Over at Project Syndicate, Dani Rodrik has an important essay on compensation to trade’s “losers.” He argues that it is too late to compensate them, certainly in terms of harm done to individuals whose livelihoods have been impaired, and also in terms of political support for liberalization. He is certainly correct that trade adjustment assistance in the U.S. has been a long-term failure. His main argument is one of time inconsistency: that, at least in the U.S., politicians may promise appropriate compensatory measures ex ante, but fail to provide them ex post. While this may be a simplification of the U.S. political context, it suggests that the fundamental problem is that political commitments cannot be made reliably. Other countries seem to have solved that problem, and perhaps it could be addressed better in the U.S. My concern, though, is with Rodrik’s argument at the end of his essay that compensation can’t work, but that “to bring the losers along, we will need to consider changing the rules of globalization itself.” He does not specify how in the Project Syndicate essay, but when asked in comments what changes he has in mind, he directed one commentator to his 2011 book, The Globalization Paradox: Democracy and the Future of the World Economy.
In that book, he proposes to amend WTO law to establish the principle that states may raise border barriers “when trade demonstrably threatens domestic practices enjoying broad popular support.” More specifically, Rodrik prescribes a special “safeguard” allowing states to violate otherwise applicable WTO law when those rules threaten to undermine domestic environmental and labor standards or when they hamper the pursuit of sound development policies. In my review of The Globalization Paradox, I explain that some of these exceptions are unnecessary or counterproductive.
But the point I want to make here is that none of these suggestions seems to provide much relief to those hurt by trade. Rodrik’s suggestions address some asserted excesses of international trade law, but the fundamental problem of winners and losers will not be solved by these changes. Indeed, it is tough to think of measures that would help those whose livelihoods are hurt by trade other than trade adjustment assistance in the form of training or income support, unless Rodrik has in mind simply reduced trade, which seems unattractive because it reduces total welfare and imposes losses on consumers and exporters. Rodrik seems right that there is a time inconsistency problem, and it is true that trade adjustment assistance has not been available in the U.S., and it is also true that the human and political support damage has been incurred and will be tough to reverse, However, he has not proposed a viable solution. I would argue that it is not too late to make more binding commitments, as other countries have done, to provide appropriate adjustment assistance. Trade liberalization will always produce losers. For an excellent treatment of the options for dealing with them, see Michael Trebilcock’s book, Dealing with Losers: The Political Economy of Policy Transitions (2014).
 The Globalization Paradox. at 241 (emphasis in original).
 Id. at 253.