Once again, economic nationalism is all the rage during an election cycle. Barack Obama and Hillary Clinton seem to have devoted much of the last week vociferously denouncing NAFTA and free trade in general. However, the true question is whether either of them actually believe what they are saying. For example, our friend Jimmy P. at U.S. News highlights a quote on globalization from Obama’s book:
We can try to slow globalization, but we can’t stop it. The U.S. economy is now so integrated with the rest of the world, and digital commerce so widespread, that it’s hard to imagine, much less enforce, an effective regime of protectionism. A tariff on imported steel may give temporary relief to U.S. steel producers, but it will make every U.S. manufacturer who uses steel in its products less competitive on the world market…. U.S. Border Patrol agents can’t interdict the services of a call center in India, or stop an electrical engineer in Prague from sending his work via email to a company in Dubuque. When it comes to trade, there are few borders left.
That hardly sounds like his rhetoric from the last several weeks. So either Obama doesn’t believe what he wrote or he doesn’t believe what he is saying. I think that it is the latter. He knows that by winning Ohio next week, he inches closer to pushing Hillary Clinton to the status of an also-ran and thus he is pandering to the economic unease of Ohioans. Additionally, economists of all stripes seem to agree that NAFTA is not the cause of Ohio’s economic woes (see, for example, Angry Bear and Mark Thoma) and there is no doubt that this group includes Obama’s economic advisor Austan Goolsbee.Meanwhile Steve Chapman highlights the myths about NAFTA:
What everyone forgets is that we got the best of that bargain, since our tariffs were very low to begin with.”Mexico had very good access to the U.S. market” already, says Charlene Barshefsky, who was U.S. Trade Representative in the Clinton administration. “What NAFTA did was level the playing field.” Critics complain that while exports to Mexico have risen, imports from Mexico have risen even faster.But that’s not because we embraced free trade. It’s because our economy has been more robust than theirs. Prosperous consumers buy more goods, from both home and abroad, than struggling consumers. Absent NAFTA, the trade imbalance with Mexico would not be smaller. It would be bigger.
Let’s hope that a President Obama’s views on trade would be more like those from his book and less like those in his recent speeches.