Imagine a policy matrix: open vs. protective on one axis, home vs. abroad on the other. Three leading politicians represent the some combination of those ideas:
Paul Ryan—open abroad, open at home—is a free trade advocate who believes less government involvement is better for the poor.
Bernie Sanders—protective abroad, protective at home—is skeptical of free trade and wants to raise taxes across the board to pay for a democratic socialist safety net.
Donald Trump is protective abroad and a Pollockian mess at home. His plans detail a historic tax cut, but he tells some people he wants a tax increase; he says he wants people to keep their health care, but he also wants to repeal Obamacare.
There is a fourth way. Think of it as “smart protectionism.” That is, to be open abroad and protective at home.
To think through smart protectionism, consider the controversial history of NAFTA. Sanders and Trump have blasted the trade agreement for, as Jeff Faux, the founding president of the Economic Policy Institute, put it, opening “the door through which American workers were shoved, unprepared, into a brutal global competition for jobs that has cut their living standards and is destroying their future."
NAFTA may have contributed to the disappearance of hundreds of thousands of American jobs. But it was also a boon to the Mexican economy, raising employment in that country by 1.5 million workers, according to the economist Brad DeLong. Nationalists often elide the fact that Mexicans are people; their personhood is not conjured out of thin air when they receive a temporary U.S. visa or green card. That free trade helps workers in other countries is a feature, not a bug, of the policy.
In defending NAFTA on behalf of American workers, DeLong shifts the focus away from trade policy entirely, writing:
I am of the faction that holds that if we are unhappy with the level of employment and of wages in the U.S., we should change our monetary, spending, taxing, banking, regulatory, and exchange rate policies to change them.
In other words, it is possible to pursue a free-trade agreement that helps Mexico and lowers prices on American products while simultaneously pursuing policies, such as income transfers, to workers displaced by those very trade agreements. This is not protectionism. But it is protection.
There are other ways to practice smart protectionism at home. In a column for the Washington Post, Fareed Zakaria has argued for what he calls “open and armed” economics—trade markets open to the world and labor markets armed to protect the vulnerable. There are some obvious solutions that even have tepid Republican support, such as expanding the Earned Income Tax Credit.
The government could take a more active role in education, too. About 11.5 million of the 11.6 million jobs created in the recovery have gone to workers with at least some college education, according to the Georgetown University Center on Education and the Workforce. Hillary Clinton recently proposed a Sandersesque policy to get rid of tuition at in-state public colleges for families making less than $125,000 a year. Other forms of education support could come even earlier in a person’s life. The U.S. government spends 0.4 percent of GDP on childcare and early education, while France, Denmark, and Sweden all spend at least three times more as a share of their economies. It is cheaper to publicly invest in the achievement and health of poor young children than to spend billions trying to remediate them as adults.