'Shame on them'

Liberal Washington Post columnist David Ignatius urges that American politicians state candidly that in the global economy there is ‘no easy escape from global competition’. The usual caveat applies: Ignatius is right if you look at the individual firm, but positively misleading if he’s suggesting that economic relations between states are characterised by competition. Nonetheless, he says apt things about current American political debate:

This anti-trade talk [from the contenders for the Democratic nomination] is dangerous nonsense, and the Democrats should be embarrassed by it. It suggests to U.S. workers that there is an alternative to change and adaptation -- to getting the skills that are necessary to compete in an increasingly competitive world. That's wrong, most of all because it misleads people about their real options. Rather than helping workers build a bridge to the future, as Clinton tried to do, these Democrats talk as if they want to build a roadblock. Shame on them.

Shame on the Republicans, too, for disowning the administration's chief economist, Gregory Mankiw. He made the "gaffe" (a Washington term for stating something that is true but politically embarrassing) of saying that "outsourcing" jobs abroad can be beneficial, by lowering costs and improving efficiency.
In economic terms, Mankiw's statement was utterly noncontroversial (unless you imagine that it's good for workers if companies have high costs and go out of business).

If I were American I would be a registered Democrat, and I say with some feeling that the views of that party’s senior figures on trade are worse than dangerous nonsense and far worse than bad economics (though they are both of those things). More fundamental, they’re a betrayal of liberal internationalist principle, which the Democratic Party once represented in contrast to the isolationism of Republicans such as Robert Taft and Thomas Dewey.

A few years ago the Progressive Policy Institute, a moderate think-tank within the party, published with the Brookings Institute one of the best non-technical expositions of the merits of open trade that I have seen. Expertly written and attractively presented, with plenty of data and charts to substantiate the authors’ compelling arguments, it apparently had zero impact in winning the Democratic Party to a responsible and reputable position on the issue. (The report’s main arguments and policy recommendations are summarised here; they remain, so far as I can see, unanswerable.) How sad and shocking it is to see the tradition of American liberalism come to a juddering halt in the persons of John Kerry and John Edwards; we liberal internationalists have no dog in that fight, and no obvious Democratic candidate for the future either.

Comments

[GrimReaper]

Why is a "betrayal of liberal internationalist principle" much worse than "bad economics"?
Surely a country's economic policies should be governed by economics, not a vague desire to be "internationalist".

[Gavin Shorto]

Globalisation and internationalism really aren't part of the same conversation. Globalisation is a rationalisation of business practices which cannot be begun half-heartedly. You're either in the game or you're out of it, which is what makes John Kerry's bumbling take on global competition so astonishing. He, and presumably others in the Democratic party, don't seem to know what they're talking about.

Daniel Mitchell, who is the Heritage Foundation's chief expert on tax policy and the economy, has an excellent piece in The Royal Gazette (Bermuda's daily newspaper) this morning, which adds to the Progressive Policy Institute's take by defending the reputation of a country John Kerry is unjustifiably smearing. Globalisation, he says, does mean competing globally in the tax field as well as any other. It's at http://www.theroyalgazette.com/apps/pbcs.dll/article?AID=/20040225/OPINION/102250088

[Mark Koyama]

I agree with Oliver's analysis and I find it shocking that an economist could find himself under attack for defending free trade. I do have one other observation which I believe few people have made, and that is, quite apart from the obvious comparative advantage/efficiency arguements in favour of free trade which everyone who knows any economics must surely grasp, very few people have made the moral case for free trade, which I believe should be at the heart of a liberal philosophy. An individual should be free to trade with whomever he wants no matter what country they live in. In restricting mutually beneficial trade between countries governments are restricting individuals in their pursuit of wealth and happiness. So long as no fraud is involved and so long as trade is voluntary, free trade is fair trade.