How NOT to Defend Globalization II

♠ Posted by Emmanuel in ,, at 9/21/2007 03:02:00 PM
In this op-ed, the libertarian-leaning Reason magazine provides yet another example of how not to defend globalization in the form of trade and migration. Elided from this kind of analysis is that US wages have been stagnant since the start of the new millennium and its possible relationship with globalization. Instead of addressing often legitimate concerns about the potential pitfalls of globalization, what we have here is boilerplate Ayn Randian fare: (1) Politicians are dangerous panderers who don't know what they're doing and (2) the average person isn't smart enough to appreciate the wonders of globalization. Unfortunately, such divisive tracts do little to promote an open agenda. Preaching to the converted it is:

Bernie Sanders, the independent senator from Vermont, is the only self-proclaimed socialist in Congress. Lou Dobbs is a close-the-borders CNN host who donated $1,000 to George W. Bush’s first presidential campaign. But when they met on Dobbs’ show on June 21 to discuss the Senate immigration bill, the two aging bulls were harmonizing like the Pet Sounds–era Beach Boys.

“Is there any sense amongst your colleagues in the Senate,” Dobbs rumbled, “that it is time for people to begin to represent their constituents rather than these special interests, corporate interests?”

“You’ve got it,” said Sanders. “Their whole ideology is based on greed. They’re selling out American workers and, in fact, they’re selling out our entire country.”

It was “blatant,” Dobbs added, that both parties “are owned lock, stock, and barrel by corporate America and special interests included in the amnesty legislation.”

Clich├ęs and all, this was a fairly ordinary political conversation in the summer of 2007. Nor was the convergence new. In 1993 conservatives such as Pat Buchanan and leftists such as Jeremy Rifkin stood shoulder to shoulder against the North American Free Trade Agreement (NAFTA), bemoaning the pending death of American manufacturing.

Fourteen years later, Dobbs and Sanders needn’t be so gloomy. Things are looking up for protectionists left and right. On June 28, the Senate anesthetized an immigration reform bill over concerns that it might grant “amnesty” to illegal immigrants already living and working in the United States. A day later, the House of Representatives let the clock run out on fast track, the presidential power to cut trade deals without congressional amendments.

And the leading candidates for president are saying amen. Take Sen. Hillary Clinton (D-N.Y.), the Democratic front-runner. When her husband was in the White House he lobbied hard for fast track and for NAFTA. In 2002 Sen. Clinton voted against fast track authority for her husband’s successor. In 2006 she voted against the Central American Free Trade Agreement, a pact with far fewer consequences than NAFTA.

Despite all this, she had to fend off charges that she is not protectionist enough. In June a not-for-attribution memo from the campaign of rival presidential candidate Sen. Barack Obama (D-Ill.) accused Clinton of courting Indian-American voters too closely and of imperiling American jobs by supporting companies that outsource to Bangalore and beyond. The memo referred to her as “Hillary Clinton (D-Punjab),” playing off her investment in an Indian electronic billing services company. Clinton’s campaign forced Obama to apologize for impugning her and for mocking Indian Americans—and then the two co-sponsored a bill punishing nations such as China for undervaluing their currency.

When you consider what NAFTA actually wrought—and you don’t count Bernie Sanders’ angina—this is all a bit mysterious. Americans are wealthier than they were 14 years ago and, with unemployment under 5 percent, are more likely to have jobs. (In the decade before NAFTA, unemployment averaged more than 7 percent.) More Americans own their own homes. Fewer Americans are going to bed hungry—dramatically so, if you scan the data on obesity [this is exceedingly silly and off-topic to boot].

“It’s not as if we’re on the ropes,” says former congressman Tim Penny, a Minnesota Democrat who retired after the NAFTA fight. “We have economic uncertainty but only in certain sectors. Overall unemployment is low; the economy is growing.”

The GOP’s front-runners aren’t adopting the trade demagoguery. Their speechwriters are too busy with immigration demagoguery. Eleven years ago the party rejected Pat Buchanan’s presidential bid and his proposed wall along the Mexican border. Not this year. No GOP candidate opposes a border wall. Former Massachusetts Gov. Mitt Romney and former New York City Mayor Rudy Giuliani, immigration enthusiasts in their previous political lives, spent June blasting the Senate’s immigration bill—not because of the restrictions it put on freedom of movement but because they objected to possible citizenship or special worker status for illegal immigrants.

To former Rep. Jim Kolbe (R-Ariz.), Republicans who pander to those voters are economically incoherent. (And political hemophiliacs too: The GOP lost the retiring Kolbe’s Republican-leaning seat in 2006 when it nominated a border hawk who thought Kolbe had been too soft on the issue.) “I don’t know many people who are ardent free traders and who want a wall built,” Kolbe says. “If you’re talking about the movement of goods, how can you not talk about movement of labor? How can you not talk about the movement of people? It’s absolutely absurd.”

It’s especially absurd when you look at the actual data. According to a 2005 study by the University of Bologna’s Gianmarco Ottaviano and the University of California at Davis’ Giovanni Peri, the surge of illegal laborers between 1990 and 2000 raised native-born wages overall but lowered the wages of Americans without high school diplomas by about 1 percent. These workers account for only 8 percent of the labor market, and their numbers are shrinking. In 2006 and 2007, tighter border controls managed to drive down the number of illegal workers picking crops in the Southwest. Americans didn’t flood the fields to do those jobs; the jobs went unfilled.

The immigration bill was badly wounded by intense, angry constituent calls to the Senate—so intense that the switchboard had to be shut down. But it’s unfair to blame rank-and-file voters for the backlash. That anger was ginned up by the party itself, which had built up immigration as a national security issue for the 2006 elections. One TV commercial run by the National Republican Senatorial Committee in Rhode Island attacked Cranston Mayor Steve Laffey (not even a Democrat, but a Republican primary challenger) for “accept[ing] Mexican ID cards that threaten our national security.” If voters nominated Laffey, the ad warned, he would “put our national security at risk in the Senate!”

Democrats can sound just as hyperbolic talking about the economy. After the short recession of 2001–02, the economy has been largely robust and unemployment has dipped everywhere but in communities that have lost manufacturing jobs. The loss of jobs is stark in the Rust Belt cities in Michigan, Ohio, and Pennsylvania; most of the rest of the country is undergoing a boom.

Interestingly, while polls showed a healthy chunk—in some surveys, a majority—of those Democrats opposed to the immigration bill, most elected Democrats supported it. Their party doesn’t pander when it comes to the labor market on the border. It panders on every other labor market.

The problem, Tim Penny theorizes, is that Democrats don’t want to take a political risk. They don’t want to explain why the economy could be growing without some of their loyal voters seeing marked local improvements. “Instead of acknowledging we’ve got challenges on worker training,” Penny says, “or that free trade is basically good but we can drive harder on workers’ concerns, we fall into the easy rhetoric of bashing trade: ‘Trade is bad, trade is bad, trade is costing us jobs.’ That’s not thoughtful. That is knee-jerk.”

That says it for both parties’ protectionist impulses. Voters have almost always harbored anxieties about the Other outside our shores, hungrily eyeing our jobs and snapping up our paychecks. NAFTA passed only narrowly; piecemeal tough-on-China bills never have trouble becoming law. It’s easier to demagogue these issues than to confront the economic and cultural dislocations in a post-industrial America.

The Democrats mounted their comeback in 2006 with no vision for entitlement reform or tax reform that could pay for, say, universal health care. Republicans are convinced that they can move on from national security and terrorism mistakes by focusing on an issue that has always sparked anxieties. Our elected representatives are turning away from open borders and open markets not because openness has failed but because the politicians have.