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Posts Tagged ‘Harold Myerson’

I’ve long thought the Republican obsession with free trade was not only bad politics but a bit of bad policy.  A recent Washington Post article asks the question whether trade–which had a lot to do with our lopsided economy, as US dollars overseas filtered back looking for a safe investment and found it in Mortgage-Backed-Securities–has been a net positive for the US economically:

A few months ago, Robert Cassidy found himself pondering whether trade actually benefited the American economy. “I couldn’t prove it,” he says. “Did it benefit U.S. multinational corporations? Yes. But I cannot prove that it benefits the economy.”

Such doubts would hardly be news if they came from an established critic of free trade. But Robert Cassidy was the chief U.S. negotiator on China’s 1999 market access agreement with the United States — the document that was the basis for Congress’s extension of permanent normalized trade relations to China, which in turn enabled China to join the World Trade Organization. During the 1990s, Cassidy was the assistant U.S. trade representative for the Asia-Pacific region, and before that he worked in the Treasury Department’s international affairs office.

Republicans did not always embrace free trade so uncritically.  In the 1980s, Reagan strong-armed the Japanese to open up their markets, for example.  In the late 1800s, the Republicans were famous for presiding over an industrial policy of protective tariffs. Conservatives have long recognized the value of the nation as an important community of interest, which follows a different logic and pursues other goods besides economic ones.

The free trade orthodoxy is so entrenched on today’s right and the  mainstream Democratic Party–in sharp contrast to the prevailing attitude even in the 1980s–that the least deviation is quickly swatted down, as if we must all become either Davos Man or Dick Gephardt with nothing in between.

I’m for a certain amount of free trade, but oppose trade that (a) hurts the American economy on net, particularly by hurting export industries without a net gain in jobs and productive capacity, (b) hurts our national defense, (c) strengthens illiberal dictatorships, or (d) does not include sufficient buffers between our economy and the various unfriendly regimes around the world whether China, Indonesia, or Iran.

I happen to like free trade with Mexico, but would have not traded a penny with the Chinese starting around 1990 or so when the Cold War ended, preferring instead to isolate them and strengthen the American manufacturing sector.  It’s good for our third world neighbor to do well, even partially at our expense. On China, though, it’s not good for a global competitor and future great power to succeed at our expense and for us to be too dependent on them.  Their cheap dollar subsidy, low cost manufacturing, and the smoke and mirrors of easy credit have distorted our economy and theirs and made us too mutually interdependent for our mutual independence and strength.

In the 1880s, Britain infamously put Egypt into receivership when it defaulted on its debts. While I don’t see anyone able to impose such a dreary condition on the US, we can soon expect foreign creditors to dictate their terms and our policies more freely.  This would not be good, needless to say, and the joys of cheap plasma televisions from China would hardly make up for our loss of independence.  We can live without cheap Chinese trinkets; we cannot live in any normal sense of that term under foreign control.  I should think an American politicians could be very popular in such a circumstance by promoting massive foreign debt repudiation, even though such a move would undeniably be very costly going forward.   We’d soon find out if Americans were more attached to their flag and their independence or, rather, easy credit and cheap trinkets imported from low wage foreign regimes.

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