Economy & Business

The Corner

Free Trade and ‘Elites’

In response to Poetry

Is free trade an “elite” concern? I touch on the question a little bit in my piece today.

A few additional thoughts:

As a working public-policy issue, free trade — necessarily implemented through big, clunky bilateral and multilateral trade agreements — is indeed an elite issue, something of deep interest to Davos Man, people who read The Economist, people who work in multinational corporations and NGOs. Agreements such as the Trans-Pacific Partnership (recently renamed the Comprehensive and Progressive Agreement for a Trans-Pacific Partnership) tend to be supported and advanced by people who think of themselves as cosmopolitans. They tend to be opposed by people who think of themselves as nationalists and populists.

Elite opinion is of course by no means uniform. Our friend Daniel Hannan is a free-trading immigration-friendly classical liberal who also is an important Brexit leader, putting his estoca right into the middle of a very sacred elite bovine, the European Union. But it isn’t exactly raging nationalism for an Englishman to believe that the United Kingdom should be governed from London rather than from Brussels.

With the American Right having a populist convulsion, there is an opening on the center-left for a politics that unapologetically supports free trade and that does not hold in contempt and horror what is called, sometimes darkly, “globalization,” which means only expanded human cooperation across national borders. The Democratic party, long in the grip of the nation’s union bosses (who are today almost comically atavistic figures; does Richard Trumka strike you as the future of anything?) has traditionally held free trade at arm’s length in the interest of protecting politically sensitive domestic business interests. Even Bill Clinton, the business-friendly “New Democrat,” initially was a reluctant supporter of NAFTA.

But the American economy today is not dominated by the Teamsters and the UAW. It is dominated by high-tech firms that are at least culturally progressive. And, as Democrats enjoy reminding their Republican friends from Kansas, the Democrat-leaning parts of the country are very productive. (In the interests of accuracy, it matters a great deal whether one is talking about blue states or blue ZIP codes; California is very productive, Detroit is not.) The ten largest U.S. companies in 2017 were headquartered in: California (four), Washington (two), and one each in New York, New Jersey, Nebraska, and Texas. Sean Hannity gets a lot of mileage out of denouncing “elites,” and that populist rhetoric has successfully turned much of the Republican party against free-trade accords. But one wonders whether a Stanford graduate earning $700,000 a year working at Google with colleagues from 30 countries while taking a dozen trips abroad annually is going to recoil from charges of “elitism.” Some of his colleagues (particularly the more junior ones) may resent H1B competition in the high-tech labor market, but they also understand the value of economic exchange among the United States, India, Japan, the Republic of Korea, Canada, the United Kingdom, the European Union, etc.

Put another way, the Democrats ought to think of being the party of free-trade accords the same way they think of being the party of climate-change accords, i.e., the party of responsible American leadership in global affairs. (Even if they overestimate the value of those climate-change accords.) With the GOP going full yahoo, there is an opening in the market.

Ronald Reagan’s prestige was greatly enhanced by his relationship with Margaret Thatcher, Pope John Paul II, Lech Walesa, and other freedom-minded world leaders who looked to the United States for inspiration, guidance, and aid in their time of need. Bill Clinton’s prestige was similarly enhanced by his partnership with Tony Blair, and by the belief (however imperfectly realized) that those around the world working on pressing global issues could count on finding an intelligent and enlightened partner in the United States. Surely someone in the Democratic party is clever enough to appreciate that — or at least to appreciate that a center-left politician in 2018 is better off throwing in with Larry Page than with Richard Trumka.

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