Democrats vs. Trade

Tuesday, February 26, 2008

Even if Hillary Clinton comes back to win the Democratic nomination and then the presidency, there will be no Clinton Restoration in economics. The Democratic party is well to the left of where it was in the 1990s. For evidence, look no further than the dispute over the North American Free Trade Agreement developing in the state of Ohio. Barack Obama’s campaign has been alerting Ohioans to some good things Hillary Clinton is alleged to have said about the 14-year-old trade pact, which her husband urged Congress to pass in 1993. A defensive Hillary maintains that she always had problems with NAFTA, and Bill has even told supporters that, behind closed doors, she opposed this key part of his legacy.

Driving this debate is the unpopularity of NAFTA in Ohio. In 2006, Ohioans elected one of the most anti-trade politicians in America, Sherrod Brown, to the U.S. Senate. With these voters at stake, Obama denounced NAFTA (and Hillary’s alleged support for it) during a speech in Lorain Sunday afternoon. "One million jobs have been lost because of NAFTA, including nearly 50,000 jobs here in Ohio,” Obama claimed. “And yet, 10 years after NAFTA passed, Sen. Clinton said it was good for America. Well, I don't think NAFTA has been good for America — and I never have.”

But when asked later, Obama said he wouldn’t pull the U.S. out of NAFTA, because doing so “would actually result in more job loss . . . than job gains.” This is true, of course. Even a politician in full pander-mode can’t deny that NAFTA, like any free-trade agreement, created jobs as well as destroyed them. Free trade allows countries to shift resources to where they are most productive relative to the countries they are trading with. We hope that Barack Obama is familiar with the concept of comparative advantage. We hope (audaciously?) that the pursuit of votes rather than gross ignorance has led him into this wilderness of incoherence.

And Hillary? Her reaction to Obama’s attacks is an even more worrying sign that the Democratic party is growing more protectionist. Fearing the credulousness of Ohioans, she has not pushed back against Obama’s economic charlatanism. Indeed, putting her faith in the credulousness of Ohioans, she has called for a “time out” on new trade deals, as if our pending agreements with Colombia and South Korea would deal a staggering blow to Ohio’s economy.

The public is souring on trade. One recent poll indicated that even Republicans were growing more skeptical about the benefits of signing more trade agreements. But these fears are not supported by the facts, as the Cato Institute’s Dan Griswold amply explained in a recent study on trade and the economy. Unemployment has remained low since the advances in trade liberalization made during the 1990s. Many people blame trade for stagnant wages, but the real culprit is the rising cost of health care—and trade is not responsible for that. Trade has, indeed, helped: It has enabled the U.S. economy to shift more resources into high-paying jobs, and more people are prosperous today as a result.

The Republican nominee, John McCain, is a stalwart free trader. We hope he pushes back against the economic nonsense coming from the Democrats. He should also point out their geopolitical hypocrisy. Unilateralism has been one of the chief Democratic indictments of the Bush administration. Supposedly Republicans have alienated world opinion, and even our natural allies, with their high-handed ways. But the Democrats would reject trade deals with countries that need them and want to be our friends, and for the most parochial of reasons: the desire to win their party’s primaries.

The Democrats also claim to be the party that cares the most about the world’s poor. But their opposition to free trade would have the effect of shutting the richest market in the world to countries desperate to export their way out of poverty.

It’s too bad that the Democrats have lost their way on trade and now repudiate the successes of the 1990s. But the public will have a clear and distinct choice on the issue come November.