What to make of disturbing news

The WSJ had a disturbing poll this morning. The WSJ-NBC poll suggested that by a 2:1 margin GOP voters feel that free trade is bad for the US.

Over the last forty years or more we have gone through a period of trade liberalization that has been profound. In the early 1990s we passed, with the significant efforts of then Vice President Gore, NAFTA, which liberalized trade between the US, Canada and Mexico. Only seven years ago 37% of GOP respondents to a poll at the time said trade agreements had helped the US. The questions between the two polls were not identical. This new one asked two questions - "Foreign trade has been good for the U.S. economy, because demand for U.S. products abroad has resulted in economic growth and jobs for Americans here at home and provided more choices for consumers." and "Foreign trade has been bad for the U.S. economy, because imports from abroad have reduced demand for American-made goods, cost jobs here at home, and produced potentially unsafe products." 59% of the respondents thought the second statement came closer to their own sentiments. But as the Gallup Guru suggested today the interpretation of the results may not be accurate. The responses to a question which asks voters to choose one of two statements may or may not reflect true sentiment.

There are a couple of issues facing any advocate of free trade. The first is an economy that is in a pretty vigorous state of flux. Seeming key industries are under pressure and demagogues like Bernie Sanders, the socialist senator from Vermont, try to exploit that. We are moving away from making a lot of goods that we formerly made. At the same time, there have been some very recent hiccups (the China toy thing for one) which have raised the uncertainties of global markets in voter's minds. As global trade continues to grow standards will continue to advance.

Since Adam Smith supported the Act of Union, free trade has always had a dichotomous relationship to voters. On the one hand almost all economists (at least those not in the pocket of unions) argue that free trade is a benefit to societies who engage in it. Ricardo was right - we do gain from trade. But on the other hand the fear mongers like Sanders can generate irrational fears based on inadequate or erroneous data.

The Congress (remember that the opposite of Progress is Congress) has several pending free trade proposals before it. CAFTA (which extends the benefits of NAFTA to Central America, a pact with Korea and one with Columbia are among the most visible. But all are in jeopardy. The malaise that the WSJ poll suggests (whether the numbers are right or not) raises questions whether this long term trend which has aided the US for many decades is about to come to an end.

Keynes told a story in his memoirs about an earlier period of free trade when he could go anywhere on the European continent with ease. The world lurched into a period of WWI, and Smoot Hawley and other policy lapses that then plunged us into a period of declining trade. The regime began to change with Bretton Woods and a number of similar tracks in the post WWII era. That movement has provided huge benefits around the world. The state of progress seems to have stalled. Ricardo and Smith were right - trade does benefit us all, comparative advantage allows us to specialize and grow. It is too bad that some either to collect their rents or because of ignorance cannot get that.