Free Trade or Not; That is the Question...

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As America faces tough economic times and perceives the benefits of trade as being realized only by only the wealthiest of Americans and corporations the following article by David Frum in The Atlantic provides an interesting perspective on free trade in general an the Trans-Pacific Partnership (TPP) specifically. Regardless of your trade stance the article warrants attention.

The natural tendency of democratic societies is gradually to accumulate barriers to international trade. The Bush administration itself exemplified this: At the same time as it pleaded for fast-trade authority, it imposed restrictions on foreign steel. Relentless international action on trade liberalization offsets equally relentless domestic pressure for trade protection.

Freer trade is always a tough vote. As long ago as the 1960s, Barry Goldwater tried to make a campaign issue out of John F. Kennedy’s allegedly excessive trade liberalization. Yet from the 1940s through the 1990s, freer trade benefited from the almost unanimous elite consensus in its favor—and the strong public instinct to defer to elites when unanimous.

That deference has eroded. A recent Pew Research poll found that although 58 percent of Americans felt that free trade benefits the national economy, just 43 percent thought such deals benefited their own families finances. And pluralities of Americans believe that free trade slows economic growth, lowers wages, and leads to job losses.

These are responses that cause economists to roll their eyes. But most of us aren’t economists. We know what we experience—and what most Americans have experienced are many more foreign products on their shelves, a half-decade of weak job growth for Americans, and stagnating or declining living standards for all but the wealthiest.

Economic and political leaders can argue that the nation’s economic troubles are not traceable to free trade—that Americans would have been even worse off if they reverted to protectionism. The trouble is that Americans no longer trust their leaders. If polls can be relied upon, trust in leaders and institutions has plunged to the lowest levels ever recorded, lower even than during the dismal days of the mid-1970s.

The belief that the economic system is rigged in favor of the wealthy and that ordinary people can no longer get ahead run is especially intense. Americans increasingly perceive the rich getting richer, the poor getting poorer. Their view of business corporations has turned especially hostile, very nearly as hostile as their view of government.

Trade is a pro-growth policy. But when the proceeds of growth are not widely shared, and not perceived as widely shared, it becomes difficult to sustain the consensus in favor of pro-growth measures—especially when those measures seem to impose costs on American workers. That’s the warning in today’s congressional action.

For trade to be truly free it must be reasonably regulated.

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Via: Memeorandum