The free trade debate: democracy against itself

President Obama is feuding this month with one of the most popular U.S. Senators of his own party, Elizabeth Warren of Massachusetts. Touted often as the anti-Hillary, Warren may not challenge Clinton next year for the presidential nomination but continues to stake positions to the left of Clinton and Obama. She opposes the latest "fast track" legislation empowering the President to negotiate trade deals requiring only bare-majority approval from the Senate. Her concern is that the latest trade deal would empower an international body to sanction signatory countries in a way that could serve to gut purely domestic regulations on business and finance. Her stated worry is that, since the grant of fast-track authority will extend for six years, then a Republican President, should one be elected next year, could negotiate international trade deals in a way designed to undermine the American regulatory order. But while her rhetoric presumably emphasizes what a Republican might do, the fact remains that the current Democratic president supports the bill while dismissing her concerns as baseless theoretical speculation and her opposition as political showmanship.

Trade deals are mainly about opening markets to American goods, and their advocates take it on faith that more exports to more markets mean more jobs for Americans. But ever since Ross Perot heard that giant sucking sound back in the 1990s that optimistic premise has been challenged by populists on the left and right who believe the opening of markets to foreign goods on more favorable terms means less jobs for Americans. Obama has been promoting his trade deal by promising more jobs; he even cajoled the head of Nike to pledge the creation of 10,000 American jobs after the trade deal is ratified. Skeptics are less impressed by Nike's promises than the prospects for people likely to lose jobs to global competition. Is Nike going to hire them?

Obama isn't simply following in Bill Clinton's footsteps but affirming the Democratic party's historic commitment to free trade. During the 19th century, when the defining issue in politics often was trade, the Democrats consistently favored free trade, meaning the minimization or elimination of tariffs, while the Whigs and the Republicans preferred protectionist policies. The dispute really goes back to Jefferson and Hamilton, the latter advocating protectionist policies from the beginning as necessary to the growth of an industrial sector, the former seeing them as mere favoritism for what we'd now call special interests. The original Democratic party was a coalition of Southern planters and working-class Northerners concentrated in the big cities where many jobs depended on foreign trade. These groups saw protectionism as nothing more than robbing Peter to pay Paul, while the protectionists accused them of having merely personal or parochial rather than national interests in mind. In the 20th century the Democrats won over a larger working class whose jobs depended on the health of the manufacturing sector. As the manufacturing sector declined due to global competition, more Democrats became protectionists. As Republicans became more ideologically committed to laissez-faire politics in contradistinction to socialism, many grew more committed to free trade.

Protectionists in both the Democratic and Republican parties today are often described as populists. Trade policy divides Americans along different lines than other political controversies. A "populist" constituency favors protectionism, reluctant to sacrifice a single American job to the ideal (or ideology) of free trade, while libertarians (and many "liberals") believe free trade is "fair" in some sense or other, whether by creating opportunities for poor people around the world -- presumably including the U.S. -- or by rewarding the best competitors, wherever they are. Complicating the debate further is a kind of ideology we might call consumerist democracy. This ideology presumes that consumers benefit from free trade either through lower prices or through competitive improvements in product quality -- if not both ways. Since in many if not all sectors of the economy consumers outnumber producers, consumerist democracy invariably favors free trade and sees protectionists as the oldtime Democrats did, as mere special interests. Republican consumerist democracy -- George Will is perhaps its most-read advocate -- presumes that increased competitiveness always benefits the consumer, so that if trade deals force changes to regulations that hamper American competitiveness, as Warren fears, so much better for the consumer.  Protectionists are likely to regard consumer interests as selfish rather than patriotic, but consumerists most likely return the favor, assuming that protectionists put individual job security above the interests of the consumer majority and the overall health of the economy. Who is the majority and who is selfish? The answer isn't as simple as an appeal to majority rule, since it really depends on how the majority defines itself. If most of us think of ourselves as consumers first, protectionists are likely to lose every time. Should we not think of ourselves as consumers first? If so, why not, and how should we see ourselves instead? "Right" and "left" don't necessarily have answers to these questions, as you might guess from the way each major party splits on trade issues and the way reporters have to resort to alternate labels to describe the disagreements. But trade policy is arguably a defining issue for any nation, regardless of whether its parties and factions can address it coherently or not, and the fact that our major parties become incoherent when debating trade policy should have clued us in some time ago, as Perot suggested, that neither one is adequate to the defining challenges of our time.