How The Democrats Lost Touch On Trade
Party elites just got blindsided by their own working-class voters. Can they let go of their cherished globalist beliefs?
One of the most startling developments of this most peculiar campaign season has been the emergence of trade as an electrifying political issue. We're used to trade being the dry province of diplomats and academic economists—in large part because, for the past 20 years, trade policy has been a largely settled matter for the leadership of the two parties. On both sides, the signing of new trade agreements was long considered an obvious and unmitigated good thing.
Today, however, public fury over those same trade deals has become volcanic. Precious few Americans had even heard of the Trans-Pacific Partnership a year ago. Now, opposition to the deal is driving populists on both the left and right, and has even been adopted by the non-populist Hillary Clinton, a politician who has supported many such deals throughout her career.
We're discovering that the consensus on trade was always something of a Washington illusion, propped up by the support of business elites plus the appearance of professional unanimity among mainstream economists. Those who doubted were dismissed as throwback isolationists, or as deluded radicals like the protesters who tried to disrupt the World Trade Organization meetings in Seattle in 1999, or as union types who simply "didn't get it" (to use the favorite expression of the New Economy 1990s), anxious to protect their obsolete Rust Belt jobs.
How did the proud trade consensus crumble so quickly? Part of the answer lies in the destruction of economic authority generally in the aftermath of the 2008 financial crisis. The people who said they could perceive utopia in the trade deals of the past two decades were the same people who believed so unquestioningly in financial deregulation and balanced federal budgets.
But part of the answer lies in something Americans have a hard time talking about: class. Trade is a class issue. The trade agreements we have entered into over the past few decades have consistently harmed some Americans (manufacturing workers) while just as consistently benefiting others (owners and professionals). As a result, and more than almost any other issue, trade brings together the wealthy elements of both parties: the free-market business types in the GOP and the successful professionals among the Democrats.
Trade is an economic issue too, of course, but for members of the political class, where you stand on "free trade" is also a statement about who you are. Supporting trade deals highlights one's attitude of broad-minded tolerance toward other nations and cultures. It establishes one's knowledge of academic economics and one's communion with professional consensus.
In reality, trade deals are complex arrangements produced by lobbyists and negotiators who fight over every comma, but you wouldn't know it from reading mainstream commentary on trade. Thomas Friedman, the New York Times columnist, once famously said that he didn't have to know the details of a certain trade deal to write in support of it. "I just knew two words: free trade," and for him that was enough. Similarly, for the classes of people who run and write about our two political parties, trade deals are something abstract, something almost holy, a matter of being on the right side of history.
To understand "free trade" in such a way has made it difficult for people in the bubble of the consensus to acknowledge the actual consequences of the agreements we have negotiated over the years. That these deals have pounded American manufacturing employment, for example, is only now starting to dawn on certain elements of the commentary class. Elsewhere, as the economist Dean Baker has pointed out, we have a whole genre of punditry dedicated to resisting such knowledge, with the thinker in question squirming this way and that to downplay or come up with alternative explanations for what has happened to manufacturing in America, always seeking to get trade deals off the hook somehow.
Other unpleasant facts about trade have yet to make a dent in the consensus. That trade deals massively altered the balance of power between management and labor has not made its way into journals of mainstream opinion. That such deals aren't really about free trade at all is still only an unsettling concept at the dim boundaries of pundit awareness.
Mainstream centrist Democrats have a highly specific reason to evade criticism of our trade deals: a guilty conscience. After all, it was the 1993 fight over the North American Free Trade Agreement that saw the Clinton wing of the Democratic Party stick the knife deep into the back of its longtime ally, organized labor. Among labor types, the NAFTA betrayal, plus the many Democratic trade deals that followed, has rankled for years; whenever I talk to union members, bitterness over trade almost always comes welling to the surface.
For the Democrats who got their way with NAFTA, 1993 was a proud moment, an enormous victory in their struggle to transform the party into the vehicle of the supposedly enlightened professional class. Everything that followed over the next decade made sense, then: financial deregulation; a soaring stock market; a "New Economy" that showered great prosperity on well-educated, "creative class" workers. It all seemed inevitable, part of a beautiful Davos fairy tale in which high achievement and virtue became almost indistinguishable.
In reality, there is nothing noble or moral—or even inevitable—about the path that globalization has so far taken. The truth is that you could organize international trade in such a way as to benefit or to hurt almost any class or social cohort you chose to single out. As Baker has written, trade deals could just as easily be written to drive down the profits of the pharmaceutical industry, or the medical and legal professions, or virtually anyone else. Just imagine what such globalization would look like, as we imported cheap prescription drugs from India, making medication affordable for ordinary people, and bringing vigorous international competition to bear on some of our country's most grotesquely overpaid elites.
It now seems the public understood all these things better than the consensus crowd in Washington, and it was only a matter of time before politicians noticed. As they did, they peeled off millions of voters who sensed they had been poorly served by their leaders. Bernie Sanders didn't win the Democratic nomination, but his endless war against modern trade agreements forced Clinton to line up against a treaty she had once called the "gold standard" of trade deals. Donald Trump put trade high on his list of crucial American grievances, and despite his own personal habit of outsourcing production abroad, he managed to walk off with the largest share of the Republican electorate.
It may have been inevitable that the Davos consensus would eventually collapse. It's less clear what will emerge to take its place. Trump's proposals on trade don't amount to much beyond retaliating against companies that take advantage of NAFTA and a promise to negotiate "better" trade deals to replace our "horrible" ones. If Clinton is elected, she'll have the even stranger task of inventing a new Clintonism to replace the old Clintonism. Assuming she is in earnest about it, her first job will be to heal the fissure that her husband opened up in the Democratic Party—a gulf in some ways wider than anything the TPP was meant to bridge.
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