself valuable in a constantly changing world. You know full well that those who do that --- go to workshops in their field, get an MBA, learn an extra language at night in a community college, learn some carpentry while being primarily a metal worker --- are never in the situation you described. And those that never thought about the future -- why should it be a social, rather than their own, responsibility?

I believe this ethos has always been at the core of American values. Since the Depression and the ensuing growth of government, however, many have lost these values. But this is about values, which is an extra-economic issue.

In academe, this change has been especially drastic. Especially after WWII, markets were supposed to be horrible --- and not just in provision of public goods. Especially since Rothchild and Stiglitz (1976), markets have become no-good even when they provide private goods such as insurance (market failure in the R-S model is, incidentally, the artifact of the model itself rather than of the underlying economy; there is no market failure in their economy; again, so much for credentials). The government must "take care" of us, poor souls with rather bounded rationality. I don't buy that.

I do not want to speak for you and your reasons for adopting the views you hold, but I was a little surprised that you take as axiom that it is the responsibility of the entire society to take care of wage drops experienced by any group of individuals. Any comment?

[bvw]

THe American Civil War settled this argument. States that do not allow slavery can not compete with nor tolerate states that do.

Slavers love "free trade".

[bvw]

In mid 1800s Pittsburgh was producing half of all steel and three quarters of glass in the world. What about now?: What happened to those workers?

They made the mistake of unionizing. While Steel was not-unionized it did well.

[TopQuark]

THe American Civil War settled this argument. Which argument? Why is this post addressed to me?

States that do not allow slavery can not compete And this too was settled by the Civil War? Can you please make even less sense in your future posts?

nor tolerate states that do. In what way did we not tolerate the Soviet Union? China during Mao's regime? Vietnam after we withdrew from that country and the communists put a few million to slave labor?

[bvw]

So, Mr. Intelligent you ain't.

[Bandaneira]

Work is such a fundamental part of people's lives that the study of it's importance is neglected. Too many of the current day world "leaders" in business and politics do not give enough thought to what place work plays in most people's lives.

A productive, dynamic, happy meritocracy is far preferable to a stagnant, boring charmocracy. The time for ideas and action is now. People enjoy working when they feel fulfilled by their activities. We all have different skill sets and work preferences. People perform best when they know they are achieving something and are involved in meaningful activity. Having a sense of purpose in life is a key component of personal wellbeing.

There may be much material wealth in the western world at the moment but a higher spiritual goal and direction is lacking. A solution to this spiritual latent demand is just around the corner...

[TopQuark]

So, Mr. Intelligent you ain't.

I never claimed to be. But your skillful reasoning and persuasion have certainly proved it.

[curiosity]

That is, if you impede the matching of labor with its use in productive activities, your (second-best) welfare maximum cannot be greater than the (first-best) maximum attained in the absence of impediments.

I see two problems with your reasoning, acknowledging that you still have to flesh it out.

1) The first best is usually not acheiveable because of imperfections, frictions, and the like. Thus the best you can do is a second best outcome.

2) The first best outcome for the world may not be the best outcome for an individual country. That is, matching labor to the most productive use of capital may maximize world net national product, but a particular country's net national product may be reduced from such a process.

Regarding the rest of your post, I suppose we just have a different philosophical perspective. You appear to be a libertarian. I am not. I believe that governments have a duty to work for the common good, and that includes protecting their citizens ability to earn high wages. Sometimes the cost of protection, in terms of national income, exceeds the benefit, but sometimes it does not. I think you are wrong that this presumption began with the great depression. One Lincoln's justifications for advocay of protectionism was the desire to prevent American wages from getting eroded by cheap foriegn labor.

Now I don't think our trade policy in the 19th century was optimal, so don't think I'm defending it. I bring up Lincoln merely to refute your assertion that it was only after New Deal that Americans started believing that the government had an obligation foster wage growth.