Check out this story from the January 10th Wall Street Journal, http://on.wsj.com/1adgua
This story hasn’t been exactly buried, but because it’s not reached the boiling point it, it falls on page two or in the business sections of all media, where its exposure is limited.
This version of the free trade story, published in the Wall Street Journal on January 10th, is about a new trade pact, still in (an advanced state of) negotiations, called the Trans Pacific Trade Agreement (TPTA). It is a very high priority for the Obama Administration; the stuff of legacy.
Going back to the Clinton era, free trade measures, like NAFTA, have brought together a coalition of Republicans and Democrats who are true believers in the economic and political benefits of free trade. The foundation for free trade policies is threefold: (1) The efficiencies of “comparative advantage” among nations, with its roots in Classic Economic theory; (2) The belief that trade among nations helps avoid war, and promotes peace among the traders; and (3) The lore around “Smoot-Hawley” protectionist tariffs causing the Great Depression, passed from one generation to the next. Pretty powerful obstacles for anyone questioning free trade.
However, recent events, and political developments of the past several years, have dramatically changed the intellectual environment for free trade. I’m not talking just about the rants of Lou Dobbs and Pat Buchanan. Or Bernie Sanders attacks from the left. The splits here are different.
Here are the situations which alter the political environment for TPTA, “fast tracking” (requiring trade agreements to be voted either up or down in congress), and free trade:
1) The face-off between Boeing and the Machinists Union, brought “race to the bottom” to the fore in recent weeks. Boeing management has worked for years to lower workers’ compensation and weaken the Machinists Union. It says those actions are necessary for the company to compete internationally. Boeing won again in this latest round, though it wasn’t quite the rout the Union says it was. Liberals weren’t the only folks mad about the recent Boeing affair. Many conservatives are upset by the generous “tax preferences,” not available to all businesses in Washington State, that were given to Boeing, alongside the labor concessions, in order to keep jobs in the state.
2) “Free Trade” (and agreements like NAFTA) are blamed by many labor Democrats and, yes, also by a lot of Tea Party Populists, for stoking, if not inaugurating, the “race to the bottom.” More economists are also coming to that view.
3) The rise of “income inequality” as a central, defining issue of our time for liberals and left leaning economists, with a boost from the President and the Pope. Even Republicans, like Marco Rubio, acknowledge its importance, though disagree on how to solve it.
4) A resurgence of distress over America’s chronic foreign trade deficits, and the role of “currency manipulations” by China and other trading partners in fostering that.
All of these elements upset the normal collations that have defined politics in Washington for the last five years. TPTA, and especially the “fast tracking” of trade bills, will soon shake up Washington politics, along lines and outcomes which are hard to predict.