Thursday, March 31, 2016

The Narrative About Bernie Sanders and Foreign Trade is Simplistic and Wrong

by Neil H. Buchanan

My new Verdict column, "Why Clinton and Sanders Are Both Right (and Trump Is Wrong) About International Trade," extends some points about economic theory that I made in two Dorf on Law posts earlier this month (here and here).  In this post, I want to expand on the broad political point that I make in that column, regarding how the notion of "free trade" is treated by supposedly responsible journalists, pundits, and politicians.  That treatment is, in fact, irresponsible in how it portrays Senator Bernie Sanders's positions on trade policy.

My column draws a clear distinction between Donald Trump on one hand and the Democratic presidential candidates on the other.  Whereas Hillary Clinton and Bernie Sanders might both be attacked by self-styled free traders as being in favor of protectionism, they are both in fact engaging in an important debate about what types of policies will make us better off.  Calling something a "free trade agreement" is good marketing, but because of the economic incoherence of that idea (which I discuss in today's Verdict column), it is perfectly appropriate to question and sometimes oppose things called free trade agreements.

The two Democratic candidates are engaged in an intense political debate, which necessarily involves emphasizing each others' weak points and political vulnerabilities.  In the end, however, they are asking whether the United States should have handled the process of globalization differently, and whether we can steer a better path into the future.  That debate includes inquiries into how we treat the people who are left behind when jobs are lost to foreign competition, which means that the trade debate is not simply a matter of whether we would forbid trade (a clearly bad idea) but about managing trade and its consequences.  Globally engaged economic powerhouses like Germany do this better than we do.  Both Clinton and Sanders, in different ways, say that we need to improve.

Even so, Sanders is the one who is caricatured as the anti-free-trader, mostly because he is tying Clinton to her husband's lead role in ramming through the North American Free Trade Agreement (NAFTA).  Interestingly, a recent column by New York Times economics columnist Eduardo Porter claims that NAFTA actually saved U.S. jobs, thus chastising Sanders for shortsightedness.  "See, Bernie?  You say NAFTA was bad, but it was good, even on your own terms!"  It is a nice twist, but it ultimately fails.

The economic argument that Porter cites, from a prominent trade economist at UCSD, essentially says that the reason NAFTA saved jobs is that it turned North America into a large economic fortress in competition with China.  We lowered "our" labor costs by building cars in Mexico, the United States, and Canada, rather than continuing to build them in the U.S. and Canada.  Without that move, the argument goes, even the relatively high-paying jobs that remain in the U.S. and Canada would have been lost.  So we lost a battle but won the war.

This argument, of course, concedes many of the points that Sanders (and Clinton) are making.  Many U.S. jobs were lost, and we did a terrible job of dealing with the fallout of those job losses.  More interestingly, however, Porter points out that the reason China would have otherwise been able to crush the Big Three automakers is that "China ultimately bumped Mexico out of many American markets after Beijing entered the World Trade Organization in 2001."  But the WTO is simply another of the series of trade treaties that Sanders is contesting.  "Yo, Bernie, you were wrong about NAFTA.  It was really WTO," is hardly responsive to Sanders's (or Clinton's) point.

And Porter's further assertion that NAFTA is not really to blame, because the devaluation of the peso and bad internal economic policies in Mexico were proximate causes, is a tacit admission that trade policies need to be responsive to a wide range of economic and political developments.  He even brings in U.S. domestic policies, noting that "autoworkers in Detroit were ... also competing with American workers in the union-averse South, where many car companies set up shop."  But Sanders and Clinton are both in favor of stronger national labor laws that would address that very issue.

The two Democrats disagree on some important aspects of how to manage the U.S.'s role in the global economy, but they are both aware enough to know that we could have done better, and we should stop pretending that there is nothing that can be done in the face of globalization.  We cannot turn back the tides, but we can at least figure out a better way to adjust to them.

As I argued in today's Verdict column, even though there is no single right answer in the trade debate, there are definitely wrong answers.  As with so many issues, Donald Trump has nothing but wrong answers on trade.  The problem, from a political standpoint, is that too many people hear Trump attack NAFTA, and then they hear Sanders attack NAFTA, and then they conclude that they are saying the same thing.  They are not.

This false equivalence is further fed by the established media narrative that Sanders is the Democrats' version of Trump.  Republicans, in turn, delight in feeding that narrative.  Last week, for example, in a cringe-inducing appearance on "The Daily Show with Trevor Noah," Senator Lindsey Graham tried to acknowledge yet deflect criticism of the Republicans' remaining two terrible choices by referring to Clinton as "the most dishonest woman in America" and by agreeing that, although Ted Cruz is "partially crazy," "[t]hat works in Washington. We’ve got Bernie Sanders."  Yuk yuk.

The trash talk, however, is not merely coming from failed presidential candidates who are now viewed as reasonable voices in a party that has come completely unhinged, yet who still insist that the Democrats are just as bad.  Unfortunately, even people who are not in the political arena are committed to the idea that Trump and Sanders are ultimately engaged in the same irresponsible game.

An economic analysis column in yesterday's Times, for example, quotes Cornell economist Eswar Prasad, who claims that Trump and Sanders "are following in the footsteps of politicians of all stripes who have found it convenient to blame the boogeyman of unfair trade for domestic economic problems."  Prasad continues: "Tough talk on trade is an easy way to distract attention from taking on difficult domestic challenges."

Sanders is trying to "distract attention from taking on difficult domestic challenges"?  If anyone is willing to take on difficult domestic challenges, it's Bernie!  One might not agree with Sanders's views on any particular issue, but he is certainly not guilty of trying to get people to believe that the economy would otherwise have been just fine if only we had never passed NAFTA.

Who actually does that?  Donald Trump.  Or, at the very least, Trump has given us no sense of anything that he would do to improve the economy for average people, other than to throw out immigrants and Muslims.  (Trump's tax proposals, such as they are, are merely super-sized trickle-down economics.)

This is where the lazy Trump/Sanders equivalence is most frustrating.  Eduardo Porter, in the column that I discussed above, says that "a wall of tariffs against America’s southern neighbor would probably do more harm than good." But "a wall of tariffs" is not the only way to manage trade.  To make the Trump/Sanders link even stronger, Porter's next sentence hammers it home: "To be sure, Rust Belt voters drawn to Mr. Trump and Mr. Sanders are not wrong to be angry."

Bernie Sanders has argued repeatedly that there are many policy changes that could provide prosperity to a broad range of Americans who are feeling vulnerable and left behind.  As it happens, he is almost surely right, and he is willing to take positions that Clinton is not willing to take.  Even if he is wrong on any of his particular policy proposals, however, he is at least trying to address the bigger picture of how our economic policies -- not just trade treaties, but labor laws, financial regulations, educational support, infrastructure spending, and so on -- can be changed to make the lives of everyone better.  So is Hillary Clinton.

Again, neither Clinton nor Sanders is blind to the obligations that our treaties impose on us, nor would they treat the outside world as our economic enemy.  They are trying to determine how best to move forward.  The other guy is promising a return to an imaginary past, without even bothering to say how he would get us there.

Sanders isn't Trump.  The very idea that it is necessary to write such a thing indicates how degraded the political conversation has become, even among supposedly responsible people.


Aaron Jordan said...

I think you are giving Bernie too much credit here. You say Bernie is not blind to our treaty obligations; I don't hear that type of rhetoric from him. And if he isn't blind to this, than why does he keep demagoguing on trade? Either he is misleading people about the extent to what he can do, or he is blissfully unaware of the foreign policy consequences of undoing trade and investment treaties.

While Trump's rhetoric is much more be xenophobic, the trade policies of Trump and Sanders are the same. Obviously Trump is 1000 tunes worse on just about every other issue.

Garth Sullivan said...

i agree... well said. this piece would be a great cross post at daily kos...