Free mar­kets aren't free. Who pays the price?

The Pak Banker - - OPINION - Me­gan McAr­dle

ARE you fed up with the "free mar­ket uber alles" types in the Repub­li­can Party, or for that mat­ter, the "free mar­ket plus re­dis­tri­bu­tion" types among the Democrats? This year there's an al­ter­na­tive. For the first time in decades, we have can­di­dates in both par­ties run­ning strongly against mar­kets and trade -- on the Repub­li­can side, prac­ti­cally gal­lop­ing. They may put dif­fer­ent names to what they're against: ne­olib­er­al­ism, the "Wash­ing­ton Con­sen­sus," "lais­sez faire," "donor class pol­i­tics." The name doesn't mat­ter, be­cause what­ever you call it, they're agin it.

For decades, the lead­ing par­ties of the lead­ing na­tions have moved to­ward free­ing the move­ment of goods, cap­i­tal and peo­ple across bor­ders -- dereg­u­lat­ing and pri­va­tiz­ing in­dus­try and ra­tio­nal­iz­ing gov­ern­ment op­er­a­tions. Amer­i­can vot­ers qui­etly let both par­ties pur­sue those goals. No longer.

I share some of their ir­ri­ta­tions. Both par­ties are ex­ces­sively ob­sessed with the con­cerns of a rel­a­tively small class of hy­per-ed­u­cated donors and staffers, with the vast mass of vot­ers promised what­ever crumbs hap­pen to fall from the well-set tables of the pro­fes­sional class. This is not just bad pol­icy; it's crim­i­nally stupid pol­i­tics.

I share some of vot­ers' prob­lems with the way that the es­tab­lish­ment has han­dled is­sues like trade, and yet I ac­cept we are not go­ing to abruptly roll those de­ci­sions back. Nor should we.

On both sides of the po­lit­i­cal spec­trum, you can now read peo­ple spec­u­lat­ing that they are fi­nally on the brink of throw­ing off the cruel yoke of the es­tab­lish­ment types who make eco­nomic pol­icy for their par­ties. On the con­ser­va­tive side, in par­tic­u­lar, there are peo­ple talk­ing as if donors and af­flu­ent sub­ur­ban vot­ers were some sort of ves­ti­gial ap­pendage that the party would be bet­ter off with­out.

Yet if you get rid of them -- well, let's not even talk about where you would get the re­place­ment money to run cam­paigns. Let's talk about where you would get the vot­ers. You don't want your es­tab­lish­ment vot­ers any­more. You're equally fed up with the other party's es­tab­lish­ment vot­ers. So … which in­ter­est group are you go­ing to poach from the other party? It's not enough to talk about the sort of is­sues you'd like your party to sup­port, un­less that's all you're in­ter­ested in do­ing -talk­ing. (And lis­ten­ing to some Trump sup­port­ers, I get the sense that for them, the trash talk­ing rather is the main ap­peal.)

But most of us don't want a party that just talks a good game while los­ing ev­ery play; most peo­ple want a party that will ac­tu­ally win. Which means putting to­gether a large enough team to hold the field (i.e., one that com­prises roughly half the elec­torate). To do that, you need a play­book full of is­sues that will unite your pro­posed coali­tion, with­out dis­gust­ing any of them enough that they head for the side­lines -- or worse, the other side. .

Peo­ple on both sides are start­ing to be­lieve that they do have the core of a new play­book: "less free mar­ket, more … some­thing else."

Un­for­tu­nately, it's not enough to ex­press a vague wish for some­thing else and then lean back and wait for politi­cians to de­liver it. That some­thing else has to be po­lit­i­cally palat­able and prac­ti­cally fea­si­ble. Pro­tec­tion­ism clearly passes the first test among some seg­ment of the elec­torate. But it's not clear whether that seg­ment is big enough to win an elec­tion. And it's fairly clear that on the sec­ond test, it sim­ply flunks.

I get why you might long for some­thing else. I've al­ready con­fessed that I, like many free traders, un­der­es­ti­mated the ef­fect of China's 2001 ac­ces­sion to the World Trade Or­ga­ni­za­tion, which gave it broad ac­cess to global mar­kets. The sud­den ad­di­tion of sev­eral hun­dred mil­lion low-wage work­ers to the world la­bor mar­ket has been a cat­a­strophic event for parts of the U.S. econ­omy that sud­denly had to com­pete. The pro­tec­tion­ists were right that free trade was caus­ing prob­lems, and we were wrong.

But that doesn't mean I'm ready to em­brace pro­tec­tion­ism. For one thing, China re­ally was unique; there's no other coun­try that's go­ing to sud­denly add so many work­ers to the mar­ket. For an­other, there is no plau­si­ble "undo" but­ton. Oh, we can cer­tainly slap tar­iffs on Chi­nese goods, but then China will take the dis­pute to the WTO, where we will lose. Of course, we could pull out of the WTO en­tirely, but this would do in­cal­cu­la­ble dam­age to both our sup­ply chains and our ex­ports to other coun­tries.

Yet even this most dras­tic of steps would not roll us back to 2000, be­cause China would still be com­pet­ing with our ex­ports to other coun­tries, and there's lit­tle we can do to stop it. There are no easy uni­lat­eral de­ci­sions in a mul­ti­lat­eral world.

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