The Third Way: Making the Case for Trade

By November 7, 2007Dobbs Watch, Trade

From The Politico:

“Today free trade is in free fall,” writes the centrist Democrat group Third Way in a report entitled “Why Lou Dobbs Is Winning,” to be released Wednesday.

The report’s authors target Dobbs, CNN’s resident populist anchor and commentator, as typical of a growing backlash against trade. And they fault the free trade community for allowing public perception of their efforts to become so negative.

“Our policies and arguments in defense of trade have stayed static in the last few decades — even as the world around us has changed dramatically,” write Anne Kim, John Lageson and Jim Kessler of Third Way.

Now, we like to mock Lou Dobbs as much as the next blog. (Obviously. We have a blog category, “Dobbs Watch.”) Dobbs IS a classic blowhard and populist bully, and on free trade he’s wrong. And yes, he has a big megaphone. But we also worry about lending him too much influence. He’s not why free trade is suffering as an issue.

The rise of anti-trade sentiment is a complex one, but certainly electoral politics play a key role. Organized labor’s place in the economy has slipped dramatically as membership numbers fall (7.4 percent of private sector workforce is unionized) and global competition and technology place a premium on flexibility and adaptability — not labor’s strengths. But labor still wields tremendous political influence through organization and its millions of dollars in campaign spending. With many Democrats frustrated at being out of power in Congress for a decade, the organizational and financial support of labor (as well as anti-war “netroots” and leftwing activists) became irresistable. And labor has just a few demands.

How are cool economic arguments about the benefits of trade, no matter how persuasive AND empirical, supposed to overcome that bald political self-interest?

Chicken/egg, we know. Which came first, the unpopularity of trade or the rising political influence of anti-trade forces? After reading economist Bryan Caplan’s “Myth of the Rational Voter: Why Democracies Choose Bad Policies” we’re inclined to think the former — that with an anti-market, anti-foreign bias, voters tend to oppose trade. It takes hard work by advocates and political leaders to overcome that bias, to win the arguments on behalf of prosperity and trade. And when the leaders bail out because of electoral self-interest, the work becomes even harder.

More about Third Way later.

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