Free Trade and the Tea Party: Puppets or Rebels?

My job deprives me of the luxury of partisanship, as I have to reach out to both sides on the issue of free trade--a disastrous policy one can give impeccably liberal or conservative reasons to be against. So I can't offer any opinion of the Tea Party movement per se. But I can tell you that the way they're handling the issue of free trade reveals a lot about them.

Over the last year, I've interacted with the Tea Party about the issue at both the local level and with some of their leadership. And I've observed a few things.

The main thing is just how utterly conflicted they are, in two very different ways.

The first way is simply that the base of the Tea Party has views of free trade very different from its Washington leadership, and very different from the Republicans they've elected to Congress. (In this respect, the Tea Party's base is not all that different from a lot of disappointed liberals who voted for Obama.)

Polls show that 61% of the grass roots of the Tea Party think free trade agreements have been bad for the country. (This is not a perfect proxy for free trade per se, but it's close enough to make the point, especially when these agreements are the flashpoints of the issue.) But there's no sign of such skepticism in their leadership, which seems to think that it's leading the Ayn Rand Party, not the Tea Party. The leadership is utterly gung-ho for new free trade agreements with Korea and now Panama and Colombia.

More importantly, the Tea Party's grass roots are themselves conflicted--between what they believe, and what they want.

What they believe about economics, if you ask them, is similar to what they say they believe about many other issues: America should return to this country's founding principles, get the overweening government out of the way, etc. It's the familiar classical liberal vision of society.

But if you ask them what they want in economics, i.e. what outcomes they want to see happen, you get a very different story: they want good jobs with good wages, an industrial base strong enough for us not to be beholden to foreign nations, no more endless accumulation of foreign debt, etc.

The problem here is that A doesn't follow from B. The reality, in both this country and abroad, both today and a hundred years ago, is that prosperous economies do not come from a pure less-government strategy. While government must respect its limits, every nation that has became a developed nation--and every nation that has stayed that way--has done so thanks to a long list of proactive government policies designed to make this happen. Laissez faire is simply false economic history.

This isn't just a liberal or Democratic insight, though obviously FDR and the New Deal would be obvious examples of effective government interventions. It's also a Republican insight, thanks to the interventionist policies of great Republican presidents like Lincoln ("give us a protective tariff and we will have the greatest country on earth") and Teddy "the trustbuster" Roosevelt.

Now here's where the Tea Party actually has a fighting chance to sort out its own conundrum, because, for all its intellectual limitations, it does at least claim to take history seriously. (By the way, the free trade issue will help reveal if this is, in fact, true.)

So if Tea Partiers ask, for example, what the Founding Fathers really thought about free trade, they will find out very fast that they were explicitly against it, thanks to Alexander Hamilton, America's first Treasury Secretary and the one serious economist among the Founders.

And if Tea Partiers want to get back to the original intent of the Constitution, Article I, Section 8 of the Constitution says plain as day that Congress has the power "to regulate commerce with foreign nations."

Clearly, a lot of the Tea Party grass roots already gets this. So--can this eventually put an end to the paradox that they have mostly elected Republicans who support free trade once in office? Obviously, that's a tough nut to crack, because conservatives in this country have a long history of being used as electoral cannon fodder by a corporate-centered Republican establishment that despises them and sniggers at their beliefs behind their backs.

But the Republican establishment doesn't have a magical grip on the Republican party. It has a grip that depends on certain finite kinds of institutional and financial power, and it has been challenged before. The most famous example, of course, is the revolt against liberal "Rockefeller" Republicanism that nominated Barry Goldwater and eventually put Ronald Reagan in the White House.

The Republican establishment has already lost a few battles in Republican primaries against the Tea Party. So it could quite possibly lose control of the party.

America's economic situation probably has to get quite a bit worse before trade will boil hot enough as an issue for this to happen, but this may, of course, be in the cards. And obviously there are huge risks involved whenever a populist insurgency takes over a party, as insurgents generally lack a lot of the political skill and prudential judgment that establishments, for all their flaws, bring to the table.

But yes, there is hope, and--to answer some of my liberal friends--no, the Tea Party is not entirely a puppet show orchestrated by selfish billionaires. Neither, as shown by its surprising willingness to countenance cuts in defense spending, is it a pack of mindless right-wing drones incapable of new thinking.

Somebody is going to have to save this country's economy from free trade, and honestly, I don't really care which end of the spectrum does it. If it turns out to be a right-wing-populist insurgency, liberals will have only themselves to blame for not having gotten the job done first.

Ian Fletcher is the author of the new book Free Trade Doesn’t Work: What Should Replace It and Why (USBIC, $24.95) He is an Adjunct Fellow at the San Francisco office of the U.S. Business and Industry Council, a Washington think tank founded in 1933. He was previously an economist in private practice, mostly serving hedge funds and private equity firms. He may be contacted at ian.fletcher@usbic.net

About:
http://www.prosperousamerica.org/ian_fletcher.html

Ian Fletcher is Senior Economist of the Coalition for a Prosperous America, a nationwide grass-roots organization dedicated to fixing America’s trade policies and comprising representatives from business, agriculture, and labor. He was previously Research Fellow at the U.S. Business and Industry Council, a Washington think tank founded in 1933 and before that, an economist in private practice serving mainly hedge funds and private equity firms. Educated at Columbia University and the University of Chicago, he lives in San Francisco.

Ian regularly writes blog posts on trade in popular online publications. His blogs can be read at The Huffington Post and Seeking Alpha.

So Huff-Post posters aren’t partisan. And people who work research for 1933 established industry councils don’t lean left...

http://www.americaneconomicalert.org/aboutus.asp

AmericanEconomicAlert.org was founded by the U.S. Business and Industry Council Educational Foundation, a 501(c)(3) not-for-profit research and educational organization dedicated to improving the American people’s awareness of critical public policy issues in such diverse fields as trade, taxation, education, health care, foreign relations, defense, and national security, among others. USBICEF is affiliated with the U.S. Business and Industry Council, a 501(c)(6) non-profit business association.

The U.S. Business and Industry Council is a national organization of business owners and executives dedicated to making the U.S. domestic economy the world’s leading engine of economic growth. The USBIC Educational Foundation is its research arm. Only a robust national economy, balanced in capabilities and dynamic in operation, can provide the material base for an American society that is stable at home and secure in the world.

The USBIC was founded in 1933 to represent the concerns of America’s small and medium-sized business community. Member companies are typically family-owned or privately held, mostly in the manufacturing sector. They are often the major employers in their home communities and the mainstays of the local economy. This membership composition has given the USBIC an outlook on issues more rooted in mainstream America than other national business groups, which are dominated by giant multinational corporations with global agendas and dwindling national loyalties.

Because it does not represent only a single industry, but has approximately 1,500 member companies in 44 states, USBIC has always based its policy positions on a national interest standard — i.e., the positions that it takes must be good for the country as a whole, both now and in terms of its future strength, rather than reflecting the narrow interests of a particular company or industry. USBIC favors lower taxes, since high hamper economic growth. Government levies on families, estates, and capital gains are particularly burdensome. It also opposes regulations that retard productive activities, especially in the development of new domestic energy sources that are needed to power a strong national economy.

Unlike many other business groups, USBIC is concerned about the impact of “globalization” on American society and independence. The huge and growing trade deficits undermine the country’s industrial base — including its defense industries, reduce personal incomes for most Americans, and threaten the financial system as indebtness to foreign corporations and governments mounts. The result is that the United States grows weaker as its vulnerabilities to overseas events increase.

The so-called philosophy of “globalization” with its emphasis on transnational organizations like the United Nations, the World Trade Organization, an International Criminal Court, and a web of suffocating agreements like the Kyoto Global Warming Treaty threaten U.S. sovereignty,which is the only firm guarantee of American liberty, values, and standard of living. As has been true since the dawn of the Industrial Revolution a quarter millennium ago, a strong economy and a strong defense go together, safeguarding the country and its people. USBIC is dedicated to keeping this connection in the forefront of American policy-making. If the United States is to maintain its pre-eminent position in the world, while continuing to prosper and advance traditional American values, it must adopt economic policies that focus on improving the productivity, capabilities, knowledge, and the wealth of the people who reside in this country

The United States must also act to advance its interests overseas; to maintain its access to resources and markets; to protect trade routes and allies; and to guard against aggression and adverse changes in the international balance of power. Building a strong national economy does not isolate America from the world, but on the contrary assures that America has the means to shape internatoinal events to its own advantage and deal with them on its own terms.

The USBIC Educational Foundation was founded in 1967 to be the research arm of USBIC and to educate both policy makers and the American public on issues of concern to USBIC member companies. To carry out this task in the area of international trade and ‘globalization,’ USBIC Educational Foundation started this web site in March 2001.

I wonder, what’s this group’s position on domestic drilling offshore and in ANWAR?

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