Saturday, November 18, 2006

Democrats On Trade

The WSJ has commentary about the Democrat party position on protectionism. Apparently there is a debate within the party at this time. It is interesting to read that some notable Democrat Presidents did not warm up to protectionism:
"Amid the breakdown of the international trading system in the 1930s, the man who began to rebuild it was a Democratic Secretary of State, Cordell Hull. With FDR's support, he negotiated a series of bilateral trade deals that Harry Truman used as the basis for the revival of the multilateral trading system known as GATT in 1947.

Two decades later, John Kennedy pushed for freer trade with Latin America as part of his Alliance for Progress. And however reluctant at first, Bill Clinton eventually supported and signed Nafta, the creation of the World Trade Organization and most-favored-nation trading status with China. Mr. Clinton also refused to impose steel tariffs, a temptation that captured President Bush.

This is a proud pro-growth tradition, helping to keep America competitive as the world's greatest destination for capital and goods. The question now is whether Democrats newly elected to Congress will squander that legacy and turn to the populist, protectionist left. The early portents aren't encouraging."
Why might the Democrat party support protectionism and not free trade?
". . . Union politics, pure and simple. Once a free-trade supporter, the AFL-CIO began to turn protectionist in the 1960s and is now a relentless opponent of open global markets. Union leaders invested heavily in this past election, and they are boasting about the exit polls showing that nearly one in four voters last week came from a union household. Those voters went Democratic by more than 60%, and now union leaders expect legislative repayment."
Imagine that? Unions, a.k.a. labor monopolies, are protectionist and unions deliver significant numbers of votes for Democrat candidates. Of course, I think any public policy supported by a monopoly, especially a monopoly that primarily exists because the coercive power of government supports it, is most likely a policy that will not be economically efficient.

Maybe most of the Democrat politicians will turn against protectionism:
"We don't think there's much political profit in a protectionist turn. Whatever applause Democrats received from the AFL-CIO, they would lose as much support from business. They'd also advertise themselves as a party of a narrow special interest rather than the larger national good. This is why no truly protectionist candidate has won his party's Presidential nomination, Democrat or Republican, since Hoover. Voters have an instinctive sense that the only way to prosper is by competing in the global economy, not shrinking from it."
Maybe. On the other hand, whether voters have "an instinctive sense" for good economics or not (and I suspect "they" don't after the recent state votes with respect to minimum wages), economics suggest that most voters will be "rationally ignorant."

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