In Which We Are Reminded Anew Of Hillary Clinton's Antediluvian Trade Policy
By Pejman Yousefzadeh Posted in Economy | Free Trade | Hillary Clinton — Comments (5) / Email this page » / Leave a comment »
Recently, Hillary Clinton gave an interview to the Financial Times, in which we learned the following:
Hillary Clinton would ask hard questions about whether it was worth reviving the stalled Doha round of world trade talks if she were elected US president, the former first lady has told the Financial Times in an interview.
Mrs Clinton said she believed that theories underpinning free trade might no longer hold true in the era of globalisation. She has called previously for the US to take "time out" on new trade agreements.
"I agree with Paul Samuelson, the very famous economist, who has recently spoken and written about how comparative advantage, as it is classically understood, may not be descriptive of the 21st century economy in which we find ourselves," Mrs Clinton said. She faces a tough contest with Barack Obama, her closest rival for the Democratic nomination, in the first caucus in Iowa a month from now.
"I want to have a more comprehensive and thoughtful trade policy for the 21st century. There is nothing protectionist about this. It is a responsible course. The alternative is simply to pick up where President Bush left off and that is not an option."
Read on . . .
To its eternal credit, the FT called shenanigans:
Even with forthright US leadership, the prospects for the Doha round are poor. Without it, they are nil. What a sad prospect, that under a new Clinton presidency the Doha round might fail because of American disenchantment with trade - and that one of the great economists of the 20th century, who has taught generations of students why trade is good, should be invoked to sanctify that disaster.
Mr Samuelson did not even say what Mrs Clinton thinks he said. In the article she apparently has in mind, and in subsequent remarks, the great man did attack the pieties of the pro-trade lobby, pointing out that not everybody gains and that even nations as a whole can lose from free trade under certain restrictive circumstances.
Though this point was delightedly greeted by the political and pundit classes as a shattering new discovery, in fact Mr Samuelson was restating a decades-old understanding. What Mr Samuelson said was true not just of the 21st century, but also of the 20th - and it is just as irrelevant to the intelligent formulation of trade policy on Tuesday as it was after 1950, when the liberal trading order was built. If Mr Samuelson, who has never (so far as we know) recommended protectionism, is not scandalised to be quoted in support of a "time-out" on Doha, he should be.
I'll let you click on the story and read the last paragraph for yourselves. It should raise serious alarm bells.
Meanwhile, Netsmith does the service of pointing us to a whole host of critiques of the Clinton economic position. Daniel Finkelstein elaborates on the fact that Samuelson is an ardent free trader. Invoking his name in the service of protectionism is sort of like invoking the name of Ronald Reagan in the service of expanding the Warsaw Pact. Or, as William Buiter puts it, after having expounded on Samuelson's views:
So, no Senator Clinton, you are quite wrong about comparative advantage. Paul Samuelson is, not surprisingly, absolutely right. Despite outsourcing and off-shoring, despite alleged Chinese currency manipulation and the threat of Sovereign Wealth Funds from the Gulf and the far East owning most of Main Street before long, comparative advantage continues to provide the valid foundations for pursuing free trade, preferably multilaterally, but if necessary unilaterally. The exercise of national market power is the only reason to depart from this, if you are confident that there will be no retaliation.
Democrats yearn for the bounteous days of Bill Clinton's presidency, when the economy was flourishing, there were good jobs at good wages, and poverty was on the wane. So it's a puzzle that on one of his signature achievements--the North American Free Trade Agreement -- the party's presidential candidates are sprinting away from his record as fast as they can. It's as though Republicans were calling for defense cuts while invoking Ronald Reagan.
Even Hillary Clinton can't bring herself to defend the deal her husband pushed through. Asked during a recent debate if she thought it was a mistake, she did everything but deny she'd ever met the man.
"All I can remember from that is a bunch of charts," she chortled, in possibly the least believable statement of the 2008 campaign. "That, sort of, is a vague memory." In the end, though, Clinton declared that "NAFTA was a mistake to the extent that it did not deliver on what we had hoped it would."
She has plenty of company. Barack Obama is on record as saying he "would not have supported the North American Free Trade Agreement as it was drafted." John Edwards has flogged the treaty like a rented mule, calling it "a complete and total disaster." And Dennis Kucinich thinks all copies of NAFTA should be humanely shredded and used as compost on shade-grown fair trade coffee, or something like that.
What did NAFTA ever do to deserve this abuse? Critics claim it destroyed a million jobs -- forgetting that its implementation coincided with the longest peacetime expansion in American history. During that period, the unemployment rate fell to its lowest level since the Vietnan War. If that was a disaster, I'm Hannah Montana.
Read it all. The only thing the article fails to mention are the significant contributions of the Reagan and Bush I Administrations to the creation of NAFTA, along with the fact that at the beginning, Bill Clinton was hesitant to use his political heft to pass NAFTA. But credit where it is due, he did pass it and was committed to the cause of free trade.
If only Senator Clinton would follow her husband's example. When voting in 2008, watch your wallet.