Failing the trade test
Free trade strongly boosts the American economy. With only 5 percent of the world’s population, we depend heavily on foreign countries to buy our products and services. Domestic industries and individual families benefit from low-cost raw materials and consumer goods imported from abroad.
Moreover, there’s a larger advantage beyond commerce. Economic ties enhance political ties. Nations that trade with each other seldom fight with each other. Yet both Hillary Clinton and Donald Trump have embraced an anti-trade, pro-protectionist approach.
Both are campaigning against the Trans-Pacific Partnership (TPP), a market-opening pact that President Obama negotiated with 11 other trading partners. Both are bowing to short-term political calculations. And both should know better.
Clinton once called the TPP the “gold standard” of trade deals before Bernie Sanders and his trade union allies pressured her into a back-bending flip-flop. Trump and his daughter Ivanka market clothing lines that are almost entirely imported.
“I know the politics of trade can be very difficult, especially in an election year,” the president told the Straits Times of Singapore. But he was absolutely correct in adding: “The answer isn’t to turn inward and embrace protectionism. We can’t just walk away from trade. In a global economy where our economies and supply chains are deeply integrated, it’s not even possible.”
So why are politicians in both parties advocating policies that “turn inward” and harm our economy instead of helping it?
Start with the optics. Trade produces losers as well as winners, and the losers -- while a distinct minority -- are more visible and better organized than the winners.
It’s easy to find an abandoned furniture plant or jobless steel worker. It’s far harder to illustrate the fact that holders of export-oriented jobs earn an extra $1,300 a year, according to White House estimates. Or to point out that a parent buying backto-school clothes has 29 percent more purchasing power because of imported options.
“These benefits are small, even if they’re large in the aggregate,” notes Ben Casselman, an economics writer for the website FiveThirtyEight. “But a lost job is very big and easy to see.”
The losers often belong to trade unions, which are fundamentally ill-equipped to deal with a rapidly changing economy. As one labor official told us years ago: “You have to understand, we repre- sent the workers who have jobs today, not the ones who might have jobs in the future.”
Moreover, business organizations that traditionally support trade have lost clout as anti-Wall Street sentiment flourished in both parties after the last recession. And the foreign policy argument, that the TPP would strengthen our alliances against the rising power of China, matters little to ordinary voters.
Geography plays a role as well. A recent study by economists at Georgetown University points out that low-skilled manufacturing jobs -- those most vulnerable to foreign competition -- are concentrated in swing states like Ohio and Pennsylvania. More prosperous sectors, like high-tech and financial services, “tend to be concentrated in university towns and coastal states that tend to vote more reliably Democratic, giving them much less electoral pull,” reports the Wall Street Journal.
The problem is compounded by misinformation, often delivered by the candidates themselves. Technology is far more responsible for lost jobs than trade deals, but you never hear that on the campaign trail. And any candidate who promises to “bring back” jobs to shuttered mines and factories is simply lying.
But it’s a lie many voters want to believe, which leads to the final point: Trade losers need more help.
Efforts to provide that help go back to 1962, when President Kennedy endorsed the Trade Adjustment Assistance program by saying, “When considerations of national policy make it desirable to avoid higher tariffs, those injured by that competition should not be required to bear the full brunt of the impact. Rather, the burden of economic adjustment should be borne in part by the Federal Government.”
Fifty-four years later, the program is woefully inadequate, especially for middle-aged workers with limited education who cannot qualify for the demanding, high-skilled jobs now being created. Even if they are retrained, they have trouble competing with younger, cheaper job-seekers.
There’s only one solution: more government help. Many proposals are out there -- higher Earned Income Tax Credits, younger eligibility for Medicare -- but new trade deals won’t pass unless the damage to existing workers is mitigated.
Still, the bottom line is clear: Expanded trade is in the national interest. And both Clinton and Trump are undermining that interest by denying reality for political profit.
Steve and Cokie Roberts can be contacted by email at stevecokie@gmail.com.