Kerry sells out on free trade
In his “Outsourcing goes two ways” Quick Takes on March 20, Don Rogers suggests that the rhetoric aimed at outsourcing, and by association free trade policies, is probably misguided.
While I agree with Don in the direction of his comments, I think he seriously misses the mark by failing to point out how incredibly misguided this type of thinking is. He missed a chance to spotlight the political duplicity that seems to underlie the Democratic Party and presidential candidate John Kerry’s convenient change of heart on the NAFTA free trade agreement.
The issue of free trade is not a new one. As early as 1662, Gerard de Malynes suggested to King James of England that free trade would have a positive impact on the economy of both England and their trading partners on the Continent. The issue has flared up repeatedly ever since.
In spite of the fact that trade barriers have been falling dramatically in almost all regions of the world since World War II, and in spite of the fact that the reduction of trade barriers has been a key factor in helping raise the world’s general standard of living, it is still convenient for some politicians to grab onto the issue in a thinly veiled attempt to grab votes.
It is unfortunate to see Democratic politicians using the issue as an emotional vote grabber as they ignore the preponderance of evidence and the counsel of most of the experts on the issue, the economists.
Milton and Rose Friedman, two of the most respected economists in the world, noted it is ironic that this debate still rages in spite of overwhelming acceptance by a large majority of the economic community. It is even more ironic that Bill Clinton, as he led the then Democratic Party drive to approve NAFTA, used this preponderance of support by the professional economic community as one of the underpinnings of his drive to get the NAFTA agreements approved by Congress.
The real impact of free trade agreements and the resulting benefit to the United States and to the rest of the world is relatively clear. While the Economic Policy Institute, which bills itself as a think tank for dealing with “research and ideas for working people” and is primarily supported by union contributions claimed in a 2001 white paper titled “NAFTA at Seven” that the NAFTA agreement has cost 766,300 U.S. jobs, a more balanced review of the evidence paints a dramatically different picture.
Let’s take a look at a few pieces of information drawn from government sources in the years immediately following the implementation of the NAFTA agreement.
A 1997 study by the Federal Reserve Bank of Chicago commissioned to study the impact of NAFTA found that under NAFTA, Mexico’s GDP is predicted to rise 3.26 percent, U.S. GDP will rise 0.24 percent, and Canada’s GDP will increase by 0.11 percent. What are the chances that these increases in the GDP translated into increased jobs? Of course they did.
The U.S. Department of Commerce has stated that every $1 billion increment in U.S. exports creates 22,800 new jobs in the United States. As noted by a number of sources, this would mean that U.S. export growth from 1993 to 1996 was responsible for creating over 5 million U.S. jobs, or 57.7 percent of the 8.8 million net new payroll jobs created by the U.S. economy during this three-year period.
That is hardly the impact that John Kerry and his new found labor friends would lead you to expect.
As of Feb. 24, 1997, 110,408 U.S. workers had been certified as eligible for training assistance under NAFTA’s Trade Adjustment Assistance Program, administered by the U.S. Department of Labor. The U.S. economy, however, currently creates this many net new jobs in about two weeks. The general U.S. unemployment rate declined from 7.5 percent in 1992 to 5.3 percent in 1996.
It is true that the economy has been tough over the past couple of years. But it has been down almost everywhere in the world and tagging the downturn to NAFTA rather than to 9/11, the Iraq war or to the Internet bubble is just plain silly.
So where is the damage that Kerry and his cohorts talk about? The answer is fairly simple. It is in the industries that are inefficient and that are not up to the levels demanded by international competition. For the free trade proponent, there is ample evidence to show that the general good is most often better off as a result of free trade. Alternatively, free trade opponents can always find numerous examples of individuals, companies and sometimes even industries where free trade has had a detrimental impact.
The issue was succinctly framed in a January 2004 article in the Washington Post in which Michael Kingsley wrote “Traditionally, the most troublesome thing about free trade – apart from the difficulty of convincing people that it works – is the unequal distribution of its benefits. The whole country is better off, but there are winners and losers. Generally, the losers are lower-income workers, whose jobs are the easiest to duplicate in less developed countries.”
Kingsley’s comments lead to a more important, broader question. In a situation in which the impact of an agreement like NAFTA is positive for the whole economy and provides significant job growth overall, is it right for the Kerry to switch his position just to garner the favor of those labor-supported industries that are operating inefficiently and in a protected environment drive prices up for all of us? And this point leads me to the greatest concern I have about Mr. Kerry.
This large concern with Mr. Kerry’s recent position on free trade is the inconsistency of his recent comments with his voting record. Even more significantly I have serious concerns about the message this convenient change of position sends about his political integrity. Walk through these key dates with me:
On Nov. 20, 1993, Sen. John Kerry voted in favor of the NAFTA agreement.
On Dec. 1, 1994 Sen. John Kerry voted in favor of the GATT free trade agreement.
On Sept. 19, 2000, Sen. John Kerry votes in favor of the China Permanent Normal Trade act.
On Dec. 1, 2002, Sen. John Kerry announces formation of his “investigative” committee to pursue the Democratic Party nomination for the President of the United States.
On July 31, 2003, Sen. John Kerry fails to vote on the free trade agreement with Chile.
On July 31, 2003, Sen. John Kerry fails to vote on a free trade agreement with Singapore.
On Aug. 23, 2003, Sen. John Kerry formally announces bid for Presidency.
Campaign trail 2004, Sen. Kerry repeatedly comments on the problems with NAFTA.
Kerry is careful to couch his position as a transition from his previous support for NAFTA. He hangs his new stance on straw issues of perceived abuse by our NAFTA partners of environmental and labor standards. He states in an interview with a prominent national business magazine that “The consensus (for free trade) has been fraying. The backlash is not only coming from American workers but from companies, too. Look at Boeing. It has been fleeced by Airbus’ subsidy structure, and we didn’t do anything about it.” Each week he seems to distance himself further and further form his voting record.
Frankly, Mr. Kerry, you insult me. Worse yet, you take a proud country and cast its citizens as fools. Don’t you understand that we pay attention to your voting record? Do you think we find convenient changes in position on issues that impact almost every person in our country as flexible? Or do you think we find them to calculating and at least marginally dishonest?
What happened between Dec. 1, 2002, and Aug. 23, 2003? Did you chance upon a huge amount of economic information that the rest of us are not aware of? Or did you just decide to run for president on the Democratic ticket and needed those union votes to make your campaign work?
Shame on you, Mr. Kerry. It is unfair to lay the burden of lower economic expectations and higher prices on the whole country just to garner a few votes in outmoded industries that have been hurt by increased competition. It is not fair to the working people of the United States to disavow an agreement that has had huge beneficial impacts on job growth for the majority of the working class just to protect jobs in inefficient unionized industries that can not compete on a world wide basis but that do have the wherewithal to make large contributions to your campaign and may be able to incite a significant, misguided voting total in your favor. It is not fair to conveniently find technical issues that allow you to move away from your previously strong support for free trade agreements such as NAFTA.
able to incite a significant, misguided voting total in your favor. It is not fair to conveniently find technical issues that allow you to move away from your previously strong support for free trade agreements such as NAFTA.
The American people deserve a leader who has the backbone to take difficult stands that match the ideals our country was founded upon. We deserve a leader that has the strength to come down on the side of issues benefiting the greater good even when there may be some disappoint to a small group of special interests. Isn’t that one of your mantras?
At the end of the day, John Kerry, the American people deserve better than you.
Steve Pope is the publisher of the Vail Daily. He can be reached at 949-0555, ext. 300, or at email@example.com