Business Acumen XVII: Globalization and Equity IIAs a follow-up to an earlier post on how the benefits of globalization can be more fairly distributed, I'd mention an analysis and set of policy recommendations published by the Financial Services Forum on June 26.
Grant D. Aldonas, Robert Z. Lawrence, and Matthew J. Slaughter1 wrote "Succeeding in the Global Economy: A New Policy Agenda for the American Worker" (pdf) as an expression of their own views, which do not necessarily represent the views of all Financial Services Forum members.
The executive summary is useful, but I suggest at least scanning the body of the paper in order to familiarize yourself with the details the authors have assembled concerning the benefits of globalization (which they refer to as "global engagement") and its current impacts on people's incomes (discussed in the section on "the distributional challenges of global engagement").
Having documented the unequal impacts of globalization on individuals, firms, and communities, Aldonas, Lawrence, and Slaughter devote the final section of their paper to their policy recommendations for the US. The policies to address poor growth of real income (income adjusted for inflation), and to facilitate adjustment by workers, communities, and firms include:
- Full integration of the FICA tax into the income tax, or an increase in the progressivity of the FICA tax. (FICA, which stands for "Federal Insurance Contributions Act," is the tax withheld from a person's salary or self-employment income to fund the Social Security and Medicare programs.)
- Combining unemployment insurance and the current Trade Adjustment Assistance program into a single integrated Adjustment Assistance program that offers a menu of benefits to all displaced workers, including wage insurance, portability of health insurance, assistance with relocation and establishing new businesses, and retraining.
- Allowing individuals a tax deduction for the full cost of education and training expenses, regardless of whether the education and training relates to one's current job (a requirement under the existing law) or to an entirely new career.
- Creating federal insurance that permits communities to insure their tax base against sudden economic dislocation.
- Identifying communities facing significant pressures from international competition as Global Economic Development Platforms, which would make them eligible for trade preferences, tax benefits, and federal financing aimed at attracting new investment to build new linkages to the global economy.
- Allowing firms a credit against income taxes for the increase in expenses they incur by extending their internal education and traning facilities to workers outside the firm or to students in local community colleges.
- Expanding programs to help companies learn how to gain certification under international standards (e.g., for quality assurance).
- Placing high priority on reestablishing a workable safeguard mechanism within the World Trade Organization.
1 Grant D. Aldonas is the William M. Scholl Chair in International Business at the Center for Strategic and International Studies. Robert Z. Lawrence is Albert L. Williams Professor of International Trade and Investment at the Kennedy School of Government, Harvard University; a Senior Fellow at the Peterson Institute for International Economics; and a Research Associate at the National Bureau of Economic Research. Matthew J. Slaughter is Professor of International Economics at the Tuck School of Business at Dartmouth; a Research Associate at the National Bureau of Economic Research; and a Senior Fellow at the Council on Foreign Relations.
Labels: Business acumen