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Is Free Trade immoral?

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  • Is Free Trade immoral?

    Is Free Trade Immoral?
    Let's dissect what Kerry and Edwards are really saying.

    Thursday, February 26, 2004 12:01 a.m. EST

    Trade is a "moral issue," declares Senator John Edwards. The Democratic Presidential candidate is in high dudgeon that "bad trade agreements," by which he means those signed by Bill Clinton, are stealing jobs away from American workers.

    It should be no surprise by now that his main competitor, Senator John Kerry, has responded by saying, "Me too." Just as Mr. Kerry parroted the rhetoric of Howard Dean on Iraq, the man who voted for Nafta now claims there is no difference between him and Mr. Edwards on trade. This scion of a Boston Brahmin family that made its fortune from the China trade is now accusing "Benedict Arnold companies and CEOs" of exporting American jobs.

    So the Democrats' main economic message for 2004 is that free trade is immoral and unpatriotic. Voters need to appreciate how rare and remarkable this is. The last Democrat to make this case was Walter Mondale in 1984, while the last candidate to win on a protectionist platform was Republican Herbert Hoover in 1928.

    This year the two Democrats argue that trade pacts that don't require other countries to adopt First World labor and environment standards either force the U.S. to lower its standards, as Mr. Edwards claims, or create an unlevel playing field on which American workers cannot compete, as Mr. Kerry says. Both want to close tax "loopholes" that supposedly encourage companies to move jobs overseas.

    We called the two campaigns to ask which labor and environmental standards should be forced on the rest of the world, but they wouldn't be specific. Nor would they elaborate on what loopholes in the tax code they want to close. Perhaps that is a good sign; the vaguer the fulminations against free trade, the easier they would be to repudiate later on, just as Mr. Clinton flip-flopped on China trade in his first year in office.
    The rhetoric is still worrying, however. Mixing morality and economics is a tricky business. As Adam Smith wrote, rather than relying on the benevolence of the baker to provide us our bread, we trust to his self-interest; the transaction benefits both parties. So it also is with trade, but the mistaken idea that selling is more virtuous than buying when the exchange is with foreigners continues to have mass appeal.

    When politicians who know better pander to this prejudice, the risk of trade wars increases and asset markets decline to account for that risk. If the Democrats campaign as protectionists through November, one of the first consequences of this "morality" could be the destruction of a large chunk of American wealth.

    One might also ask the Democrats, is it moral for a government to deprive Americans of their freedom to enhance their standard of living by buying foreign goods and services? Or is it moral to stop foreign people from working their way out of poverty by closing access to the U.S. market? The moral imperative of trade looked very different to John F. Kennedy, who proposed an Alliance for Progress to open the U.S. to goods from Latin America because reducing poverty saves lives.

    It is also hardly moral for the U.S. to foist its own policies on other democracies as a precondition for trade. Mr. Edwards complains that past trade deals allow companies to profit by "paying people pennies a day to work in disgusting conditions." Even if this is true in some places, the legacy of trade is that it raises living standards over time. In any case even the world's only superpower doesn't have the right to micromanage the developing world's economic policies, and it would be bitterly resented if it tried. Isn't that "unilateralism"?

    We doubt either Democrat would be able to rewrite past trade agreements. More worrying is that they'd stop the current momentum for new trade agreements, with significant damage to the U.S. economy. Notwithstanding the hand-wringing over Indian call centers, America is a world leader and innovator in services, and so both Presidents Bush and Clinton have pushed to liberalize trade in services. Freer trade would give some countries openings to export lower-level services to the U.S., reducing costs for consumers. But American workers would also benefit from new, higher-paying jobs as local service companies expand to serve a global market.
    If the Democrats really want to call free-traders immoral, perhaps we should look at the rights and wrongs of employment in America. A National Association of Manufacturers study two months ago found that the primary competitive challenge facing manufacturers was not competition from cheaper foreign workers, but the extra cost of doing business in the U.S.

    The costs contributing to the loss of jobs were high corporate tax rates, mandated employee benefits, tort litigation, regulatory compliance and energy. In other words, the Democrats' agenda of higher taxes, more regulation and coddling the tort lobby makes them the biggest sinners of all.

  • #2
    depends on what you are trading
    Official Sponsor of Jim Edmonds & John Smoltz


    • #3
      Originally posted by The Pocket Rockets@Feb 26 2004, 12:48 PM
      So the Democrats' main economic message for 2004 is that free trade is immoral and unpatriotic. Voters need to appreciate how rare and remarkable this is.
      Yes, remarkably fantastic for us Republicans. Ah, the Democrats and their cute little anti-free trade policies. Good times...
      Official Sponsor: Tyler Hansbrough and the North Carolina Tar Heels