How to be a free trade Democrat12 Mar 2004
I’ve been troubled by the protectionist rumblings of the Democrat candidates. Edwards did it. Now Kerry is doing it.
It may be smart politically, but it isn’t smart economically.
I had been considering drafting some sort of longer article about this, but luckily, I don’t have to. Foreign Policy has an excellent article this month by Gene Sperling called “How to be a free trade Democrat”, written as a memo to the eventual democratic nominee. The article is for subscribers only, but I’ll quote the good parts:
You must counter any notion that most of the job loss and economic dislocation in the United States flows directly from recent trade policies. Much of the dislocation whether from intense competition, technological advances, outsourcing, or weak economic demand is not likely the result of recent trade agreements. This trade over-blame game paints a distorted picture of the nation’s current economic challenges and will not help produce the broader progressive agenda so critical to the United States economic future.
During the coming national campaign, be direct about how future prosperity hinges on how well we prepare for, rather than resist, what I call the dynamism economy the degree to which forces such as information technology and increasing openness in the global economy increase pressure on prices, competition, and innovation. While you must address the recent pain of many families caused by global trade and outsourcing, the largest source of U.S. job woes is not the sudden loss of jobs to global competition but the failure to create new jobs to replace ones lost in the upheaval of the dynamism economy.
Amen. If Democrats frame the debate on free trade properly, they have everything to gain and nothing to lose. George “steel tariff” Bush and his administration have already proven that they are no slaves to ideology when it comes to free trade. They are weak, here, and Democrats would do well to pound this weak spot. The Republicans have historically advocated free trade without providing any meaningful solution to deal with its consequences (which are usually ignored altogether), or they evoke the “free market” as an excuse to defend cronyism and corruption. These days, the Bush administration seems to have discarded the idea altogether. Democrats have an opportunity now to sieze the free-trade angle for its true benefits. Leave the scapegoating of jobs overseas (i.e. the China blame-fest) to the Bush administration. Democrats can focus on the real problem: the failure of the Bush administration to stimulate significant job growth.
Although it is not popular for any politician to acknowledge benefits from imports, progressives must not be afraid to point out that higher prices resulting from protectionism operate like a regressive tax, hitting the pocketbooks of modest- and low-income families the hardest.
Even if continued job stagnation or fallout from outsourcing and globalization require you to propose new policies to help protect jobs, wages, and health benefits, why pay for them with protectionism that will impose disproportionate costs on average consumers? Wouldn’t it be preferable to achieve those goals by embracing the dynamism economy and paying for such benefits with revenues from progressive income taxes?
This is where it can all be tied together with traditional Democrat ideals. The costs of free trade are negligible compared to the benefits, and the costs are easily offset by the sort of progressive social programs Democrats are historically the champions of. The two things dovetail very nicely.
Protectionism in this day and age is a lost cause – like trying to plug the many holes in a dam that is ready to burst. Capital now flows too freely in the global marketplace, even if labor does not. We need to re-think our economic strategy to address this reality instead of relying on a mentality of outdated, retaliatory scape-goating.