However, for the sake of this argument, I just read a very interesting Pat Buchanan column that got me thinking.
I am an unabashed advocate of free trade. And I think that, on balance, a level playing field is a good thing for the MOST people. However, in re-assessing the situation, it's clear that the leveling of this playing field is coming at the expense of and not entirely to the benefit of the American worker and consumer.
Now that the U.S. trade deficit for 2005 has come in at $726 billion, the fourth straight all-time record, a question arises.
What constitutes failure for a free-trade policy? Or is there no such thing? Is free trade simply right no matter the results?
Last year, the United States ran a $202 billion trade deficit with China, the largest ever between two nations. We ran all-time record trade deficits with OPEC, the European Union, Japan, Canada and Latin America. The $50 billion deficit with Mexico was the largest since NAFTA passed and also the largest in history.
Buchanan cites further food for thought:
When NAFTA was up for a vote in 1993, the Clintonites and their GOP fellow-travelers said it would grow our trade surplus, raise Mexico's standard of living and reduce illegal immigration.
None of this happened. Indeed, the opposite occurred. Mexico's standard of living is lower than it was in 1993, the U.S. trade surplus has vanished, and America is being invaded. Mexico is now the primary source of narcotics entering the United States.
Buchanan makes the point that almost all of our job growth has been in the service sector, and since 2001, we've lost 17% of the total job base in the manufacturing sector. Even the knowledge based jobs in technology have been outsourced.
Now, the Adam Smith part of me would say that it is not the legislation and trade policies per se that have driven this failure, and that we simply need to be lower cost producers of many of the manufacturing jobs we've outsourced. I also personally believe that the current situation is also a direct legacy of blue collar unionism, which was resulting in higher structural costs than were viable. That's not to trash unions, but to state that I think there was a bubble of sorts in wages and benefits in the manufacturing sector that became an untenable situation and accelerated the outsourcing phenomenon. So when Buchanan talks about how real wages have not increased, that's both true but misleading on the surface. He doesn't get into a more detailed causal analysis in this column, but I know in reading one of his books that he has discussed it.
However, the root point is an interesting one.
If the US trade deficit is at an all-time high (again), and we are being negatively impacted in a host of other areas, is it reasonable to question the trade policy as flawed? Or is it simply that we are in the midst of a cyclical shift of sorts to which we've not fully adjusted?
I don't see any reforms from within a corrupt nation of Mexico, and the entire illegal immigration issue has become the single largest powder keg out there as far as I'm concerned. I harken back to our debate about the Canadian timber issue as well in that it was flawed trade policies that set the stage for that.
So what are your thoughts about this?
I must admit to being at an intellectual crossroads about free trade. Not due to a singular piece of commentary, but because the entire body of evidence is becoming pretty damning. We're losing our hard manufacturing capability. I think that's a national security issue to boot. We're also trading away--literally--our economic sovereignty for the sake of cheap plastic goods from China and elsewhere. Long term, something has to give.