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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.

Millions Of Ordinary Americans Support Donald Trump. Here's Why
by Thomas Frank

TPP and NAFTA: Trump Is Speaking Against, Will Cancel TPP

homepage: homepage: http://www.politico.com/magazine/story/2016/09/2016-election-working-class-trade-tpp-trade-democrats-214219

The issue is not Hillary Clinton's Wall St links but Democrats' core dogmas 17.Sep.2016 12:58

Thomas Frank

The Democratic party rejected the New Deal and its stress on working-class Americans in favour of a technocratic elite - is it time for a political revolution?

Tuesday 16 February 2016 17.01 EST

President Franklin D Roosevelt signs the Industrial Control-Public Works Act at the White House in 1933. The Democratic party has struggled with the legacy of the New Deal for decades. Photograph: Associated Press

Stunned by the rise of Bernie Sanders, Hillary Clinton has been at pains to assure the Democratic rank and file that she too understands their concerns; that just like her rival, she is capable of denouncing wealthy interests, of promising to break up big banks and even of hinting that she might prosecute powerful financiers.

After her landslide defeat in New Hampshire last week, she conceded that "the way too many things were going just wasn't right". There was a difference between her and the senator from Vermont, however: she was the candidate who would get things done, who could "actually make the changes that make your lives better".

These are noble sentiments. Unfortunately, what voters are rejecting is not Hillary the Capable; it is the party whose leadership faction she represents as well as the direction in which our modern Democrats have been travelling for decades.

In my younger days, the Democratic party seemed always to be grappling with its identity, arguing over who they were and what they stood for all through the 1970s, the 1980s and into the 1990s. What Democrats had to turn away from, reformers of all stripes said in those days, was the supposedly obsolete legacy of the New Deal, with its fixation on working-class people. What had to be embraced, the party's reformers agreed, was the emerging post-industrial economy and in particular the winners of this new order: the highly educated professionals who populated its clean and innovative knowledge industries.

The figure that brought triumphant closure to that last internecine war was President Bill Clinton, who installed a new kind of Democratic administration in Washington. Rather than paying homage to the politics of Franklin Roosevelt, Clinton passed trade deals that defied and even injured the labor movement, once his party's leading constituency; he signed off on a measure that basically ended the federal welfare program; and he performed singular favors for the financial industry, the New Deal's great nemesis.

Among the legions of the respectable at the time, Bill Clinton's many reversals of Democratic tradition were thought to establish him as a figure of great historic significance. A telling example of this once-common view can be found in an admiring 1996 book by the then Guardian journalist Martin Walker, who asserted that the president's few failings were "in the end balanced and even outweighed by his part in finally sinking the untenable old consensus of the New Deal, and the crafting of a new one".

That Clintonian consensus, which slouches on in the bank bailouts and trade deals of recent years, is what deserves to be on the table in 2016, under the bright lights of public scrutiny at last. As we slide ever deeper into the abyss of inequality, it is beginning to dawn on us that sinking the New Deal consensus wasn't the best idea after all.

Unfortunately, focusing on the money being mustered behind Hillary Clinton by various lobbyists and Wall Street figures misses this point. The problem with establishment Democrats is not that they have been bribed by Goldman Sachs, Morgan Stanley and the rest; it's that many years ago they determined to supplant the GOP as the party of Wall Street - and also to bid for the favor the tech industry, and big pharma, and the telecoms, and the affluent professionals who toil in such places.

Consider the revolving door between Washington and Wall Street, which drew so much public outrage in the early days of the Obama administration ... or the revolving door between Washington and Silicon Valley, which has been turning briskly in recent years without much public notice at all. Or the deal the pharmaceutical companies got as a result of the Obamacare negotiations. Or the startlingly different ways in which Obama's Treasury Department treated beleaguered bankers and underwater homeowners. Or the amazing double standard his Justice Department seems to have erected for dishonest mortgage financiers and dishonest mortgage borrowers. Or the way office-holding Democrats of nearly every rank throw money at the people they call "innovators" while telling working-class Americans that little can be done about their ruined lives.

The reason Democrats treat these professionals so respectfully in everything from trade deals to urban bike paths is because that is simply who the Democrats are today. Read through the party's favorite works of political theory from the last few decades and you repeatedly encounter the same message: the highly credentialled experts and innovators at the top of the nation's hierarchy of achievement belong there by virtue of their brilliance. That these people also happen to be colleagues and classmates of leading Democrats only reinforces the party's identification with them. Liberals love to mock the One Percent and their self-serving ideology, but they themselves serve the needs of the top 10% just as blindly.

In truth, our affluent, establishment Democrats can no more be budged from their core dogmas - that education is the solution to all problems, that professionals deserve to lead, that the downfall of the working class is the inevitable price we pay for globalization - than creationists can be wooed away from the tenets of "intelligent design". The dogmas are simply too essential to their identity. Changing what the Democratic party stands for may ultimately require nothing less than what a certain Vermonter is calling a "political revolution".