Questioning free trade, Part Three

The economic crisis is causing far more Americans to rethink the last fifty years of national trade policy.

A poll conducted last year found that 51% of respondents held negative opinions of “free” trade, up from 35% in 2000.

The globalization of our economy has had bipartisan support, with Democratic President Bill Clinton pushing through controversial trade bills such as NAFTA.

But now only four in ten Americans, according to the CNN/Opinion Research survey, still believe that unfettered trade will stimulate economic growth.

Not surprisingly, those who wish to see America stay the course are terrified.

“This paints a picture of the Europeanization of America,” said Senate Minority Leader Mitch McConnell (R-KY).

Speaking of the Democratic Party’s stimulus plan, McConnell lamented:

“Where are we going to leave the country in 2 years if we take all of these steps. We will have taken a dramatic move in the direction of turning America into Western Europe.”

Gregory Mankiw, a Harvard economist and a former Bush advisor, penned a similarly jittery column for the New York Times arguing that the current crisis is “no time for protectionism.”

He laments the use of the term “fair trade” by Administration officials and offers the same tired assurances that exporting our industrial capacity to China benefits “the many millions of American consumers who prefer to pay less for the goods they buy.”

Mr. Makiw goes on to argue that any effort at fixing the trade imbalance will cause the Chinese to stop lending us money.

“As we sort through the wreckage of our own financial crisis,” he concludes, “a retreat into economic isolationism is one mistake we want to be sure not to repeat.”

What Mr. Makiw fails to explain is how American consumers can possibly buy products – cheap or otherwise — if they don’t have decent-paying jobs.

Our retail-and-service economy is collapsing, not because prices are too high, but because unemployment lines are growing by half a million jobs each month.

For years, criticism of the free-trade orthodoxy was limited to fringe groups, with almost no treatment in the mainstream press.

But in his new book, “The Tyranny of Dead Ideas,” Fortune magazine columnist Matt Miller describes the knee-jerk acceptance of free trade as a destructive ideology that is crippling America.

“Though millions of people may be hurt by foreign competition,” he writes, “we’re told the overall gains from free trade so outweigh any downside that it is folly to question its ultimate advantages.”

Unfortunately, President Obama has yet to confront this problem directly. No amount of stimulus can fix the country’s eroding industrial base.

Consider, for example, Mr. Obama’s vision of a new “green” economy or his plan to invest billions in education.

If his plan works, America will develop a new generation of whiz-kids clever enough to innovate revolutionary technologies that the world needs and will pay for.

But under our current trade model, the products we create will almost certainly be manufactured overseas.

Those shiny new wind turbines and hydrogen-powered cars – developed with billions of dollars of taxpayer investment — will come with the same old “Made In China” label.

So what do we do?

Tomorrow, we close this thread with a look at how a new trade approach might help America rebuild its industrial base.