Trading on Resentment
“The ‘free trade’ policies championed by US leaders from Reagan to Obama, most definitely including the Clintons, have produced many victims.”
As the midterm elections approach, anger at Donald Trump is growing. Amplified by the conviction of Paul Manafort and the guilty plea of Michael Cohen, two of the president’s close advisers, the racket being raised by anti-Trump forces is reaching almost deafening levels. For voters opposed to the president, a clear Democratic victory on November 6 will mark the beginning of the end of the national nightmare: Robert Mueller’s investigation will continue and result in the dismissal of the crook currently installed in the White House.
But there are contradictions within the anti-Trump “resistance” that, although they may not help the Republicans retain a majority in the House of Representatives, run the risk of strengthening Trump’s support among a working class long ago abandoned by the Democratic Party. And those contradictions are shared, ironically enough, by elements of both the liberal left and the conservative right.
Our intellectual and electoral paradox pertains to some of the most vexing subjects, namely NAFTA, our trade relations with China, and the theology of “free trade” itself. On the left, we have the hysterical voice of Paul Krugman, winner of the Nobel Prize in Economics and star op-ed columnist of the New York Times. In August, he suggested that Trump and his militant supporters were within striking distance of a virtually fascist takeover of the United States government: “We’re currently sitting on a knife edge. If we fall off it in the wrong direction—specifically, if Republicans retain control of both houses of Congress in November—we will become another Poland or Hungary faster than you can imagine.”
The “free trade” policies championed by US leaders from Reagan to Obama, most definitely including the Clintons, have produced many victims. Krugman is supposed to be on the side of ordinary people, but as far as he’s concerned, those victims are just plain villains: “Don’t tell me about ‘economic anxiety.’ That’s not what happened in Poland, which grew steadily through the financial crisis and its aftermath. And it’s not what happened here in 2016: Study after study has found that racial resentment, not economic distress, drove Trump voters.” This argument is extraordinarily and, in the end, blindly foolish. Krugman seems to reflect the catechism lessons of David Ricardo and Adam Smith from his university days. He can’t acknowledge that many thousands of former factory employees in key Midwestern states voted for Obama in 2008 and 2012 and then opted for Trump in 2016. Unemployed or stagnating in badly paid jobs because much of American industry had relocated to low-wage Mexico and China, these same people also suffered after the 2008 financial crisis, which was partially caused by Bill Clinton’s deregulation of the financial sector. All racists, to be sure.
However, the Wall Street Journal, allegedly the ideological rival of Krugman and the Times, has been fiercely critical of the administration—despite Trump’s bias in favor of the rich—because of its attempts to establish a partial balance in the country’s enormous trade deficit by raising tariffs. An editorial dated August 28 expressed the Journal’s disgust for the “politically managed trade” in the American proposal of a new trade deal with Mexico to replace NAFTA, the current one. In order to retain the right to sell automobiles without tariffs in the US, the new deal stipulates that by 2023, forty percent of Mexican car parts must be manufactured by workers making a minimum of $16 an hour; the Journal finds this requirement particularly shocking and declares it “a political strategy to get a revised deal through Congress,” with provisions “that go far to imposing US-style labor laws on Mexico.” The horror! A possible raise in income for Mexican workers that could also benefit American trade unions!
A month later, the deal was superseded by the proposed new United States-Mexico-Canada Agreement, which applied the requirement of forty percent of parts and $16 an hour to Canada as well. In fact, such things have never before been part of trade negotiations. Usually, discussions of this type concern the best ways to protect private assets and exploit cheap labor. It seems that, to please the Democrats, the pure-blooded Republican Robert Lighthizer, the United States Trade Representative, has become a leftist. The height of betrayal; friends don’t do that to one another.
But what’s amiss in this scenario is that Krugman, a liberal economist and a spokesman for the Clinton-Obama faction, is more or less in agreement with the editorial page of the Wall Street Journal. During a conference at UNAM, the National Autonomous University of Mexico, in October 2017, Krugman called NAFTA “a partial success.” But here’s the essential part of his remarks: “If you ask if there was something wrong [or say that] there was a significant error in the treaty that should be fixed—in reality, I don’t see it, because that is the commitment of a free trade agreement…[It’s] not the salaries, because we can’t make salary demands in Canada or Mexico without destroying exports…”
My God, that’s rubbish. NAFTA is largely an investment compact that allows United States companies to manufacture goods cheaply in Mexico with protection from expropriation, political harassment, and labor strikes. It’s the United States that leads the dance, runs the show, dictates almost everything. And then there’s Donald Trump, enemy of the people and notorious double-dealer, successfully presenting the elites of the Democratic Party and the press as the real enemies of the people. A very bad omen indeed.
