Alan S. Blinder, a liberal economics professor at Princeton, wrote a major editorial about Free Trade for the Boston Globe on April 20, 2018. Titled “Why Economists like Free Trade but Politicians Don’t,” the article started from the odd assumption that U.S. politicians dislike Free Trade and have blocked attempts to implement the idea. Note that, in a recent post, I detailed the long history of U.S. political leaders implementing Free Trade principles. To set the record straight, I wrote the following Letter to the Editor, which the Boston Globe published on April 25th.
“One could never tell from reading Alan Blinder’s essay about Free Trade (April 20, 2018) that both Republicans and Democrats have supported free trade ideas since WWII. The Kennedy Rounds reducing tariffs, the overall General Agreement on Tariffs and Trade negotiations (known as GATT), and the North American Free Trade Agreement (NAFTA) are examples of U.S. free trade deals. The results are in: the U.S. has endured enormous trade deficits since the 1970s, with the deficit in 2016 surpassing $500 billion. Since the deficit is primarily in manufactured goods – TVs, cars, etc. – these deficits cost American manufacturing jobs. These are jobs that, in general, have higher pay and better benefits than retail and service jobs.
The Commerce Department, in 2014, said that every $1 billion in U.S. exports supported about 6,000 manufacturing jobs. Using that rough estimate, the deficit in 2016 displaced more than three million U.S. jobs. This is why, in the poll Blinder cites, 82 percent of Americans would pay a little more for merchandise made here: they live in towns and cities that have been damaged by the loss of manufacturing jobs; they know the downside of Free Trade. While Trump campaigned against Free Trade, so did Bernie Sanders, and we should hope that more politicians follow Bernie’s example.”
Professor Blinder is an important member of Democratic policy-making circles. In the 1990s he served as a member of President Clinton’s Council of Economic Advisers and was appointed by Clinton to serve as Vice Chairman of the Board of Governors of the Federal Reserve System. His essay is a good example of how the Third Way Democratic Party supports economic policies that aid the economic interests of mega banks, multi-national corporations, and other corporate entities that profit from Free Trade while brushing off those who point to the jobs lost and communities hurt by our enormous deficits.