NAFTA Crosstalk

Yesterday, Canadian television reported that Obama advisors were telling Canada's ambassador in Washington not to take the candidate's NAFTA rhetoric too seriously. Now what really seems to have happened is that Austan Goolsbee tried to get someone from the Canadian consulate in Chicago to be a bit less worried about Obama. Whatever the details, this kind of ambiguous messaging is likely to recur time and again.

I recall being at a meeting in Cambridge, MA around the time of the 2004 Democratic Convention where John Kerry's top economic and foreign policy advisors were essentially promising a group of assembled ambassadors that all of his anti-trade rhetoric was just empty rhetoric. This seemed like a typically Kerryish thing to have happen, but it would serve Obama may to try to avoid the same kind of thing repeating.

Comments

"but it would serve Obama may to try to avoid the same kind of thing repeating."

classic

Posted by Mark | February 29, 2008 4:45 PM

The New York Times' Chris Suellentrop today quotes the Economist approvingly which fears that the two leading Democratic candidates may actually be somewhat liberal economically (i.e. scary "populists"), but don't worry, because they're probably just faking it, they hope -- such as would be suggested by this report.

http://opinionator.blogs.nytimes.com/2008/02/29/populists-of-yore/

The Economist warns that Obama sounds like an "anti-capitalist demagogue"; however, "His rival, Hillary Clinton, is no less responsible for the Democratic Party's wholesale descent into economic miserabilism."

And since all smart people always want Democrats to just play to the rubes but then ignore them once in office, the Economist speculates on the future:

Yet there are reasons to worry. The longer the Democratic race grinds on, the more entrenched the candidates may become in their populism. As America moves into the election proper, there is every likelihood that it will do so against a backdrop of worsening macroeconomic figures and rising numbers of house repossessions. Both John McCain and the Democratic nominee will then be chasing swing voters who are, typically, white working men—the type already prone to pessimism about their prospects. This group is not a natural part of Mr Obama's constituency and, if he were the nominee, he might well be tempted to keep the populism turned up high. If he were elected president, backed by a Democratic Congress with enhanced majorities, Mr Obama might well feel obliged to deliver on some of his promises. At the very least, the prospects for freer trade would then be dim.

But hopefully the good smart people will win, say the magic words to the right people, and the silly public won't get any real changes and will continue to hear that somehow things will just all work out best for them if they'll just stick with it.

Maybe if we're lucky we'll get some of that recycled rhetoric we used to give Africa & Latin America about "belt-tightening" and what not.

Posted by El Cid | February 29, 2008 4:55 PM

Can someone tell me if Goolsbee reached out to the ambassador, or was it the other way around? Because I don't understand why the Obama team would want to put them at ease immediately. Whereas some ambassador in Chicago getting all concerned and tracking Goolsbee down makes a lot more sense.

Canadians aren't voting in this election anytime soon, and if they were, team Clinton would surely tell us they don't count.

Posted by Jake | February 29, 2008 4:57 PM

At this point, Goolsbee is just denying the story.

“It is a totally inaccurate story,” he said. “I did not call these people and I direct you to the press office.”

Didn't stop the Clinton campaign from holding a press call about it though.

Posted by southpaw | February 29, 2008 5:01 PM

Obama's popularity depends on his perceived authenticity. He really, really can't afford the perception that he's telling gullible American voters one thing, and assuring foreigners of something else.

The Obama campaign has been admirably disciplined up until now. But this was a serious gaffe to start with, and poorly handled once the press got involved.

Obama seems to adapt and learn well. He'd better learn quickly from this one.

Posted by jbd | February 29, 2008 5:03 PM

Southpaw, as you can also find at TPM, he denied it to the NY Observer, but not to ABC. To them he said (as did the Canadian chap) that he was directed by the campaign not to comment. And recall that the campaign's first denial (per TPM) was a non-denial denial. I'm no Hillary supporter, but I think their handling of this story is damaging, and I think the whole business of ramping up protectionist rhetoric is just stupid. As a proud rust-belt Ohioan, those jobs just are not coming back, and pretending that renegotiating NAFTA will stem the tide of globalization in this regard is shameless, intellectually dishonest pandering by both campaigns.

Posted by Bill | February 29, 2008 5:08 PM

This is absolutely hilarious. I'm an economist, and I'd bet even money that the Goolsbee denial is a complete lie.

It makes perfect sense to me that he would have told his Canadian sources that it's just politics. There are very few mainstream economists who are opposed to free trade. End of story. Clinton's economists, Obama's economists, McCain's economists.

Let's put it this way: I believe the Goolsbee denial about as much as I believe Sen. Clinton's recent statements that she was secretly opposed to NAFTA during her husband's administration. That Clinton line sounded just as bogus to me when I heard it.

Posted by Dave | February 29, 2008 5:11 PM

The Financial Times is concerned about the Dems' populist/protectionist stances as well. See today's editorial, "Democrats’ cheap shots at Nafta". An excerpt:

Trade policy has no effect on net employment: you can as easily have full employment, or chronic unemployment, under autarky as under free trade. The purpose of liberal trade is not to “create jobs” – the term is a badge of economic illiteracy – but to change the pattern of work and raise living standards overall. As with new technology, there are winners and losers. The right policy is not to turn back integration, any more than it would be to ban the fork-lift truck. It is to ensure that the overall gains are widely shared and the victims get help.

The saddest thing is that the Democrats who understand this reasoning believe that the party’s supporters are too dull to grasp it, and must be fed some protectionist red meat. The challenge, they believe, is to pander to ignorance while doing the least harm. Good policy rarely happens that way. And is the logic of trade really so hard to grasp – or to sell? Bill Clinton gambled on making the forward-looking case for economic integration, and Nafta was one of his signal political wins. Today’s economic conditions are less favourable, to be sure, but the substance of the matter has not changed.

On this crucial issue, Mr Obama and the Democrats have been seized with a kind of intellectual and political cowardice. The implications of this lack of spine are grave – and extend beyond economics. The next Democratic administration promises to repair US alliances and standing in the world. A worthy aim. Yet its first act, the party says, will be to tell its closest neighbours that the rules they are all agreed to are defunct – and if they do not like it, tough luck.

Posted by Fred | February 29, 2008 5:13 PM

I became highly suspicious of Austan Goolsbee immediately after reading Megan McArdle rave about the guy.

Posted by Woody Bombay | February 29, 2008 5:16 PM

Bill:
The problem is we don't want Clinton or Obama entering into any more NAFTA type agreements again. We want fair trade, not free trade. Free Trade is just a euphemism for screwing over the little guy. After all, do Obama or Clinton have to deal with the effects of the trade deals?

Posted by Joe Klein's conscience | February 29, 2008 5:19 PM

The best case scenario, on this and other policies, is that Obama's political ambition is writing rhetorical checks to the Dem base he has no intentions of cashing.

What's most striking about this race to the radical left isn't Obama's positions -- he's always been a liberal Democrat -- it's Hillary matching him stride-for-stride. Apparently, all the time she spent serving as a centrist in the Senate was just opportunistic positioning for her eventual run for the White House. Not a huge surprise, of course, but the blatant contrast is still striking.

Posted by Fred | February 29, 2008 5:19 PM

I don't believe Goolsbee either. In fact, he has obviously been telling the University of Chicago economics faculty, The Economist and Megan McCardle the same thing he told the official at the Canadian consulate.

There is a foreign policy angle here. How can we as Canadians be expected to stick it out in Afghanistan if the new American administration is determined to wreck our economy (and that of a lot of border states as well).

Posted by Pithlord | February 29, 2008 5:21 PM

I can't comprehend what the upside of Obama people initiating that conversation would be. Canadians are up in arms! Who cares!

If you are just pandering, you can tell the Prime Minister that when you receive his conglatutory call on November 5. Until then, I would tend to think that winning over US voters takes precedence.

Posted by Gentle Reader | February 29, 2008 5:21 PM

Perhaps Senator Obama can wear a special hat when he is saying stuff that he doesn't mean in the least, just for the non-rubes in the audience. The question is whether he would wear it when he rips George W. Bush for alienating people in other countries, given Senator Obama advocates unilaterally repealing permanent treaties.

Posted by Will Allen | February 29, 2008 5:39 PM

I don't know Goolsbee and he may well be lying. But I'm inclined to give him the benefit of the doubt for this reason:

Neither the Canadians nor I need to hear from a highly placed adviser that Obama is being disingenuous on trade. I don't think it's too much to say that "Obama and Clinton are disingenuously pandering on trade" is conventional wisdom at this point. There is simply no need for Goolsbee to undertake a covert mission to reassure the Canadians on that score--our media is doing it free of charge.

Now, maybe the issue came up over lunch with a consulate employee or something and Goolsbee was a little too knowing and dismissive. I could believe something like that, and the campaign would be wise to clear it up in a transparent fashion. But the conceit that Goolsbee was dispatched to reassure our restive northern ally is just bizarre.

Posted by southpaw | February 29, 2008 5:44 PM

I was at that meeting in 2004 that Matthew mentioned and got to hear the ambassador's take afterwards. A lot of them weren't convinced by the dog and pony show actually, so the effort may not be useful after all.

Posted by lfo | February 29, 2008 5:46 PM

It occurs to me that the kinds of things Obama says he wants to enforce thru trade agreements - fair wages/safety/enviro standards, already exist in Canada, so the issue may be more or less moot. Maybe this was what Goolsbee was saying.

Posted by Brautigan | February 29, 2008 6:02 PM

No, it has little to do with that. It was Goolsbee trying to save face. He is the economic lead for Obama, so it looks bad for him when Obama attacks NAFTA.

Posted by Rob | February 29, 2008 6:15 PM

Could MattY be even more of an apologist? Could he be intellectually honest enough to note that Obama is on record as supporting Bush's SPP (spp.gov), aka "NAFTA on steroids"?

So, while Obama says one thing to Ohioans, one of his reps allegedly says something quite different to Canada. And, then they issue conflicting "denials"/"no comment"s.

And - no allegedly involved - he speaks in code to unknown persons, letting them know that he supports their NAFTA++ schemes.

Regarding the Bush scheme that Obama supports, see this video:

youtube.com/watch?v=Br31mdP8-Ug

Posted by TLB | February 29, 2008 6:19 PM

For those not yet used to ignoring Whack O'Mole's blogwhore links, a summary: Scary Mexicans! Eating tacos! In my city!

Posted by pseudonymous in nc | February 29, 2008 6:29 PM

You mean Obama isn't really a cross between Tiger Woods, Neo from "The Matrix," and Jonathan Livingstone Seagull? Are you telling us that he's actually a politician, and a Chicago politician to boot? I've never been more shocked in my life.

Posted by Steve Sailer | February 29, 2008 7:27 PM

The Financial Times:

The purpose of liberal trade is not to “create jobs” – the term is a badge of economic illiteracy – but to change the pattern of work and raise living standards overall.

Horseshit. The purpose of liberal trade is to allow unrestricted movement of capital, goods, services, and labor.

As with new technology, there are winners and losers.

True. The winners are those who can take best advantage of the movement. The losers cannot. A wage earner, and particularly one attempting to maintain a family, by and large cannot act to her advantage, but merely react to changing circumstances.

The right policy is not to turn back integration, [...]. It is to ensure that the overall gains are widely shared and the victims get help.

The "right" policy springs from one's POV. Much like anyone else, the primary holders of capital aren't particularly concerned about raising anyone's living standards but their own, and aren't interested in sharing their gains. They have the time and money to get their POV heard in Washington. Therefore, most victims have to self-help.

A wage-earning US citizen is for the most part unable to follow the flow of capital out of the country. That citizen has about 30 to 40 years to sell her labor before mental or physical fatigue and cultural age discrimination takes its toll. To get the most out of that time, she obviously tends to her career path, and looks for political candidates that claim to represent her interests.

A candidate who tells a wage earner that her earning potential will stay in flux during much of that time is often in for a hard sell. It ought to be, if the wage earner has any sense of self and family preservation.

A candidate may feel forced to tell different stories to the mass of voters and the economic elite to get elected, but that's their cross to carry. The Democratic Party's supporters aren't too dull to grasp the situation. Rather, they just aren't powerful enough ensure their POV is consistently represented, and have to make do with the pandering.

Posted by cmholm | February 29, 2008 8:06 PM

The purpose of liberal trade is to allow unrestricted movement of capital, goods, services, and labor.

I don't know of any U.S. trade agreements which allow the unrestricted movement of labor. Do you?

Posted by El Cid | February 29, 2008 8:19 PM

El Cid,

Only in my libertarian dreamworld. (The same one where more than 5% of the country agrees with me on anything)

The constitution guarantees free movement of goods and services among the states, but I don't think that's what cmholm had in mind.

Posted by heedless | February 29, 2008 9:32 PM

The Financial Times was referring to the theory of liberal trade, and I was responding to it.

Posted by cmholm | February 29, 2008 9:39 PM

cmholm,

I'd say that the free(er) movement of capital, goods, services and labor is the definition of liberalized trade. Those of us who support it believe that will cause a broad increase in people's standard of living. The purpose of our support is to deliver that benefits, with liberal trade simply a means to that end.

You may disagree (and I know El Cid does) about whether the increase in the general welfare is sufficient to offset the jobs lost in industries facing increased competition. But that is another debate entirely.

Posted by heedless | February 29, 2008 10:10 PM

"A wage-earning US citizen is for the most part unable to follow the flow of capital out of the country."

How many even try? In some cases, it would make sense to look for work overseas. For example, there is huge demand (and high wages) for blue collar labor in Canada's oil patch (the Canadians, in their wisdom, let their energy companies access Canada's natural resources). How many unemployed or under-employed Americans have gone to the nearest Canadian consulate and applied for a work visa? Another example is the aviation industry. Aviation is booming in Asia. A number of American pilots have gotten work overseas. How many aviation mechanics have tried to follow suit? The NY Times had an article a few years ago about some laid-off aviation mechanics here being counseled to take lower paying jobs in different industries. Why not encourage them to look overseas, and if there are visa issues, arrange for some sort of reciprocity for American work visas?

The other approach is to encourage more foreign employers to create high-paying jobs here in America, as Toyota, Honda, and others have.

Judging from the Democratic candidates' continual anecdotes we seem to have become a nation of helpless victims.

Posted by Fred | February 29, 2008 10:17 PM

I'll bet if you asked a gifted third grade class what could be the problem with a "free movement of people", somewhere close to half or more would point out all those things complete idiots like "heedless" forget to include. Such as the fact that such a "free movement" would result in strong, non-libertarian countries sending people here to basically colonize us.

It wouldn't be that far off the mark to consider "free" traders this century's equivalent of last century's Communist collaborateurs.

Posted by TLB | February 29, 2008 10:27 PM

"Fred" writes:

How many aviation mechanics have tried to follow suit?

Great idea! Millions of Americans can look for work in other countries, and they can send their money home so we can buy Chinese goods. Then, we can become dependent OnRemittances, and use proxies in those other countries to make sure that our American heroes are able to keep sending their money home.

(Special note to MattY: I know you don't understand the preceding, but that's a take-off on Mexico).

Posted by TLB | February 29, 2008 10:36 PM

I bet if you asked a gifted third grader the difference between a concise definition of liberal trade and a fully fledged national policy, they might be able to point out a few distinctions.

Between TLB and a John Bircher, not so much.

Posted by heedless | February 29, 2008 10:49 PM

Well goodness gracious, it appears that Holy St. Barack may actually just be another pandering politician, much like his arch-nemesis Hillary Satanus...

My faith in human nature and the American political system is forever destroyed!

Posted by RKU | February 29, 2008 10:52 PM

Mark Kleiman:

The Canadian network CTV reports that a senior staffer for the Obama campaign called the Canadian Ambassador to the US and said that he should ignore whatever Obama said about wanting to renegotiate NAFTA, because it was just for domestic consumption.

Obama denies it. The ambassador denies it. McCain, having first said he didn't know whether it was true, later decides to assume it is true and use it to attack Obama's integrity.

Turncoat Democrats are all over it; CTV originally stands by its story, which to fever-swamp residents like Taylor Marsh and Larry Johnson proves that it must be true. After all, since people in the Bush administration have told lies, anything a Canadian official says should be assumed to be false. (No, I don't follow that logic, either.)

Just one thing, though: the story reeks of fish, and CTV, far from standing behind it, is rapidly backing away from it. The original account vaguely mentions "Canadian sources." The follow-up, which includes denials from Obama and from the Ambassador, gets a little more specific: now the source is said to be "a high-ranking member of the Canadian embassy." But suddenly that source isn't so sure he had it right in the first place: "He has since suggested it was perhaps a miscommunication."

Swiftly switching gears, CTV now claims to be pursuing, not a conversation between a senior Obama staffer and the Canadian Ambassador, but a phone call between Austan Goolsbee — not a staffer but an academic at the University of Chicago who has been advising Obama — and someone (unnamed, of course) in the Canadian Consulate-General in Chicago.

Since we have no evidence for any of this save the word of CTV, and since CTV can't get its story straight, anyone who claims to believe the story — that is, McCain and his odd bedfellows Marsh and Johnson — ought to be presumed to be in bad faith. It might be true, but there's no reason for any fair-minded person to believe that it's true.

Is it possible that Goolsbee — like most economists, a free trader by instinct — tried to say something calming to someone he knew at the Consulate General in Chicago? Sure. But so what?

That's precisely right.

Posted by southpaw | February 29, 2008 11:02 PM

"this kind of ambiguous messaging is likely to recur time and again."

"ambiguous messaging"?

What you mean, Matthew, is "lying".

You are such a pathetic creepy apologist partisan hack. OK, there are lots of those. But it's the air of eclectic superiority which you feign while partisanly hacking which so stinks.

Posted by am | February 29, 2008 11:11 PM

Uh, "southpaw", you might want to note a couple things:

1. Kleiman is an a**hole.

2. CTV has since named names (as even this post notes), yet - oddly enough - Kleiman hasn't updated his post and I don't see a later post about the topic.

As for "heedless"'s latest, he shows one of the only argument "free" traders have: ad hominems. Perhaps "heedless" or some other untraceable commentor would like to tell us how we could avoid foreign countries colonizing us in one way or other and to one degree or other should we ever allow some form of "liberal" movement of people. If we made it possible for, say, China to profit from sending us people you can rest assured that they would do whatever it takes to make sure that they were able to continue profiting, including using those who are loyal to that country as proxies inside the U.S., just as they now use industrial spies.

Posted by TLB | February 29, 2008 11:14 PM

As for "heedless"'s latest, he shows one of the only argument "free" traders have: ad hominems.

and

Special note to MattY: I know you don't understand the preceding

Fascinating how those two statements came from the same person.

Posted by Kevin | February 29, 2008 11:18 PM

"TLB" writes,

"(Special note to MattY: I know you don't understand the preceding, but that's a take-off on Mexico)."

This reminds me of when President Bush says something that's completely simple and obvious, and then says, "in other words," and proceeds to rephrase it in equally simple language for sake of the reporters, just in case they didn't get his meaning the first time.

Posted by Fred | February 29, 2008 11:30 PM

I suspect the Obama campaign is going off air on this international incident to avoid an even bigger international incident.

NAFTA went into effect in 1994, superseding the existing Canada-United States Free Trade Agreement of 1988 by adding Mexico to the deal. I've heard no complaints (at least on the US side) about the 1988 pact. When people complain about NAFTA, they're complaining about jobs going to the low wage, low tax, low service corrupt regime in Mexico. I don't think anyone has problems with a free trade agreement with Canada, a country that, if anything, has more honest politicians, more services (and taxes) than we do and a wage rate comparable to our own.

When people talk about renegotiating NAFTA, they're talking about putting pressure on Mexico to reform, not Canada (though I'm fairly sure the WTO and free trade with China has had a far greater impact on our trade deficit).

So it could be that Goolsbee made the legitimate point-- don't worry Canada, we're not talking about changing our deal with you. However, the Obama campaign can't clarify that point now without pissing off Mexico (and Mexican-American voters) to no end.

Posted by beowulf | March 1, 2008 12:18 AM

TLB, that was an insult.

An ad hominem is an attempt to refute someone's argument by calling them names.
(See your pithy, one word response to Kleiman if you need an example)

As for your argument (and I use the term in its loosest sense) that there is a risk of "strong, non-libertarian countries sending people here to basically colonize us", I'm not quite sure where to begin. (And what is it that makes these countries "strong"? It's clearly not their economic or military might, since we take top honors in both of those categories.)

People have been coming to America from abroad for our entire history. Most of them spoke English poorly, if at all, and their countries of origin were usually far more despotic, and far more hostile, than China. Nevertheless, our nation is in pretty good shape.

What is different about the current generation of immigrants that makes them such a threat?

Posted by heedless | March 1, 2008 12:46 AM

2. CTV has since named names (as even this post notes), yet - oddly enough - Kleiman hasn't updated his post and I don't see a later post about the topic.

The only name CTV named was Goolsbee, whom Kleiman discusses, and--as I said upthread--Goolsbee's denials were fairly absolute until the Obama campaign (apparently) took him off the board.

Maybe the campaign should trot Goolsbee out to deny the story every time CTV decides to try out a new version of the facts. But the risk there is that someone gets the bright idea to ask Goolsbee what he really thinks of the campaign line on NAFTA, which is presumably: not much.

I imagine David Axelrod got on the horn with Goolsbee and told him to shut his yap ("I direct you to the press office") until March 5th. In other words, the lack of further Goolsbee denials may not imply all that you think they imply. The guy's an economist, not a candidate.

Also, I think beowulf is right.

Posted by southpaw | March 1, 2008 12:55 AM

Cut to the chase:

Neither Obama or Clinton are going to lift a finger to reverse any part of NAFTA.

Posted by Andruw | March 1, 2008 1:05 AM

whether the increase in the general welfare is sufficient to offset the jobs lost in industries facing increased competition

There are mostly assertions and repetitions of economic theory about whether or not certain ways of structuring trade and protecting investors leads to an "increase in the general welfare", and there are certainly more variables than "jobs lost in industries facing increased competition."

It is not "increased competition" in any commonly held (Adam Smith and the pin-makers model) when one manufacturer sites its production elsewhere in the world, for example.

But then, I don't want to have to compete with libertarian dreamworlds.

Posted by El Cid | March 1, 2008 3:58 AM

The obvious solution is for Obama to fire Goolsbee, who clearly can't be trusted and isn't in tune with the Democratic party base.

I'm not surprised to see that right-wing hacks are still posting the same hackwork about so-called "free trade." The usual crap like "ensure that the overall gains are widely shared and the victims get help." The problem with this is that workers have heard it all before. The promised help never arrived, and most workers have now concluded that it was never meant to - that the promises were made in bad faith to push through the deals and then discarded afterward. Exactly how do you answer these people? You can't, because it's true.

Posted by Josh G. | March 1, 2008 6:31 AM

I'm generally on board with heedless here, and sympathetic in that having data-supported ideas that fly in the face of popular hysteria is often a difficult position to be in. On immigration, it's easy to discount the nativist fringe, but there is a real issue here.

Our labor needs are different now than they were in the 19th Century. We need immigration, but it is foolish to allow the illegal importation of millions of illiterate helots who depress wages and overload already stressed public services in the areas where our already-existing underclass is struggling to get by. The current non-system allows the Mexican government to use us as a release-valve, avoiding pressure for badly-needed reform. Moreover, it results in the appalling exploitation of desperate compesinos by big corporate interests that can afford to pay decent wages. Immigration si. Illegal immigration no.

In terms of campaign rhetoric about NAFTA, which is really about "nafta", it's all bullshit. NAFTA was written so as to be damned near impossible to re-negotiate, even if both Mexico and Canada wanted to, which they don't. In any case, the part of NAFTA that I think has the most pernicious effect on the US is that it allows Big Agriculture to destroy Mexican farmers by dumping subsidized grain. To fix that, we just need to end farm subsidies. No need to get involved with the neighbors' internal politics.

Posted by Robert Powell | March 1, 2008 6:41 AM

The only reasonable inference from all of this is that a conversation between Goolsbee, a RIGHT of center economist --- I don't think that GBS employee left wing economists --- and a Hyde Park / UC buddy of Obama's and part of Obama's brain trust (and a very smart guy, by the way) made the call to the Counsel, or someone he knew high up in the consulate to give that message. And that Goolsbee's non-denial denial confirms it. And that Matt (and others here) knowing that their candidate can do no wrong believe that there may be some ambiguities, but no lies here. (The same Matt, of course, eager to impute bad motives to Clinton, even when he has no evidence that they exist, refuses to see the evidence of bad motives and bad actions when those motives and actions are there.)
Now these things happen in a campaign. And GOolsbee may have been misrepresenting Obama. But Obama should say so, immediately, one way or the other, and if Goolsbee was misrepresenting Obama (or Obama wants to claim that Goolsbee was misrepresenting him) Goolsbee ought to be gone. From the campaign, from eventual employment in the Council of Economic Advisors or whatever.

But the most interesting thing here is that we've learned, if we didn't know it before, that you can't rely on anything Matt says, when the reasonable inferences lead to conclusions that he doesn't like. And that is really too bad.

Posted by Barry | March 1, 2008 8:15 AM

The usual crap like "ensure that the overall gains are widely shared and the victims get help." The problem with this is that workers have heard it all before.

That may well be a problem. But the thing is, it's not impossible to strengthen and expand the safety net. It's just proven politically difficult. But -- speaking as an optimist -- American already has a pretty solid foundation. If we could simply add national healthcare, wage replacement insurance and more robust retraining to the mix, along with, say, a more progressive tax code, we'd be in pretty good shape. These things won't be easy to obtain, but they shouldn't be impossible either -- especially in a political environment underpinned by increasing economic anxiety.

If we were able to realize the goals of the advocates of social democracy (like me), I can see the immediate tangible benefits. But what benefits do we get out of making trade with foreigners more difficult? I don't see any at all. What I do see is less wealth creation and a slower growing economy.

Posted by Jasper | March 1, 2008 10:09 AM

Sorry, El Cid,

In the libertarian dreamworld, everyone will need to compete.

Posted by heedless | March 1, 2008 12:28 PM

"Moreover, it results in the appalling exploitation of desperate compesinos by big corporate interests that can afford to pay decent wages."

I'm with you in opposition to the massive immigration of illiterate campesinos, but I've got to call bullshit on your use of the phrase "big corporate interests". Big corporations are far more likely to adhere to immigration laws -- try getting a job at Costco or Staples or Starbucks without showing proof that you are legally allowed to work in this country. Most employers of illegal aliens are restaurants, farmers, general contractors, and upper middle class couples (for illegal au pairs). There have been, in the past, examples of corporations in the meat packing industry hiring illegals, but much less of this since the recent crackdown.

Overall though, Democrats' support of illegal immigration has two political benefits for them, even if it hurts the living standards of many of their constituents. First, it ensures that we will always have an underclass that they can propose welfare programs to help. Every statistic you hear about inequality, poverty, lack of health insurance, etc. is driven to a large extent by the importation of 12-20 million illiterate poor campesinos over the last decade or so. Second, when these campesinos become citizens, they will invariably become a reliably Democratic voting block.

Again, great for Dems, but lousy for their constituents. Unfortunately for the GOP (and for the American people), McCain is also in favor of unrestricted immigration by 4th grade dropouts from Mexico.

Posted by Fred | March 1, 2008 12:30 PM

I certainly think the evidence indicates that currently no major political faction intends to take on the issue of structuring trade for any goals other than the simple ones of investor favoritism which have currently been enacted.

There is indeed cause for optimism with regard to social benefits (i.e., perhaps a health care plan of some sort under a Democratic president and a strongly Democratic Congress) being enacted.

But to some degree the changed rhetoric by both Obama & Clinton on trade serve to signal that perhaps the time period should now have expired in which either people simply throw up their hands and say that mutually deteriorating fortunes are the mysterious results of forms of economics and trade which cannot be re-thought or to continue to listen to crazy libertarian market fundamentalists who insist that we all share their aesthetic preference for notions of market "efficiency" as the highest human value.

And this isn't a U.S. vs "them" discussion -- the same argument is going on within the very third world trading nations whom most lazy thinkers seem to think are all 100% chipper over the last couple of decades' views on "trade".

The closest I've heard for any kind of reasoned approach to the structural problems we are undergoing and which we have been told over and over to ignore are the serious proposals to invest in a "green" energy & transportation infrastructure transition, although like the false issue of TRADE / NOT TRADE, the question to me is once again how and for whose interests it actually works out.

Posted by El Cid | March 1, 2008 12:39 PM

"The closest I've heard for any kind of reasoned approach to the structural problems we are undergoing and which we have been told over and over to ignore are the serious proposals to invest in a "green" energy & transportation infrastructure transition"

Ah, the next bubble. Don't be the last one holding the bag on the "green" energy stocks. Fortunately for the idiot Al Gore, the grown-ups at Kleiner Perkins will let him know when it's time to cash in the chips.

Posted by Fred | March 1, 2008 1:08 PM

Why are so many people under the mistaken impression that Mexicans and Mexican-Americans love NAFTA?

http://www.commondreams.org/views06/0425-30.htm

"While there has been some media coverage of NAFTA's ruinous impact on US industrial communities, there has been even less media attention paid to its catastrophic effects in Mexico:

NAFTA, by permitting heavily-subsidized US corn and other agri-business products to compete with small Mexican farmers, has driven the Mexican farmer off the land due to low-priced imports of US corn and other agricultural products. Some 2 million Mexicans have been forced out of agriculture, and many of those that remain are living in desperate poverty. These people are among those that cross the border to feed their families. (Meanwhile, corn-based tortilla prices climbed by 50%. No wonder many so Mexican peasants have called NAFTA their 'death warrant.'

NAFTA's service-sector rules allowed big firms like Wal-Mart to enter the Mexican market and, selling low-priced goods made by ultra-cheap labor in China, to displace locally-based shoe, toy, and candy firms. An estimated 28,000 small and medium-sized Mexican businesses have been eliminated.

Wages along the Mexican border have actually been driven down by about 25% since NAFTA, reported a Carnegie Endowment study. An over-supply of workers, combined with the crushing of union organizing drives as government policy, has resulted in sweatshop pay running sweatshops along the border where wages typically run 60 cents to $1 an hour.

But Mexicans must still contend with the results of the American-owned 'maquiladora' sweatshops: subsistence-level wages, pollution, congestion, horrible living conditions (cardboard shacks and open sewers), and a lack of resources (for streetlights and police) to deal with a wave of violence against vulnerable young women working in the factories. The survival (or less) level wages coupled with harsh working conditions have not been the great answer to Mexican poverty, while they have temporarily been the answer to Corporate America's demand for low wages.

With US firms unwilling to pay even minimal taxes, NAFTA has hardly produced the promised uplift in the lives of Mexicans. Ciudad Juarez Mayor Gustavo Elizondo, whose city is crammed with US-owned low-wage plants, expressed it plainly: "We have no way to provide water, sewage, and sanitation workers. Every year, we get poorer and poorer even though we create more and more wealth."

Falling industrial wages, peasants forced off the land, small businesses liquidated, growing poverty: these are direct consequences of NAFTA. This harsh suffering explains why so many desperate Mexicans -- lured to the border area in the false hope that they could find dignity in the US-owned maquiladoras -- are willing to risk their lives to cross the border to provide for their families. There were 2.5 million Mexican illegals in 1995; 8 million have crossed the border since then. In 2005, some 400 desperate Mexicans died trying to enter the US.

NAFTA failed to curb illegal immigration precisely because it was never designed as a genuine development program crafted to promote rising living standards, health care, environmental cleanup, and worker rights in Mexico. The wholesale surge of Mexicans across the border dramatically illustrates that NAFTA was no attempt at a broad uplift of living conditions and democracy in Mexico, but a formula for government-sanctioned corporate plunder benefiting elites on both sides of the border.

Posted by Carla | March 1, 2008 1:08 PM

Fortunately for the idiot Al Gore, the grown-ups at Kleiner Perkins will let him know when it's time to cash in the chips.

Posted by Fred

Heeeee-haw!!! He done made an Al Gore joke! And Al Gore is fat!!!

And it's funny, 'cause, you know, this whole energy efficiency & transportation infrastructure & global warming stuff was just made up by Al Gore, made up whole cloth, done nobody no-whur done never thought nothing about it (and how 'bout it you liberals -- why don't you admit the Sun is hot, hmmm?) all so he could make his fat movie and his fat book and his fat stocks so he could make money off it!

Posted by El Cid | March 1, 2008 1:23 PM

conversation between Goolsbee, a RIGHT of center economist --- I don't think that GBS employee left wing economists

Um no. Goolsbee is not a right of center economist, and Chicago GSB certainly does employ left wing economists.

Posted by Barbar | March 1, 2008 1:28 PM

It appears that, in fact, my good buddy Mark Kleiman did mention Goolsbee, and I extend a heartfelt apology to the a**hole.

As for heedless, he switches from promoting open borders to discussing our current imm. policies; those two are obviously quite different. He also can't seem to figure out that it's a jungle out there when you get to the country level: the only thing that keeps the U.S. from being invaded is the fact that we have a strong military. If we didn't have a strong military there are no space aliens that could step in to protect us. And, likewise if we showed weakness in other areas. If we had an open immigration policy, rest assured that stronger, more cohesive countries with a lot of people (China, India, Mexico, etc.) would rush to take advantage of us as described above. China (industrial spies) and Mexico (illegal immigration) are already doing that, and it would get even worse with the "free movement of people".

Posted by TLB | March 1, 2008 1:32 PM

Fair enough, Fred. It's always tempting to throw in a little counter-intuitive class struggle rhetoric when arguing with doctrinaire leftists.

But to be strictly fair to my point you should acknowledge that it IS the big corporate interests that can better afford to pay decent wages than the mom-and-pop restaurants and lawn services. And if you think large-scale hiring of illegals by big companies is a matter of some "examples in the past", just go into any packing plant, light-manufacturing shop, or construction site in much of the Sunbelt and parts of the Midwest and yell "Immigration!". Don't stand near the exit or you're likely to be trampled.

Although it's usually impossible to be too cynical when speculating about the motivations of political parties, I think you give the Dems credit for too much Machiavelli on immigration. Most seem to support illegal immigration because it fits with their preferred self-image as open-minded Vanguards of the Proletariat, in spite of its catastrophic consequences for the real "little guys" in the story. Anyway, marginalized poor people simply don't vote.

If Republicans play their cards right I think they'd have a perfectly good chance to get the votes of upwardly-mobile, aspirational types whether they are Mexicans or Southern Blacks or anyone else. See Mike Huckabee for the right approach. Democrats who think they have an automatic lock on these groups in perpetuity are deluded.

Posted by Robert Powell | March 1, 2008 1:51 PM

"And it's funny, 'cause, you know, this whole energy efficiency & transportation infrastructure & global warming stuff was just made up by Al Gore..."

Well, to be fair to Al Gore, he invented the Internet and didn't get to cash in on that boom, so he might as well become a billionaire on this one.

Posted by Fred | March 1, 2008 2:00 PM

Well, to be fair to Al Gore, he invented the Internet and didn't get to cash in on that boom, so he might as well become a billionaire on this one.

Posted by Fred

Trust me, it has been obvious for some time now that while the nut squad and paid-off right spent its time denying any problems with fossil-fuel stemmed global warming, etc., the main priorities for an entire subgroup of worldwide upper classes will be to make sure that (a) any costs to be borne for any 'green' transition will be shifted as closely as possible to us schmucks, and that (b) any profits from that transition will go in the specific directions they are able to push their preferences for.

That's not some sort of conspiracy based argument -- it would simply be standard craziness to continue to assume as so many do that really, really wealthy interests have been unable to think through the clear incentives and disincentives as logically as bloggers.

And just like as on "trade", if that simple array of incentives and disincentives tends to color the best options available versus even worse options, well, like so many things, so be it.

And if you personally want to use "Al Gore" as a more palatable proxy for you to understand the groups of people, corporations, and investors who will pursue (a) & (b), fair enough.

But I don't see why it's the most wonderful thing in the world for corporations, manufacturers and investors to profit by successfully pressing for their specifically preferred models of "trade" agreements but it's a horrible "Al Gore" perversion for them to profit by similarly gaming the "green" transition.

Posted by El Cid | March 1, 2008 2:11 PM

Whenever immigration, etc., comes up here (at Matt's blog), I find myself wondering: Has TLB ever had an IQ test? Always, every time.

Posted by m | March 1, 2008 2:38 PM

"Concerns over Obama's shift to left"
By Edward Luce in San Antonio, Texas
Financial Times, February 29 2008
http://www.ft.com/cms/s/0/b6dc1c0e-e669-11dc-8398-0000779fd2ac.html?nclick_check=1

Until a few weeks ago Barack Obama's economic platform was the most centrist of the three Democratic contenders remaining after John Edwards, the flag-bearer of the left, dropped out in late January.

Since Super Tuesday on February 5, that has changed. Scenting, perhaps, the chance of settling the nomination next week (when Ohio, Texas, Rhode Island and Vermont go to the polls), Mr Obama has indulged in a bidding war with Hillary Clinton to see who can rail most strongly against globalisation.

Campaign veterans say much of the rhetoric can be discounted as classic primary season politicking that will be diluted when it comes to the general election. But sympathetic economists have expressed concern about proposals Mr Obama has unveiled in the past two weeks since campaigning began in earnest to woo the workers of Ohio....

"Threatening to repudiate international agreements would have serious foreign policy consequences which would undermine Mr Obama's broader foreign policy goals," says Susan Aaronson, professor at George Washington university and a former adviser to Bill Richardson, who dropped out of the race in January. "Some of this may be normal pandering for the primaries. But it has gone much further than expected."

Mr Obama's proposal to levy lower corporate tax on companies that reverse the offshoring of jobs has caused disquiet. "Patriot employers" was unveiled when Mr Obama had already become the favourite to secure the nomination. Some say it is unworkable.

"It just isn't clear why the Obama campaign felt the need to bring this out now," one Democratic economist says. "It might have political merits in the primaries but there are many more effective and less bureaucratic ways than this to incentivise the creation of new jobs."....

...officials on John McCain's Republican campaign believe Mr Obama has given them ammunition for the general election....

advisers to Mr McCain believe that Mr Obama would present a juicy target as nominee. "We see him as a classic liberal whose proposals come straight out of the 1970s," says Douglas Holtz-Eakin, senior McCain adviser. "It is hard to understand his stance on trade. Access to the US market is a vital element of our foreign policy."

Supporters of Mr Obama deny he is opposed to trade liberalisation and point to his recent vote in favour of the bilateral deal with Peru because it had agreed to incorporate labour and environmental standards. Critics say such arrangements could jeopardise Nafta.

Were he the Democratic nominee, one test of Mr Obama's trade position could be the expiry in November of a deal that imposes quotas on China's textile exports to the US. Mr McCain would recommend scrapping the quotas. Neither Mrs Clinton nor Mr Obama has expressed a view.

Another test would be on steel. "Would Mr Obama support shutting out Chinese steel imports where production didn't conform to US carbon emissions standards?" Mr Hufbauer asks. "Ideas like this are in circulation. They sound good on the surface."

Posted by artappraiser | March 1, 2008 3:52 PM

Anything that any Democrat ever does or suggests he or she might do which is in any way unlike what the Republicans would do is instantly declared by right wingers and those who like their policies to be fodder for the Republicans in the general election.

That's exactly the point of view of people who think that Republican views are always both correct and election-winning.

Posted by El Cid | March 1, 2008 4:20 PM

As for your argument (and I use the term in its loosest sense) that there is a risk of "strong, non-libertarian countries sending people here to basically colonize us", I'm not quite sure where to begin.

How about starting with the Irish, and the few among their progeny that are now ladder-pulling paranoid shit-the-beds?

Posted by pseudonymous in nc | March 1, 2008 5:00 PM

"But to be strictly fair to my point you should acknowledge that it IS the big corporate interests that can better afford to pay decent wages than the mom-and-pop restaurants and lawn services."

While I admire your willingness to concede the first point, I can't agree with this one either. It's not the size of the "corporate interest" that determines how well it can pay its workers; it's the profit margins and profit-per-employee. High-margin, high profit-per-employee Goldman Sachs can afford to pay its workers plenty, and it does. Low-margin, low profit-per-employee Wal-Mart can't, and it doesn't. There are small restaurants and general contractors who can afford to pay their workers (and do pay them) more than the average annual wage at Wal-Mart.

A meta point: this NAFTA thread ignores a bigger influence on the wages of those who majored in lunch in high school: technology. American manufacturing is booming, in dollar terms, but because it uses more technology and is more efficient, a smaller percentage of the workforce is employed in manufacturing -- from about 30% a few decades ago, to about 12% today. The same technological advances that give lefty hipsters the iPods they love also make it tougher for folks who barely graduated high school to get high-paying jobs. Reneging on NAFTA won't change that, and neither will egalitarian pretensions about education as an economic panacea. A good start to make things easier on the unskilled workers would be to stop importing competition for them from Mexico that drives their wages down even further.

Posted by Fred | March 1, 2008 6:57 PM

Fred--
Let's just say that virtually NO industries in the US that deserve to stay in business require the exploitation of desperate compesinos, and continuing to allow it is destructive to the larger interests of both Mexicans and US citizens. In terms of enforcement, it is both more practical and less distorting to start with big employers. I think it's fair to say that Goldman Sachs is not a factor here.

And no one is going to "renege on NAFTA". The one sure thing that everyone should be able to agree on here is that all the talk about doing so is pure campaign bullshit that will disappear like smoke in a windstorm the second week in November.

Posted by Robert Powell | March 2, 2008 3:09 AM