Economics as a discipline wields some ideological power through mystification. What is frequently referred to in media as “basic” economics is in fact loaded with ideological assumptions that often bear little resemblance to reality. Data for Progress (@DataProgress) is proud to host “econo-missed,” an economics advice column for the left, featuring a cast of young economics grad students and practitioners. Our latest comes from Ben Wolcott (@bbwolcott), a public policy grad student and campaign researcher at Make The Road, who originally started econo-missed and has graciously offered us the name. - Sean
For years, many folks on the left have been objecting to free-trade policies of both Republican and Democratic administrations, saying that lowering trade barriers hurts American workers. Now President Trump has scuttled the Trans-Pacific Partnership and raised tariffs on foreign imports, but I don't see anyone on the left applauding. What gives?
-- Bemused in Bethesda
Trump’s trade moves infuriate most mainstream economists, but beyond schadenfreude, there isn’t much to cheer from the left. That’s because Trump’s trade policy appears more driven by trying to score “points” in a xenophobic zero-sum game than helping American workers. Even when Trump’s policy preferences momentarily align with the left, such as when he scuttled the Trans-Pacific Partnership, he’s mostly trying to score short-term wins than help working people in the US or abroad.
For decades, the left has railed against free trade, a term that encompases institutions, policies, and politics that allow capital to move around the world as freely as possible in order to maximize profit. Unbridled free trade attacks economic sovereignty and encourages a race to the bottom in labor and environmental standards. Political elites sign free trade deals to create opportunities for the rich to get richer while trading away fundamental rights to control capital without being dragged in front of an international trade tribunal. Rather than simply reduce tariffs, most of these trade agreements come with huge strings attached, like imposing aggressive intellectual property rights restrictions. Unfortunately, unlike other kinds of international law, trade law has teeth. For example, intellectual property rights allow corporations to benefit from rent-seeking while depriving low-income countries of medicine.
Free trade has been a disruptive economic force for decades. It’s much easier to oppose the expansion of that force than it is to know how to transform it. While Trump has taken up some of the left’s criticisms, there are various ways to try to transform it. His piecemeal attempts to move towards a different system have been more corporatist and xenophobic than leftist.
First, Trump supports corporate boondoggles to prop up companies, such as when he declared mission accomplished at Carrier after getting the state of Indiana to give $7 million to entice the furnace maker to keep 1,100 jobs. While Trump strode through the plant, he said, “Companies are not going to leave the United States any more without consequences. Not going to happen.” One-off deals make for good photo ops, but they aren’t policy, and they don’t change companies’ incentives.
Second, Trump has also been a big proponent of raising tariffs, tweeting, “Trade wars are good, and easy to win.” Tariffs function like a sales tax on foreign goods, and trade wars escalate when targeted countries respond by raising their own tariffs. In the past year, the price of washing machines in the US has gone up 13 percent, and Paul Krugman estimates that “all-out trade war could mean tariffs in the 30-60 percent range… [and] a 2-3% reduction in World GDP.” Given how many jobs could be lost as tariffs escalate, it’s not a tool to take lightly.
While conservative economists oppose tariffs in any instance, they can play an important role in both trade negotiations and in protecting strategic industries from excessive global competition. Unfortunately, the motivation behind Trump’s tariffs remains unclear, and it seems that Trump mostly wants to look like he’s standing up to China and other countries. In contrast, a successful leftist trade agenda would be a part of broader industrial policy designed to challenge the supremacy of capital and create good jobs for working people in the long-term.
If Trump has been consistent about anything on trade, it’s that the rest of the world has been taking advantage of the United States. Trump’s revisionist history is dangerous: the US wrote the rules of international trade so American companies could open and exploit foreign markets.
While Trump tries to score points by playing to xenophobia, a leftist trade platform would both fight to protect jobs domestically and aim to dismantle the institutions that undergird US imperialism, which prioritize the profit of multinational corporations above all else.
- Ben Wolcott (@bbwolcott),
To submit a questions to econo-missed please email firstname.lastname@example.org with “econo-missed” in the subject line.