Tuesday, September 21, 2010

Rethinking the Conventional Wisdom that a True Free Trade Platform is Political Poison

I've often lamented the misguided political position of many free trade advocates in the House and Senate who are afraid to counter protectionist politics with a robust defense of trade liberalization, and instead use self-defeating mercantilism to deflect anti-trade criticism.  My reasoning is pretty simple: by focusing only on exports and trade surpluses, free traders are immediately exposed to false protectionist arguments that, for example, "if exports and trade surpluses are good, then current US free trade policies must be bad because we're running a trade deficit."  Of course, this response is poppycock (as I've noted seemingly millions of times), but a little thing like the truth has never stopped most politicians, especially during campaign season.

Typically, however, pro-trade politicians and their omniscient strategists respond to my idealistic (albeit totally fact-based) pleas with stories of bad poll numbers and "short-term political realities."  Their (short-sighted) argument is that because free trade is a dead loser of a political issue and because they don't have the time to teach folks the "truth" about trade and protectionism, they'll politely decline my advice thankyouverymuch and, assuming they can't avoid the issue altogether, merely deflect protectionist criticism with trite chatter about exports and international obligations, regardless of the inevitable protectionist auto-response.

But is this "conventional wisdom" correct?  Is true free trade advocacy really a one-way ticket to Loserville?

Recent events sure seem to indicate otherwise.  As I noted last week, Democrats across the country are running full-steam on an anti-NAFTA, anti-China, anti-trade campaign platform.  And as Cato's Dan Griswold points out today, protectionism so far appears to be a big fat dud of a plan:
The early returns are in on the Democratic tactic of making trade an issue in the 2010 campaign, and the results are not encouraging for those who want to blame trade agreements for the state of the economy.

In a column this morning for the Wall Street Journal (“Ohio’s Test of Protectionist Rage”), Gerald Seib reports from Ohio that two Republican candidates have been unscathed so far by Democratic attacks on their past support for major trade agreements.

In races for U.S. Senate and governor, Democrats have unleashed hard-hitting ads accusing their GOP opponents of supporting trade deals “that shipped tens of thousands of Ohio jobs overseas.” So far the attacks have failed to draw blood. According to Seib:
Right now, both Republican contenders in those races—Rob Portman for the Senate and John Kasich for governor—are coming under fire for their past support of free trade. The fact that both enjoy big poll leads right now suggests the attacks have had limited effect so far.
A key question in the campaign stretch run, both for Ohio and for policy making in Washington after the election, is whether that remains the case.
The Ohio races are ones that I've already noted here, and these polls are certainly a good sign that not only is protectionism not winning lots of votes these days (even in the Rust Belt), but also a free trade agenda might not be the political poison that it (allegedly) once was.  Nice.

Yet perhaps an even better sign of this phenomenon is a little-known race in Maine's 2nd district between incumbent Democrat Rep. Mike Michaud and his Republican challenger Jason Levesque.  Congressman Michaud, you see, is one of the House's biggest protectionists.  He's chair of the "House Trade Working Group," which ironically works to prevent trade, co-sponsor of the equally ironic TRADE Act, and routinely campaigns on rabid protectionism.  Michaud's congressional seat was thought to be very safe, but a little thing happened on the way to the mid-terms: he's getting a strong challenge from the relatively unknown Levesque, who now trails Michaud by only a few percentage points and is starting to pop-up on everyone's radar as a race to watch in 2010.

Now, given Michaud's hardcore protectionism and past electoral success, as well as the fact that Maine has long been represented by protectionist (and Republican) Senators Olympia Snowe and Susan Collins, one would expect Levesque to also express serious skepticism about free trade, or at best adopt the standard GOP "milquetoast mercantilism" in order to survive the inevitable protectionist onslaught and maybe eke out a win in a very favorable year for Republicans.

Guess again.

Now, it's not like Levesque is hanging his hat on free trade, and no one, not even your humble correspondent, can blame him for that. (As Griswold said today "free trade... is probably not a big vote-getter on Election Day, but neither is it a vote-loser.")  But Levesque also isn't dodging the issue or embracing mercantilism either, as these recent pro-trade statements make absolutely clear:
“We cannot be a protectionist society — this is a changing world, we live in a modern global economy, where communications, travel and goods are, quite frankly, regardless of border,” says Jason Levesque, Michaud’s Republican challenger in this year’s election and a big supporter of free trade.

The challenges faced by Maine’s paper industry, Levesque says, are more a result of the state’s non-business-friendly climate than foreign competition. “I’d argue that they need to look at the paper industry domestically and realize that there are paper machines and paper plants that are starting up in other parts of the United States, namely Virginia. So we’re not necessarily losing jobs to foreign entities, we’re losing jobs to other states because we are not a business-friendly district any more.”

Maine companies, he says, need to become more competitive and not rely on what he calls “trade walls” to insulate them from foreign competition. He does not, he says, support efforts to make foreign companies abide by certain labor and environmental standards.

“Do we just take our ball and go home and stop playing if they don’t abide by our rules and our social conscience?” Levesque says. “I just think it’s another excuse to be not competitive in a modern global economy and to build that wall and become more of a protectionist society, which will not work in this day and age.”
Awesome.  Of course, everything Levesque said is correct, and the facts about trade liberalization and competitiveness certainly support him (and contradict Michaud's anti-trade claims).  Indeed, I don't think I could've said it much better myself.

But as good as Levesque's response is, there's a much bigger point to be made here.  If Levesque - who currently trails Rep. Michaud by a an easily surmountable 7 percent - can pull off a win against a rabidly protectionist incumbent in a highly trade-skeptical area of the country, it would, in my humble opinion, go as far as the Ohio races - and considering his unapologetic free trade rhetoric, perhaps even further - to proving that the "conventional wisdom" on free trade and politics is dead wrong.  So stay tuned, folks.  And cross your fingers that Levesque's trade honesty and integrity pay off in November, and that the Democrats' broader protectionist plans go down in flames.

(Of course, a little contribution to Jason's cause couldn't hurt.)


Steve said...

Interesting points, but also look at the recent Allstate/National Journal Heartland Monitor poll results. When asked what type of economic policy the US should take as it relates to the global economy, 36% supported protectionism and 32% supported industrial policy focused specific industries versus 23% supporting free trade.

Scott said...

Thanks for the comment, Steve.

Yes, you're certainly correct that free trade doesn't poll well, and it indeed may be true that Levesque, Portman and others are succeeding in spite of, rather than because of, their free trade support.

However, those same polls also show that (a) trade is a very, very low priority for most Americans; and (b) opposition to free trade is very maleable, probably because of pt (a). The thrust of last night's post is based on the former point - that protectionism just doesn't resonate with voters this year because they're focused on other things.

However, point (b) is really the "meat" of the long-term strategic issue. My favorite example is the Pew series of polls which showed that support among Democrat voters for FTAs dropped 10 percentage points in 2007-08, then popped right back up to its historical position in 2009. Of course, the drop coincided with a 07-08 Dem primary season in which every major candidate was bashing NAFTA, and the the rise with a 2009 in which now-President Obama adopted a much more pro-trade approach. This malleability is likely due to that fact that most voters just don't pay attention to trade issues, and it demonstrates that protectionist politics breeds protectionist sentiment, which in turn breeds more protectionist politics. And until pro-trade pols stop ducking the issue, this vicious cycle might not end. Levesque is a great example of how that can be done, and if he can win, it would be a nice start towards proving my point.