In the wake of the GOP debate earlier this week, there's been a lot of to-ing and fro-ing and to-ing and fro-ing as to whether Republicans have shifted away from the neoconservatism of George W. Bush and towards offshore balancing or isolationism. I don't think it's a settled question -- I'd conclude that it's partly a genuine realpolitik backlash to the massive costs of Iraq, partly a reflection of public sentiment, and partly a partisan reaction to the fact that it's a Democratic president who's launching
wars kinetic military actions nowadays.
What's more disturbing, however, and uncommented until now, was the total lack of support for freer trade among the GOP field.
This came through loud and clear through what was said and what was not said in New Hampshire. Trade didn't come up all that much during the debate. Tim Pawlenty provided the only comment of substance, and it wasn't a productive one:
[N]umber one, we've got to have fair trade, and what's going on right now is not fair.
I'm for a fair and open trade but I'm not for being stupid and I'm not for being a chump. And we have individuals and organizations and countries around this world who are not following the rules when it comes to fair trade. We need a stronger president and somebody who's going to take on those issues.
In presidential campaigns, this amounts to "don't expect to see any new trade deals anytime soon." As for the other dimensions of globalization, well, peruse the section on immigration
provided you have a green card if you dare. No one said anything about the positive economic and demographic benefits America receives from immigration.
The other thing that was striking was what wasn't said during the debate. All of the candidates focused like sharks with frikkin' laser beams attached to them on the economy. The standard GOP litany of solutions for jump-starting the economy were offered: tax cuts, cutting regulation, tax cuts, cutting government spending, tax cuts, reigning in the Fed, tax cuts, ending Obamacare, tax cuts. Not one of the candidates, however, mentioned trade liberalization as part of their fornmula for getting America moving again.
To be fair, this isn't as bad as when Obama and Clinton were debating over who would eviscerate NAFTA faster in 2008 (and funny, isn't it, how that never happened). And it's not like I was a huge fan of Obama's trade policy. To be just as fair, howeever, at least the current president completed KORUS negotiations and signaled strong interest in the Trans-Pacific Partnership. I get the sense that no one in the GOP field is going to stick their neck out on international trade or investment. For the party that claims to be in favor of lower taxes and regulation, this is a travesty.
Trying to pick the most offensive campaign ad of this election season is not easy -- there's a long and distinguished list of truly offensive ads out there. However, my award for Most Offensive Ad goes to the Democratic Senatorial Campaign Committee with this attack ad on Pennsylvania Republican senatorial candidate Pat Toomey:
I'll give credit to the DSCC: Not everything in the ad is offensive, just 98 percent of it. By far, however, the worst part is the DSCC's suggestion that Pennsylvanians not vote for Toomey because he thinks that "it's great that China is modernizing and growing." Using that logic, apparently the DSCC supports doing everything to keep China backwards and impoverished. Which, if you think about it a little bit, is really disgusting.
I'd love to say that this is the only anti-globalization ad of this election cycle, but that's obviously not true. In another ad, the DSCC blasts Toomey for -- God forbid -- spending part of his career overseas. Forbes' Shikha Dalmia points out, however, that both sides have been throwing up mercantilist ads as fast as they can produce them:
Virg Bernero, the Democratic gubernatorial candidate in Michigan, where I live, has dubbed his opponent, Rick Snyder, Chief Executive Outsourcer (ha, ha). Mr. Snyder's crime is that he is a successful businessman who invested in a semiconductor company that once employed five -- five! -- people in Shenzen to sell its products in China. In other words, it is no longer a sin to buy from China. It is also a sin to sell to China! (Where did Bernero get his views on trade theory, anyway? The Kim Jong Il School of Autarky?)
Nor is Bernero alone in the Democratic Party: California Sen. Barbara Boxer is accusing her opponent Carly Fiorina, former CEO of Hewlett Packard, of outsourcing thousands of jobs to "Shanghai instead of San Jose"; Senate Speaker Harry Reid is calling Sharron Angle "a foreign worker’s best friend"; and Richard Blumenthal, Connecticut Attorney General running for Senate, who lied about serving in Vietnam, has the temerity to attack his opponent, the former CEO of World Wrestling Entertainment, for "outsourcing" American jobs because her company got toy action figures manufactured in China instead of America.
Hostility to trade is par for the course for Democrats perennially beholden to Big Labor, but what is the excuse of Republicans -- the alleged believers in free markets? In race after race, they too are hitting China to beat Democrats. In West Virginia, Spike Maynard, a Republican running for the House is airing ads against his opponent, complete with Asian music in the background, castigating him for giving stimulus money to a Texas company that happens to be buying windmills from China. Meanwhile, in Virginia Republican Robert Hurt is accusing Rep. Tom Perriell of supporting tax breaks for foreign companies "creating jobs in China."
Well, it's not that surprising to see this. Americans think about trade through a mercantilist, relative gains lens, as opposed to the radical concept that trade can generate win-win outcomes. The Obama administration has abetted this mindset with a trade policy that careens between an
idiotic exclusive focus on exports and complete radio silence. And, of course, China has been taking steps in recent months in order to perfect their role as economic bogeyman.
I'd love to say that if the Obama administration mounted a full-throated defense of trade liberalization, this mindset would go away. The thing is, I don't believe that. As the Gallup data suggests, even decent growth rates won't eliminate the zero-sum mindset that people have when it comes to free trade.
Developing… in a thoroughly depressing manner.
After the sturm und drang of last week's decision by the Obama administration to slap tariffs on Chinese tires, I've seen a bit of a pushback among the economic commentariat. This pushback comes in one of two forms:
Over at TNR, Noam Scheiber makes the first case -- that this is a tempest in a teapot:
With anti-trade sentiment rising in the aftermath of the worst financial crisis since the 1930s, it's become increasingly difficult to resist genuine protectionism--to say nothing of passing new trade pacts. (Bilateral deals with Colombia, South Korea, and Panama have all stalled out in Congress.) Absent a small gesture on behalf of American workers, it's safe to say the trade agenda would be doomed for the foreseeable future. (It may be anyway, of course.) Which is why Obama's decision seemed relatively straightforward once the International Trade Commission ruled that Chinese tires were in fact disruptive. Even so, Obama announced that the tariff would top out at 35 percent, well below the 55 percent recommended by the ITC.
So the tariff is modest, narrow, legal, and designed to preserve the political viability of free trade....
[B]oth Bush and Obama were rhetorically committed to free trade at the time of their tariff flirtations, and both men had taken practical steps to promote it. (Bush had sought fast-track authority from Congress; Obama, in a much tougher political environment for trade, scaled back a "buy American" provision in the stimulus.) So pretty much the only way to divine this difference is by peering into the two men's souls.
Hmmm........ no, not buying the equivalence between Bush and Obama here. First, to repeat, just because something is legal doesn't mean it's good policy.
Second, as Phil Levy pointed out, the Bush administration specifically declined to apply these tariffs when he was president. So there is some different between the two administrations' perspectives on trade.
Third, if Scheiber is correct that this is merely "a small gesture on behalf of American workers," then I'd be fine. But I'm curious about his faith in that assertion. All the political signs point to a lot of gestures in the protectionist direction. Each of them, by themselves, is Lilliputian in their effects -- but the cumulative effect can be to keep the Gulliver of freer trade under lock and key.
The Financial Times' Alan Beattie makes the more interesting argument -- which is that a short term sacrifice of trade policy in favor of health care will sow the seeds of a viable long-term policy of trade liberalization:
The conventional wisdom in Washington is that this is a straight trade-off. Placate the labour unions on trade and get them to support Mr Obama on healthcare. Whisper it quietly, and be prepared for accusations of heresy to rain down on your head, but that might be a deal worth making....
Instead of hoarsely exhorting the benefits of trade to people who aren’t listening, [trade enthusiasts] need to be seen to soften its downside. Since the American public seems to ascribe much job loss in the US economy to globalisation – usually wrongly, but there we have it – this means reducing the costs of being laid off. Since much healthcare is currently tied to employment, achieving universal coverage would be one of the best ways of doing that....
Mr Obama has now come down on the wrong side of three big decisions on trade: happily signing a stimulus bill with Buy American provisions, abrogating an agreement allowing more Mexican trucks to operate in the US, and now granting the first ever emergency tariffs under a particular “safeguard” measure in US law. All are damaging both to trade and to the US’s international standing. All risk inflaming protectionist sentiment at a sensitive time.
But if he can use his capital to achieve universal healthcare and begin to shift the visceral dislike of trade that has gripped large parts of the American public and their representatives on Capitol Hill, it might prove worth it. He is playing with fire, which has creative but also destructive power. Just like globalisation.
Beattie gets at an interesting proposition -- that stronger safety nets will make Americans more comfortable with globalization. You can certainly point to public opinion polling in support of this hypothesis.
It's a good argument, and it's the one I suspect Larry Summers and Tim Geithner told themselves after the tire decision was made. The thing is, I'm not sure whether it's politically accurate.
In my debates about trade over the years, I've talked with a lot of union activists on the other side of the fence. These are people dedicated to the protection of them and theirs -- and given the economic straits of their workers, I can't blame them. I know from talking with them, however, that a stronger social safety net will have zero effect on their trade position. Sure, they want health care -- but they also want to make sure that their union continues to exist as a viable political entity. Regardless of universal health care coverage, globalization eats away at the unionized employment sector in the United States. For unions in the 21st century, protectionism is not a policy position to be traded away -- it is at the core of their perceived interests. Health care will not affect that position.
Am I missing anything?
UPDATE: Noam Scheiber responds on TNR's blog to say that maybe I am missing something:
[T]he political context looms incredibly large here. Simply put, it's incredibly difficult to defend, much less expand, free trade in the middle of a deep recession. And this is the deepest since the 1930s. In that context, the best you can probably do is beat back the worst protectionist excesses and live to fight another day.
Which is to say, you can't just make a straight-forward point-by-point comparison between Bush and Obama. The question is, what would a pro-trade president do in the current political context? My point is that it's far from clear he or she would behave any differently from Obama.
Scheiber is absolutely correct that the curent political environment is hostile to trade -- but I'm not all that sure the environment was any less toxic in the early half of this decade. In December 2001, George W. Bush, flush from the success of the war in Afghanistan, possessing an approval rating above 80 percent and larding out pork like no one's business, secured the passage of Trade Promotion Authority through the GOP-controlled House of Representatives by a single vote. In 2005, CAFTA made it through the House by a two-vote margin.
Let's face it, however -- this debate is about the future. If Obama abstains from futher acts like the tire tariff, I'll concede that I've overreacted. If there's more of this to come, then I think Scheiber will have underreacted.
Daniel W. Drezner is professor of international politics at the Fletcher School of Law and Diplomacy at Tufts University.