Free trade

Free traders are worried that unions will push Obama to adopt protectionist policies.

And the leaders of the G-20 should take note: Mr. Gerard and his fellow labor leaders are just getting started.

While labor’s opposition to free trade is nothing new, having an ear in the White House is. The Obama administration, though it says it supports free trade, has so far seemed more aligned with labor’s trade agenda than has any administration in decades.

Let's review the charges against labor:

- The steelworkers' union pushed Obama to impose tariffs on Chinese tires. A provision of the legislation that admitted China to the WTO allows the US to do this when there is disruption in an industry. If we're not going to enforce this provision, why was it included in the legislation? Furthermore, China imposes a slew of protectionist policies that affect US goods. Shouldn't we use the tools at our disposal to get them to eliminate these provisions?

- Unions want border adjustment taxes to be included in climate change legislation. If the US adopts a cap-and-trade system to regulate greenhouse gas emissions, US manufacturers will be at a disadvantage relative to manufacturers in China, India, and other countries without such a system. This is the main reason climate change legislation generates so much opposition. Compensatory tariffs would have the effect of raising the price of imported goods by the same amount as if the producing countries had signed onto cap-and-trade. As Paul Krugman argues, this makes perfect economic sense and it is legal under WTO. Also, by imposing a system in which Chinese manufacturers are subject to high prices for carbon emissions, yet the revenue generated by those restrictions goes to the US, imposing these border adjustments may be just the tool to encourage China to sign on to a global emissions reduction system.

- The steelmakers' union is pushing many individual trade cases. Well, China subsidizes many of its exports illegally. The Commerce Department imposes tariffs when it finds evidence of illegal subsidies.

After so many decades in which labor has taken it on the chin, I'm going to tolerate some push-back for awhile.

Tom Tomorrow weighs in on David Brooks' column

Tom Tomorrow sez:

David Brooks was out jogging on the mall and saw some teabaggers interacting with actual black people, and because no one was literally shouting the n-word or fashioning a noose, he concludes that racism plays absolutely no part in whatever it is that drives this — well, I almost wrote “political movement” but I’m not sure you can dignify it as such. It’s really more of a mass temper tantrum.

Be sure to watch the video clip at the bottom of his column. It's a little bit frightening.

David Brooks on race and the anti-Obama backlash

I expect that the left-of-center blogosphere will jump on today's column by David Brooks soon enough. Let's see if I can point out the absurdities of the column before anyone else.



Brooks says it is not racism that motivates the town hall protesters, tea partiers, and marchers on Washington opposed to "Obamacare" in particular and creeping socialism in general. His evidence for this claim is that last weekend he saw white anti-Obama protesters mixing with black African American family reunion celebrators on the Mall. Brooks believes that the protests against Obama have a more distinguished lineage that can be traced back to the dispute between Hamilton and Jefferson over the nature of the American republic:



Hamiltonians stood for urbanism, industrialism and federal power. Jeffersonians were suspicious of urban elites and financial concentration and believed in small-town virtues and limited government. Jefferson advocated “a wise and frugal government” that will keep people from hurting each other, but will otherwise leave them free and “shall not take from the mouth of labor the bread it has earned.”



And it has always had the same morality, which the historian Michael Kazin has called producerism. The idea is that free labor is the essence of Americanism. Hard-working ordinary people, who create wealth in material ways, are the moral backbone of the country. In this free, capitalist nation, people should be held responsible for their own output. Money should not be redistributed to those who do not work, and it should not be sucked off by condescending, manipulative elites.



Barack Obama leads a government of the highly educated. His movement includes urban politicians, academics, Hollywood donors and information-age professionals. In his first few months, he has fused federal power with Wall Street, the auto industry, the health care industries and the energy sector.



Given all of this, it was guaranteed that he would spark a populist backlash, regardless of his skin color. And it was guaranteed that this backlash would be ill mannered, conspiratorial and over the top — since these movements always are, whether they were led by Huey Long, Father Coughlin or anybody else.



Let's start with the third paragraph reproduced above. Did not George W. Bush lead a government of highly educated people? Were there no urban politicians, academics, Hollywood donors and information age professionals in his movement? Did he not fuse federal power with Wall Street, etc.? Except for the fact that there are probably more black faces in positions of power under Obama, I don't see a lot of demographic differences. What I do see is one administration that to some people looks black and scary and wants to do things to benefit marginalized groups, versus the previous administration that looked to those same people white, southern, and comforting, whose interest was in preserving the prevailing social order. White middle class conservatives did not rise in opposition to Bush because he was one of them - Obama represents the Other.



Now for Brooks' blinkered view of history. Can it really be true that when Brooks looks out over the crowds on the Mall or at the town hall crazies and tea partiers, he sees noble early 19th century Jeffersonian farmers rebelling against urban industrial elites? I see the reflection of grimmer historical movements: the crowds in Little Rock who didn't want the federal government telling them to integrate their schools; the white middle class voters in the 1960s who, repulsed by urban riots, led a backlash that scuttled the Great Society and brought Richard Nixon to power; the anti-busing movement in the 1970s; the militia movement in the 1990s. These movements too were grounded in a particular vision of the American republic: one in which local majorities could impose a particular social order on their communities free from the interference of the federal government. That social order, of course, was rooted in race. Time and time again in American history, the white middle class rebels when it feels its position at the top of that social order is threatened by the intercession of the federal government.



I don't believe that all, or even most of the anti-Obama protesters are explicitly racist. But the anger and fear has its origins in the long history of race relations in the U.S. Surely Brooks would see this if he looked at the symbols around which the protesters are rallying: secession, nullification, the 10th amendment. These are arguments that trace back to John C. Calhoun and Orval Faubus, not Thomas Jefferson.

Public Policy Major FAQ

I sat down with one of the sponsors of the motion to establish a major in Public Policy to ask some pressing questions. Here are his responses.

Q: Does the motion create death panels?

A: No.

Q: How can you support a motion that creates death panels? Doesn't that make you a Nazi?

A: I do not support such a motion. I am not a Nazi.

Q: But here on page 36 of the motion it clearly states, and I quote, "Death panels will be established."

A: There is no page 36. The motion has only one page.

Q: But my point is, is there anything in the motion that guarantees that there will be no death panels in the future?

A: Um, no, but...

Q: So you admit there MIGHT be death panels?

A: Um...

Q: Didn't Adolph Hitler major in Public Policy?

A: I don't know. Er, can we move to a different topic?

Q: Sure. Tell me this, is the Public Policy major just a public policy option, or is it a public policy mandate?

A: Finally, some reasonable questions. The Public Policy major is just an option. No one will be required to major in Public Policy.

Q: But what is there to guarantee that the Public Policy major won't drive other majors out of business, so that eventually no one will have any choice but to major in Public Policy. Isn't that the real threat here?

A: In principle yes, that might be a problem. But we have intentionally designed the major to be so weak and uninteresting that most students will choose to major in something else. We estimate that only five percent of students will want to major in Public Policy.

Q: Still, isn't it true that 41 percent of the faculty representing the smallest departments on campus will refuse to support any Public Policy major, even if it is optional?

A: That is a possibility. We are exploring an alternative in which we create a large number of floating Public Policy study groups that aren't really majors but give students the illusion that they are doing something valuable with their time.

Q: Well, that's not going to fly. Sounds like socialism to me. One last question: will illegal immigrants be allowed to major in Public Policy?

A: No, the motion specifically prohibits illegal immigrants from majoring in Public Policy.

Q: You lie!

A bold suggestion from the Chronicle of Higher Education

The Percolator blog: Let's Stop Publishing Research Papers

Percolator blog, I'm way ahead of you!

More on Obama's trade strategy

The Obama Administration's decision to impose tariffs on tires should not come as a surprise. Testimony by the U.S. Trade Representative Ron Kirk in March and the Administration's official statements of its trade policy since January suggest that the Administration would take advantage of authority it has under current trade agreements to push US trading partners on issues of concern to the US. Edward Gresser advises us not to hyperventilate about the tire decision - similar actions have been taken frequently by previous presidents and by other countries.

Each year the World Trade Organization counts 100 to 200 of them [temporary tariffs] around the world, usually imposed through the “anti-dumping” and “countervailing duty” laws many countries have passed to defend industries against predatory export practices, such as below-cost sales and government subsidies.

India is the most frequent user of these laws, imposing about 30 anti-dumping penalties a year since 2000. The United States is a bit less enthusiastic, imposing about 15 anti-dumping cases a year. China and the European Union also record about 15 cases a year. According to the U.S. Commerce Department, China now maintains penalty tariffs like these on 17 types of American goods, including tariffs ranging up to 46 percent on optical fiber, 61 percent on Spandex, and 91 percent on chloroform. And a week before the administration’s tariff decision, in fact, the Chinese Commerce Ministry renewed anti-dumping tariffs on a grade of Russian, Japanese and Korean rubber known as “styrene butadiene” used precisely to make automobile tires.

Why are free traders such cowards?

Ok, so there's a good chance that imposing a tariff on tires imported from China is bad economic policy. But for many commentators left and right, any assault no matter how trivial on the fortress of free trade brings a response ranging from hand-wringing to apoplectic. Not only is this bad for consumers - it might ignite a TRADE WAR! Oh my God, we must not do anything that might provoke retaliation! Look, China is already retaliating by talking about restricting imports of chicken products - this could lead to another GREAT DEPRESSION!

The opening of trade with China in the 1990s was a momentous act. It benefitted the U.S. in many ways, but also imposed costs on some sectors of our economy. There are good arguments for continuing to restrict trade with China in some areas - (1) while in the end free trade will benefit all, because it comes with costs the opening should be done gradually in order to give US producers time to adjust; (2) China restricts imports of US goods; we can use tariffs as a diplomatic tool to persuade them to adopt a more open trade policy, which will make us all better off in the long run; (3) China's export-driven growth strategy and the exchange rate policy that is an integral part thereof contribute to global macroeconomic imbalances; we can use tariffs as a diplomatic tool to persuade them to modify these policies.

Perhaps the tire tariffs is simply a craven move to pay off Obama's supporters in the labor movement. It might, on the other hand, be part of a strategy to force concessions from China on trade policy that would benefit the U.S. in the long run. (This testimony by Richard Trumka from a few years ago, for example, suggests there's a longer-term strategy than simply protecting jobs in dying industries.) If so, there's no need to panic when every once in awhile our government throws some elbows around. It's how one negotiates with a tough adversary.

Imagine if the same attitude were taken in national security policy. What, Obama has criticized Iran's leaders for its treatment of protesters? MY GOD, WHAT IF THE IRANIANS RETALIATE? THIS COULD MEAN WAR!! CALL OFF THE ATTACK DOGS AND APOLOGIZE!