[Annotated] Trade creates losers. Here's how to help them

Addressing^[각주:1] hardships^[각주:2] requires both redistribution^[각주:3] and regulation^[각주:4], writes Swati Dhingra of the London School of Economics

As early as 1941, Paul Samuelson, a Nobel prize-winning trade economist^[각주:5], argued that globalization causes economic hardship for some. He continued to write that the losers from globalization need to be compensated by the gainers to^[각주:6] address the drastic increase in inequality we have seen in the past few decades. Yet this compensation has never really happened. 

America is a striking example of^[각주:7] this. Recent research estimates that Chinese import competition caused 20% of the losses in manufacturing jobs in^[각주:8] America. These displaced workers^[각주:9] barely got 10% of their fall in wages as^[각주:10] compensation from public support systems. Many have ended up suffering permanent income losses, and the regions where these losses are concentrated have gone into rapid economic decline^[각주:11]. 

This is not just an American story. Low-skilled workers across^[각주:12] the developed world are in a trap of stagnating^[각주:13], even falling, real wages^[각주:14]. Adjustment policies to^[각주:15] give them temporary relief^[각주:16] or re-training during difficult transitions exist in^[각주:17] many countries, but they are notoriously^[각주:18] inadequate^[각주:19]. For example, the European Globalization Adjustment Fund doesn't provide for any temporary relief^[각주:20]; it just funds retraining programmes. These retraining funds have stringent^[각주:21] eligibility criteria^[각주:22], so that the programme is heavily under-used^[각주:23]. 

Moreover, retraining programmes have low success rates^[각주:24], and America's Department of Labour estimates that retrained workers have a one-in-three chance of not finding^[각주:25] a new job. Workers therefore remain exposed to hardship from changes in their economic environment, and losers from the past few decades have never really seen any of the prosperity that^[각주:26] globalization brought to many global firms and their workers. 

Many have argued that these disparities^[각주:27] have polarized people^[각주:28] and contributed to the current rise in^[각주:29] nationalist politics. The common solution suggested by some politicians is that putting up protectionist barriers will undo the economic damage suffered by^[각주:30] those who lost out earlier^[각주:31]. This is not what is happening. Protectionism is not undoing the losses; it is de-skilling workers even more^[각주:32]. 

Take Brexit, which involves Britain breaking from its largest trading partner^[각주:33], the European Union. The depreciation of sterling which^[각주:34] followed the Brexit referendum^[각주:35] is^[각주:36] already hurting British workers. Forthcoming research from^[각주:37] the Centre for Economic Performance^[각주:38] at LSE finds that British firms have cut back on^[각주:39] training programmes for their workers, in anticipation of^[각주:40] reduced trade ties with the EU. Employers provide a large share of skills training, so the Brexit-induced^[각주:41] reductions^[각주:42] will have a long-term negative impact on human capital^[각주:43] and worker earnings - quite the opposite of what the protectionist policy is intended to achieve^[각주:44]. 

Looking to the future, if private investments in human capital fall, public investments would need to step up even more to^[각주:45] ensure workers don't suffer permanent job losses. Public policy has been complacent about^[각주:46] setting up well-functioning compensation and reemployment assistance for those who suffer from the churn of^[각주:47] economic conditions. For example, the average American worker got back less than 1% of the earnings lost to^[각주:48] Chinese import competition as unemployment benefits and "trade-adjustment assistance". Many workers had to resort to^[각주:49] disability payments for^[각주:50] temporary relief. 

Redistributing the gains through taxes, and public transfers to a comprehensive adjustment programme^[각주:51], would redress the disparities caused by^[각주:52] such changes. High-productivity, low-inequality economies like Denmark and Sweden commit about 1% of GDP to retraining^[각주:53] and upskilling workers^[각주:54], while countries with greater inequality such as America and Britain spend substantially less than that^[각주:55]. Silicon Valley and the City of London can surely give up some of their massive gains to ensure Detroit and Hull do not fall even further behind. 

Many economic changes, though, require more than just national redistribution, if the losers are concentrated on one side of the border. Samuelson warned more than a decade ago about the decline of manufacturing in the West. He wrote that^[각주:56] in an integrated world, economic changes that dampen^[각주:57] the comparative advantage of^[각주:58] a country also create permanent income losses in that country. Public policy^[각주:59] therefore needs to figure out what to do with those 80% of workers who lost their jobs for reasons other than just import competition from developing countries. 

Addressing the hardship increasingly faced by^[각주:60] these workers requires a combination of redistribution and regulation. Adjustment-assistance programmes need to be generously funded and to cover economic changes that go beyond globalization^[각주:61]. Production and capital are much more internationally mobile now^[각주:62], so there is a greater chance of firms shopping around for lower wages^[각주:63], lower taxes and lax regulation. Raising the resources to fund programmes for temporary relief and retraining of workers will therefore require policies that can reallocate resources from^[각주:64] the worldwide gainers towards the potential losers. 

Worldwide redistribution systems don't exist. Even simple international policies, like plugging^[각주:65] tax-haven^[각주:66] loopholes^[각주:67], have seen little or on progress^[각주:68]. Domestic policy therefore has to fill the gap in international policy. And it can do this. First, by generating resources from different international jurisdictions^[각주:69]. Second, by enforcing compliance with^[각주:70] worker protections^[각주:71]. And third, by channeling resources from the gainers towards^[각주:72] policies that offset^[각주:73] the deskilling of^[각주:74] workers who are likely to fall behind. 

It is a form of compensation to those who are harmed by globalization that Paul Samuelson, who passed away in^[각주:75] 2009 at the age of 94, might have endorsed^[각주:76]. 

1. address ; 5. ~ (yourself to) sth (격식) (문제・상황 등에 대해) 고심하다[다루다] [본문으로]
2. hardship ; [U , C] (돈・식품 등의 부족에서 오는) 어려움[곤란] ;; 1. [U] (종종 hardships) 고난, 고생, 고초, 곤란, 궁핍. ;; 2. 학대, 억누름, 무도함(oppression, injustice). [본문으로]
3. redistribution ; [U, C] 1. 재분배, 재배급, 재배포; 〈경제〉 재분배. [본문으로]
4. regulation ; 2. [U] 규제, 통제, 단속 [본문으로]
5. prize-winning ; [형용사] 입상의, 수상한 [본문으로]
6. gainer ; 1. 획득자; 이득자; 승리자(opp. loser) [본문으로]
7. striking ; 2. 돋보이는, 사람 눈을 끄는, 현저한(remarkable) ; 눈부신, 인상적인(impressive). [본문으로]
8. manufacturing job ; 생산직 [본문으로]
9. displace ; 4. (특히 美) (직장・지위에서) 쫓아내다 [본문으로]
10. fall ; 7. (가격 따위의) 저락, 하락; 침강, 강하, 낙차; 감퇴 [본문으로]
11. go into[sink into, suffer] (a) decline ; 쇠퇴하다[감소하다]. [본문으로]
12. low-skilled ; [ADJ] not having or needing a high level of skill or education [본문으로]
13. stagnate ; [자동사] 1. <액체가> 흐르지 않다, 괴다; 썩다, 상하다 ;; 2. <생활·활기·일·사람이> 침체[정체]하다 [본문으로]
14. real wages ; (경제) 실질 임금(opp. nominal wages) ;; 임금의 실질적인 가치를 나타내는 금액. [본문으로]
15. adjustment policy ; Government's fiscal measures aimed at reducing or eliminating balance of payment deficit. [본문으로]
16. temporary relief ; 임시방편의 위안, 임시 방편, 일시적인 해결책 [본문으로]
17. transition ; [U, C] 1. (위치·지위·상태·단계 따위의) 변천, 이동, 변화, 추이; 과도기, 바뀔 때. ;; 2. 과도기, 변하는 시기. [본문으로]
18. notoriously ; [부사][경멸적] 유명하게; (…으로/…로서) 소문나서, 악명 높게; 세상에 잘 알려져. [본문으로]
19. inadequate ; 1. ~ (for sth) | ~ (to do sth) 불충분한, 부적당한 ;; 2. (사람들이) (상황을 처리하기에) 부족한[무능한] [본문으로]
20. provide for ; 1. ~에 대해 준비[대비]하다 ;; 2. 법률·규칙 등이 ~을 가능하게 하다[허용하다] [본문으로]
21. stringent ; (격식) 1. (법률・규칙・규정 등이) 엄중한 ;; 2. (재정적 조건이) 긴박한, 절박한 [본문으로]
22. eligibility criteria ; 자격 기준 [본문으로]
23. underused ; [형용사] (또한 격식 under・util・ized) 충분히 이용[활용]되지 않는, 이용 부족의 [본문으로]
24. success rate ; [명사] 성공률 [본문으로]
25. of 전치사구에 not 이 활용되는 위치 확인 [본문으로]
26. prosperity ; [U] 번영, 번성, 번창 [본문으로]
27. disparity ; [U , C] (pl. -ies) (격식) (특히 한쪽에 불공평한) 차이 (disparateness, inequality). [본문으로]
28. polarize ; [타동사] 3. (사고·사상 등)을 분극화시키다, 분열시키다. [본문으로]
29. contribute to ; to help to cause something [본문으로]
30. undo ; 2. 무효로 만들다, 원상태로 돌리다 [본문으로]
31. lose out ; (비격식) (~을) 놓치다; 손해를 보다 ;; 1.[VERB] [informal] [intr, adverb] to be defeated or unsuccessful ;; 2.[VERB] lose out on to fail to secure or make use of [본문으로]
32. deskill ; [타동사] (자동화·분업화에 의하여 일이나 조작을) 기능을 요하지 않는 단순한 부분으로 나누다, 단순 작업화하다 ;; [VERB] If workers are deskilled, they no longer need special skills to do their work, especially because of modern methods of production. [본문으로]
33. break from ; (집단·남의 영향력 등에서) 떨어져 나오다[독립하다], 탈피하다, 벗어나다 ;; cut [tear, loose] from [본문으로]
34. depreciation ; 1. 가치 하락, 가격의 저하; 화폐의 구매력 저하 [본문으로]
35. referendum ; [C , U] (pl. ref・er・en・dums 또는 ref・er・enda) ~ (on sth) 국민 투표, 총선거 [본문으로]
36. follow ; 2. HAPPEN/DO AFTER | (시간・순서상으로) 뒤를 잇다; (결과가) 뒤따르다 [본문으로]
37. forthcoming ; 1. [명사 앞에만 씀] 다가오는, 곧 있을 [본문으로]
38. economic performance ; [명사] 경제적인 성과, 경제성장, 경제 실적, 경제성 [본문으로]
39. cut back on ; ~을 줄이다 [본문으로]
40. in anticipation of ; …을 예상하고, 내다보고 [본문으로]
41. -induced ; [COMB in ADJ] -induced combines with nouns to form adjectives which indicate that a state, condition, or illness is caused by a particular thing. [본문으로]
42. reduction ; 1. [C , U] ~ (in sth) 축소, 삭감, 감소 [본문으로]
43. human capital ; (경제) 인적(人的) 자본 [본문으로]
44. intend ; 4. [수동형으로] …을 (어떤 목적으로) 돌리려 하다, 예정하다[for, as, to be]. [본문으로]
45. step (sth) up ; ~을 증가시키다[강화하다] ;; to increase the rate, level, amount, etc. of something [본문으로]
46. complacent about ; …에 대해 안주하는 [본문으로]
47. churn ; 4. 교반 (상태); 격렬한 움직임, 격동 [본문으로]
48. be lost to ; 1. …에서 상실되다; 이미 …의 수중에 없다 [본문으로]
49. resort to sth ; (다른 대안이 없어서, 특히 좋지 못한 것에) 기대다[의지하다] [본문으로]
50. disability payment ; a monthly payment made to someone who has become disabled and is unable to work [본문으로]
51. comprehensive ; 1. 포괄적인, 종합적인 [본문으로]
52. redress ; [타동사][VN] (격식) (부당하거나 잘못된 것을) 바로잡다[시정하다] [본문으로]
53. commit ; 6. MONEY/TIME | [타동사][VN] (돈・시간을) 쓰다 [본문으로]
54. upskill ; [VERB] to improve the aptitude for work of (a person) by additional training [본문으로]
55. substantially ; 1. 상당히, 많이 ;; 2. (격식) 주로, 대체로 [본문으로]
56. write ; 4. STATE IN WRITING | (어떤 내용을) 쓰다 [본문으로]
57. dampen ; 2. (감정・반응의 기세를) 꺾다[약화시키다] [본문으로]
58. comparative advantage ; 비교 우위(優位) [본문으로]
59. public policy ; 공공 정책; [법] 공익 질서 ;; 공정 책(公政策), 국책 (國策). [본문으로]
60. address ; 5. ~ (yourself to) sth (격식) (문제・상황 등에 대해) 고심하다[다루다] [본문으로]
61. go beyond ; to be greater, better, etc. than something [본문으로]
62. mobile ; 4. 융통성 있는, 변통 자재의, 활동적인(versatile, active) ; 변하기 쉬운, 변덕스러운(changeable, fickle). [본문으로]
63. shop around (for sth) ; (가장 나은 것을 선택하기 위해 상품의 가격·품질 등을 비교하며) 가게를 돌아다니다 [본문으로]
64. reallocate ; [타동사][VN] ~ sth (to sb/sth) 재분배하다 [본문으로]
65. plug ; 5. [美] 〔행동·계획 따위〕를 방해하다, 훼방놓다. [본문으로]
66. tax-haven ; [명사] 조세 피난지(본국보다 세율이 낮다는 이유로 사람들이 이주해 가서 살거나 기업 등이 서류상 등록지로 삼는 곳) [본문으로]
67. loophole ; [명사] ~ (in sth) (법률・계약서 등의 허술한) 구멍 [본문으로]
68. on progress ; 진척중에 있는 [본문으로]
69. international jurisdiction ; 국제적 재판관할권, 외국재판 [본문으로]
70. compliance ; [U] ~ (with sth) (법・명령 등의) 준수; (명령 등에) 따름 ;; 참고 ; comply [본문으로]
71. worker protection ; 근로자 보호 [본문으로]
72. channel ; [타동사] (-ll- , 美 주로 -l-), 2. MONEY/HELP | ~ sth (through sth) (돈・도움 등을) (~을 통해) 보내다 [본문으로]
73. offset ; [타동사] 1. …을 차감 계산하다, 상쇄하다; …을 보충하다, 벌충하다. [본문으로]
74. deskilling ; (사회학) 탈숙련화 [본문으로]
75. pass away ; 사망하다[돌아가시다] (die라는 말을 피하기 위해 씀) [본문으로]
76. endorse ; 1. (공개적으로) 지지하다 [본문으로]