Divergent views on trade
International trade is usually not much of an issue in U. S. politics, or at least, it’s much less of an issue than it is for Canada. Although U. S. exports and imports are large by world standards, American merchandise trade as a share of its gross domestic is the smallest of industrialized countries. Since trade wasn’t very important to the domestic economy, U. S. policymakers have historically viewed it as an instrument of foreign policy, offering access to their market in order to advance their goals in other areas.
Unhappily for Canada and other countries for whom the U. S. is a major trading partner — that is to say, much of the rest of the world — the surprising strength of both Donald Trump and Bernie Sanders, and their antitrade messages, may change that. Being pro-trade is a difficult stance to take during this election season, mainly because it’s so difficult to point t o good economic news in the U. S. that could be plausibly ascribed to the benefits of i nternational trade: wages are stagnant, median household incomes are falling and income inequality is rising.
Sound familiar? This is the same list of economic woes that the Liberals have been rhyming off for a couple of years now, most recently in the budget. But unlike Trump and Sanders, Prime Minister Justin Trudeau does not go on to conclude that trade has been bad for Canada. This is all to the good, but it does raise the question of how the Liberals have managed to make use of the same talking points as Trump and Sanders without also arriving at the same conclusions.
This question is all the more problematic when you take into account the fact the we have just seen one of the biggest bonanzas that international markets have seen fit to award Canada in living memory. How could Canada have received so much extra income from selling oil and other natural resources on world markets without its citizens seeing any widespread benefits? If the Liberals think that wages stagnated, incomes fell and inequality increased, even as Canada was supposedly benefiting from an exceptional trade boom, then what explains their support for free trade?
The simplest answer is that none of these “facts” are true. After being stagnant through the 1980s and 1990s — that part, at least, is true enough — real wages started increasing as commodity prices rose during the 2000s. Median inflation- adjusted weekly earning for full- time workers increased at an average rate of just under one per cent a year between 2005 and 2015. There’s a similar story for family incomes, and in particular for the sort of family that appears most often in Liberal narratives. The median inflation- adjusted, after- tax income of a couple with children in 1996 was slightly less than it had been in 1976. Since then, these families have seen a steady increase in their incomes, averaging just over one per cent a year. ( Other family structures have also seen increases.)
Recent trends in inequality also contradict the Liberal narrative. The broad Gini index — which captures things like the divergence between median and average incomes — has remained unchanged over the past 20 years, after having increased during the previ- ous two decades. And the share of total income going to the top one per cent of high earners peaked at 12.1 per cent in 2006, and by 2013 had fallen to 10.3 per cent — below what it was in 1999, although still well above the 7.1 per cent they received in 1982.
The only way to make the facts fit the Liberal narrative is to play three- card monte with verb tenses. Wages and income were stagnant during the 1980s and 1990s, and have shown healthy growth over the past 15 years or so. If you put the two episodes together, the average growth rate over the past 40 years will of course be lower than what it has been over the past 15. From there, it’s only a matter of elegantly imprecise phrasing to imply that anemic wage and income growth over the past 40 years is the same thing as anemic wage and income growth over the past 10 years.
The same for inequality. Gini coefficients have remained stable over the past 20 years, but are up over the past 40. Incomes are less concentrated at the top end than they were 10 years ago, but more concentrated than they were 30 years ago. Again, all it takes is a bit of blurry language to leave the impression that inequality has worsened over the past 10 years.
The Liberals like to present themselves as champions of evidencebased policy making, but their willingness to play fast and loose with the facts on their fundamental narrative in order to score partisan points off their predecessors makes it hard to believe they really are serious about using the data to guide their decisions.
I can’t help but wonder what the Liberals would do if the New Democrats — still stinging from being outflanked on the question of deficits during the election — decide to take a page from Bernie Sanders’ campaign and use the Liberal narrative of stagnant wages and increasing inequality to take a decisive stand against free trade. If the Liberals were forced to choose between sticking with the communications strategy that got them into power and supporting free trade, which would they select?
As they say in Quebec, to ask the question is to answer it.
HOW HAVE THE LIBERALS MANAGED TO MAKE USE OF THE SAME TALKING POINTS AS TRUMP AND SANDERS WITHOUT ALSO ARRIVING AT THE SAME
CONCLUSIONS?