Elizabeth Warren is building the future of progressive trade policy

The question of trade and globalization often throws the left for a loop. Democrats tend to be split between the pro-trade elite consensus, and the hardscrabble skepticism of big trade deals epitomized by Sen. Bernie Sanders (I-Vt.). What the latter group has lacked is a clear alternative to the elite consensus. Meanwhile, President Trump has complicated things further by adopting much of the anti-trade left's rhetoric and turning it into a badge of right-wing ideology.

Now, as she campaigns for the Democrats' 2020 presidential nomination, Sen. Elizabeth Warren (D-Mass.) has stepped into the breach.

Warren's trade proposals are neither complete nor perfect. Yet between her various "I have a plan for that" releases over the past few months, she has put together a coherent and interlocking framework that stands as a genuine progressive alternative for how to approach trade and globalization.

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"For decades, we have had a trade policy that has been written by giant multi-national corporations to help giant multi-national corporations," Warren argued at the second Democratic debate. "I have put out a new comprehensive plan that says we're not going to do it that way. We're going to negotiate our deals with unions at the table, with small businesses at the table, with small farmers at the table, with environmentalists at the table, with human rights activists at the table."

Every country has its own regulations, for everything from labor standards to automobile safety requirements to intellectual property. The differences in those regulations can act as de facto trade barriers. At a very high level, the purpose of trade deals is simply to standardize those rules between countries, so that trade can flow more freely. Which is fine, so far as it goes. But countries still have to decide what values they want the standards to prioritize.

Warren's critique, which is entirely correct, is that trade deals over the last few decades have prioritized the needs of big international companies: cheap labor, fewer regulations, stable investment environments, etc. So Warren wants to improve the transparency of the trade negotiating process, and she wants to reorient the standards around an entirely different set of priorities: labor rights, human rights, environmental protection, combating climate change, heading off international tax avoidance, and so on.

Warren also recognizes that the U.S. government is often the worst actor on the world stage in this regard. She wants us to stop pushing an extremely narrow definition of anti-competitive behavior for guiding antitrust law in our trade deals; to scrap the international court system that allows companies to sue governments over regulatory changes; and she wants the U.S. to stop imposing brutally demanding intellectual property laws on other countries that drive up the cost of prescription drugs.

These changes together would go a long way to making the international trade system less harmful to everyone but the super-rich.

Moreover, the challenge of trade goes well beyond just trade deals like NAFTA and the TPP. Warren's latest proposal addresses those directly. But there's also the systemic imbalance in trade flows between the U.S. and other countries, which has much more to do with ongoing currency and macroeconomic policy than any particular trade deal. The U.S. dollar tends to be perpetually stronger than other currencies, which renders our exports less competitive and drives up our trade deficits. It's unlikely we could entirely undo this situation, seeing as the dollar is also the world's preferred reserve currency. But a strong dollar has also been the explicit goal of administrations from both parties going back decades. At the very least, we could turn the dial down.

Happily, Warren's "economic patriotism" plan is explicit about the need to do just that. Even better, while she recognizes that tariffs can have their place, they aren't especially effective in this instance. Rather, the policy toolkit Warren points to includes countervailing currency intervention — an approach that should be getting way more consideration — as well as taxes on foreign investment in U.S. assets, and a more aggressive use of general trade negotiations. Basically, Warren doesn't want to follow Trump down the rabbit hole of endless trade wars with individual countries. Rather, she wants to reform global trade flows in and out of the U.S. at the systemic level.

Finally, the U.S. needs to do more to boost aggregate demand with domestic economic policy. Ultimately, the problem of unbalanced trade is that it takes American consumption that could power American employment, and drains it off to other countries, reducing jobs and wages here at home. This is why foreign trade can be so punishing for blue collar workers in particular. But while part of the fix is reforming trade itself, another approach is to plug the holes in our own domestic demand with our own policies. There are myriad ways to do this, but they generally boil down to fiscal stimulus and public investment. Between her economic patriotism plan and her proposal for a "Green Marshall Plan," Warren covers the bases.

She aims to drop $1.5 trillion in federal spending over the next decade to build out America's green energy and technology capabilities. She wants to devote hundreds of billions more to research and development, both for climate technologies and for the wider world of U.S. industry, as well as other programs like worker training. Warren aims to use that spending to leverage contractors into providing workers things like living wages, benefits, labor rights. Finally, Warren also proposes consolidating various agencies like the Commerce Department, the Small Business Administration, and the Patent and Trademark Office under one new Department of Economic Development, to resurrect an organized and intentional American industrial policy.

Warren wants to "pay for" all this with a series of taxes on the wealthy. But seeing as taxes on the rich remove way less demand from the economy than this sort of broad-based spending would add, the net effect would still be a giant boost to the U.S. jobs market.

Now, there are plenty of details Warren still needs to flesh out. Her desire to crack down on drug patents contradicts her proposed requirement that green tech made with U.S. intellectual property be manufactured here in the states — the rest of the world needs cheap zero-carbon energy just as much as it needs affordable pharmaceuticals. And it's possible that the bar to which she wants to hold trade deals is simply too stringent to function when countries are at lots of various stages of economic development.

But big picture, the left desperately needs its own battle plan on trade: something it can offer to combat both the old elite globalization consensus, and Trump's new xenophobic nationalism. Warren is providing that battle plan as we speak.