comments:
None of these are really my own unique thoughts; this is based on what people like Joseph Stiglitz and Dani Rodrik have said. It's a good question so I thought it deserved a good answer. Globalization took away the policy space for social democracy. Social democracy relied on national sovereignty during the Bretton Woods era, where capital had to negotiate with labor. This is why social democratic parties managed full employment and equity targets for decades, unrestrained, and built significant democratic institutions that have held all across the world. The New Deal in the USA, the corporatist settlement in continental Europe, the NHS in the UK, etc. When it was halted, all of those things were crippled because the global economy became a "race to the bottom" where hypermobile capital had so many exit options, while the poor and middle class hardly did. And arbitraging tax codes, labor laws, environmental protections, etc. systematically erodes the social settlement. Sweden is the canonical case: the failed defense of the krona, the banking collapse, the inflation-targeting Risbank, the privatized pension tier, and then a school-voucher system more radical than anywhere else on Earth. Social goals went from feasible in politics to requiring heroic levels of international cooperation that never materialized. The costs were never advertised. The three-or-so million people who suffered catastrophic economic consequences due to globalization were told that it would be very easy to retrain, that few jobs would be lost, that their communities would quickly pivot. Many more were indirectly impacted (negative spillovers, demand externalities, social effects from family/friends being impacted, etc.) It was more than bad enough, but it also came from a lie. And current neoliberals didn't really offer the support you said — the 2009 TAA stimulus and POWER+ initiatives came far too late to help, had their funding gutted, were hardly used, and had very poor track records. Neoliberals told the losers that this was just a tough political choice and they couldn't afford to help — then the GFC and COVID made that assumption visibly shake. (Source there is Autor's work, again, since he tracked the data for these programs in post-deindustrialized communities.) It's often just based on a falsity. Free trade's benefits were advertised based on very specific neoclassical assumptions that have been found faulty. Paul Krugman (a neoliberal at the time) published his NTT (New Trade Theory) which provided a formal framework for strategic trade policy's benefits based on economies of scale, and then proceeded to argue for free trade anyway by arguing governments were just too bad to implement a coherent trade policy. The US itself repeatedly-used quasi-industrial policy to boost technological growth, shaping and creating markets. Developed nations used strategic trade policy to boost themselves up (re. the East Asian miracles), and then gutted the path by framing industrial policy as "communism" and heresy. Only recently has the World Bank actually recognized industrial policy's benefits, only thirty-or-so years late. Neoliberal economists repeatedly told Biden he would destroy the economy by spending hundreds of billions of dollars into domestic green investment, and then it worked. Also the alternate vision isn't "protect all jobs from being lost" or isolating from trade. It's international cooperation to restore a minimum floor and prevent race-to-the-bottom effects (like the OECD's global minimum tax of 15% on corporate profits), entering trade deals with fairer terms and labor standards, being willing to use industrial policy as an actual tool, and invest significantly into genuine supports for retraining (think social democratic vocational training, or the post-Keynesian / social democratic job guarantee proposals.)