Modern history of free trade vs protectionism. Is protectionism really a progressive value?

[andym]

I think the real answer is that trade policy has really been a nationalist value, in the best sense of that word-- used to promote national well-being for quite a long time.

Who were the biggest proponents of protectionism in the relatively modern era?:
Well in the late 19th century-- the GOP strongly believed in protectionism from before Grover Cleveland through Taft (and the early 20th century progressives largely went along) until Hoover. However, the protectionist policies helped build the American economy in that era.

But...
Herbert Hoover is thought to have worsened the world-wide depression by promoting protectionism and the Smoot-Hawley tariff of 1930. He was a strong supporter of strong nationalistic, protectionist trade laws. Herbert Hoover is the spiritual godfather of modern protectionism and the Great Depression that partially resulted from his policies are why so many very liberal Democrats were free traders.

Although FDR began the process of reducing tariffs, it wasn't until Truman that things really changed. The end of WW2 made the US the dominant world power and marked a shift to free trade. It has been argued that the strong free trade policies which were established by Harry Truman and favored by Democratic stalwarts such as JFK helped to rebuild the global economy AND was greatly in the US' interests, since the US dominated the world economy in the post-war period. The creation of the World Bank was strongly supported by Truman. So it's no surprise that even the most liberal of Democrats were mostly strong free traders like George McGovern. Although there was concern about the rise of multinationals in the 1970s (recognized by McGovern's platform) the connection to the consequences of free trade was not made.

Reagan, Clinton, Bush and Obama have continued the mid 20th century push for free trade. But the equation began to change in the 1980s (and even before) as greater global competition began to eat into America's economic dominance. By the 80's Japan had begun to be a serious competitor in cars and electronics, when earlier they had been known as best for creating junk. Believe it or not made in Japan once meant inferior quality (in the 50's and 60's). So free trade became more and more of a mixed bag-- some American industries continued to grow (high tech) while many traditional industries (eg steel) completely foundered. The economic changes have been consequential, and probably irreversible.

Now almost 70 years from Harry Truman and his colleagues strongly set the US and the world on a free trade course, there is talk of re-evaluating US free trade policies. This election cycle has finally brought needed light to be shined on the consequences of free trade. Bernie Sanders and Trump have both pushed for more protectionist polices (as did Ross Perot more than 20 years ago), and recently Hillary Clinton has decided that the TPP should not be supported. The pendulum may be shifting.

But if you look at the list of protectionists versus free-traders, i think that it is clear that neither free trade, nor protectionism is really a liberal/progressive or conservative policy per se, but really one that both parties tend to coalesce around when it becomes clear that the current policies are leading the country astray.

Summary:
Notable Protectionists: Grover Cleveland, William Howard Taft, Herbert Hoover

Free traders: Harry Truman, JFK, Lyndon Johnson, Jimmy Carter (helped push for NAFTA in 1993), Ronald Reagan, Bill Clinton, George W Bush, Barack Obama.

Note the absence of correlation with other economic political ideology.

[MADem]

1. Every year, 'newly industrialised countries' (NICs) come online.

I can remember when no one would by a JAPANESE car--they were seen as utter garbage. And a KOREAN microwave? Or electronic equipment? NEVER!! The stuff was considered inferior. And no one bought anything from China!

Now, these countries and others do a great job at producing products that are (most of them, anyway) reliable and affordable.

Our challenge is to create stuff that THEY want to buy.

Protectionism doesn't work. It's like -- dare I say -- building a wall. People will go over, under or around it--but they'll get to where they want to go, eventually.

[BlueMTexpat]

9. Too true. eom

[Warpy]

2. Progressives 60 years ago saw free trade as a great thing

since the US was the unchallenged industrial powerhouse of the time. Dropping tariffs made raw materials coming in cheaper and made finished goods being exported cheaper and more attractive. Wages here were high by law and everybody won. What could possibly go wrong?

The problem is that in the past 60 years, especially in the past 40 years, we've seen what can go wrong when free trade isn't balanced by insisting on fair trade. We've lost enough key industries for it to be a national security issue and wages have plummeted while the few have reaped rewards so enormous they couldn't be squandered by a thousand generations of wastrels.

If common sense doesn't enter the heads of the rabid free traders, something is going to give and it is not going to be pretty or peaceful.

[Shebear]

3. Like everything else, it depends...

... If trade lifts conditions for the citizens, its a good thing... if it leaves most of the citizens worse off, not so good.

But I think this is a red herring argument. Mostly trade has been a great vehicle for progress and development in Western countries... not so much many Third World countries, whose industries and prosperity was limited to those at or near the top.

But when we're discussing NAFTA, MFN status with China and TPP, we aren't talking about trade. We are talking about setting up structures so that private companies can avoid laws that protect local citizens against economic and environmental harm - and sometimes physical harm. And those structures are always front-loaded in those deals, meaning they are the first to be enacted... any protections for labor and environment always come later.. which means, since the powerful have no incentive to enact them, is never.

[HarmonyRockets]

4. NAFTA and TPP are pure corporate protectionism.

And anyone even remotely progressive and in favor of labor rights, in favor of environmental regulations, against corporate subsidies, etc, would be against them. They have very little to do with trade and are more accurately investor rights agreements made with multinational corporations for the benefit of the corporations' own profits, "intellectual property rights", etc. There is a reason they are kept secret from the public. Both NAFTA and TPP have very high protectionist elements for multinational corporations to protect their profits and harm the populations. Corporations, for example, are given the right to sue governments for potentially harming their future profits. NAFTA managed to harm the working populations in all participating countries, Canada, the US, and Mexico. It caused higher unemployment and caused wages to decline for the US and for Mexico. The labor movement had proposed alternatives that would have benefited the workforce in all 3 countries, but the proposals were completely ignored and even barred from the media.

Most critics of NAFTA were not opposed to any kind of trade agreement, but specifically against NAFTA, because of what it contained. NAFTA critics were then called "jingoist left-nationalist fanatics who don’t want Mexican workers to improve their lives." All the way from people on the left to way over to the right, you had this fabrication that NAFTA critics were reactive and negative and jingoist and against progress and just wanted to go back to old-time protectionism. It just simply wasn't true.

[stuffmatters]

6. Excellent summary!

[JVS]

5. You cannot have regulated capitalism if you are unwilling to restrict trade

Minimum wage, collective bargaining rights, child labor laws, workplace safety laws, environmental regulations, etc. are all undermined if you allow businesses to avoid compliance by outsourcing the work.

[pampango]

13. Tell that to Sweden and Germany who trade 2 to 3 times as much as the US does AND

regulate capitalism quite well, thank you.

You regulate capitalism by regulating capitalism not by going after trade. Check out FDR's record back in the day and what Germany, Sweden, Canada and other progressive countries are doing today.

[nationalize the fed]

7. Free Trade vs. Protectionism explained

In this interview, Sir Goldsmith discusses the ramifications of free-trade agreements that were about to take place in 1994 (GATT), as you can retrospectively see, he correctly predicted many of the things that happened after that.

Who anyone actually believes becomes somewhat more complicated when the so called mainstream media is owned by 6 corporations, doesn't it.

Of course, many people still believe the discredited liar Brian Williams, which is why he is still making millions of dollars a year peddling lies. He's an Exceptional American after all...

[BlueMTexpat]

8. In the 21st century,

protectionism is economic suicide. That said, free trade agreements must have provisions that aim to ensure that adverse consequences can either be prevented, mitigated and/or regulated, that enforcement mechanisms actually have teeth, and that arbitration provisions are not unduly tilted towards the interests of multi-national corporations as opposed to social, environmental and other interests that can adversely affect communities.

Without such trade agreements, btw, there are multi-national corporations that already have more power than actual Nation-States and they will do their own thing in spite of Nation-States if they are not uniformly subject to TAs. This could in fact lead to economic chaos and the worst of all possible worlds.

Whatever happens, the One Percenters always come out on top. So I for one would like to see protections for the rest of us. We cannot have such without TAs.

[seabeckind]

11. They're going to beat us if we don't give them our lunch money.

[seabeckind]

10. Misleading title

Who said that protectionism and free trade are the only choices?

And who gets to decide where the pendulum is located?

The people?

Or the corporation doing the trading. What if that corporation is not an American corporation? What if it is an American corporation in name, but not in actuality?

From the piece:

neither free trade, nor protectionism is really a liberal/progressive or conservative policy per se, but really one that both parties tend to coalesce around when it becomes clear that the current policies are leading the country astray.

[ileus]

12. I was back when we believed in strong unions and a working middle class.

Now that we accept no unions, and scorn production jobs, because it hurts the human spirit to needless toil at jobs. Now we're happy with iphone payment style pay and important starbucks jobs.

[pampango]

14. Indeed. That is the problem. If we go back to acting like we believe in strong unions,

progressive taxes and a healthy safety net - which a famous Democratic president did in the 1930's - we might be surprised at what could happen to our middle class. As he showed, integrating our country with the rest of the world is part of the solution, not part of the problem.

[pampango]

15. republicans Harding, Coolidge and Hoover all restricted trade. FDR came along and expanded it.

Plus FDR is the one who proposed the IMF, World Band and the International Trade Organization. (Such an international approach was the exact opposite of the policy of his isolationist, protectionist republican predecessors - whom Trump seems to pattern himself after.)

The IMF, World Bank and other international organizations proposed by FDR were approved fairly quickly. Unfortunately, negotiations under Truman on the ITO took several years. By the time it was signed the 'FDR international era' had been replaced by the 'republican nationalist era' and republicans in congress never approved the ITO.

Indeed the 'nationalism vs internationalism' is a pendulum that swings back and forth. Harding, Coolidge and Hoover were nationalists. FDR and Truman were internationalists. The pendulum has swung back and forth many times in the past and will in the future. Trump is obviously a nationalist who will 'tear up' our international agreements and organizations. Brexit in the UK showed that the pendulum is swinging towards the nationalists again.

IMHO, nationalism/patriotism (nativism/xenophobia on the extreme end) is more associated with the right (though not exclusively, of course). America First, Britain First, etc.

Internationalism has historically been more of a liberal aspiration (again not exclusively liberal).

[nationalize the fed]

19. fascinating

IMHO, nationalism/patriotism (nativism/xenophobia on the extreme end) is more associated with the right (though not exclusively, of course). America First, Britain First, etc.

What's next?

Internationalism has historically been more of a liberal aspiration (again not exclusively liberal).

What does "internationalism" mean? Bombing Yugoslavia, Libya and Yemen?

And one more question: Can a nation be a "superpower" when it can't make shoes?

[geek tragedy]

22. the parties got pulled in opposite directions by their main constituencies

the business community has been very much pro-trade liberalization/globalization, whereas labor unions have been overwhelmingly economic protectionist/isolationist/nationalists.

Every few election cycles, the economic nationalists in the labor unions and the xenophobic whackadoodles on the right find themselves on agreement regarding a major trade agreement--NAFTA/GATT comes to mind as an example.

Trump himself is Pat Buchanan minus the social conservativism.

[geek tragedy]

16. there's a continuum between revanchist globalist capitalists on one end and "close the ports"

economic isolationists/nationalists on the other.

For a long time in the US, it tilted in the direction of the former (Bush, Bill, Obama all are more free trader than not) whereas this election cycle the energy has been on the "close the ports" side of the equation--Trump and Sanders have pulled Clinton in that direction, though she's obviously still much closer to the middle.

[sufrommich]

17. Protectionism doesn't work and never has. We need a fairer

tax system to be sure,but that won't bring back manufacturing jobs,they are most likely gone until wages in the third world rise. We can't force manufacturing back to the U.S. anymore than we can force Americans to buy American products.

[seabeckind]

26. Got nothing to do with forcing consumers

it's about giving them a fair and reasonable choice.

If I walk into a store and every product available comes from some other country, where is my choice?

Buyers for the retail stores that dominate our markets choose for us. And they choose based on profit margins.

BTW, the argument that the manufacturing isn't coming back is the one made by those who control where the manufacturing is done.

Maybe somebody else should have a say. At one time it was the unions, but somebody came for them.

[sufrommich]

27. We had choices,we chose foreign products.

I notice a lot of people gloss over that fact. The UAW started warning Americans that their choices were destroying their jobs in the 1970s and were ignored. Yeah,someone came for them alright but no one put a gun to our heads and forced us to buy Japanese cars.

[Hoppy]

18. Obama was gonna renegotiate N.A.F.T.A.

[pampango]

21. I don't know why he did not include Canada and Mexico in the new trade agreement.

Obama was gonna renegotiate N.A.F.T.A.

Which is what Bernie said he will do. To me 'renegotiating' means changing the rules of trade that exist now.

Meanwhile Trump will 'tear up' NAFTA and the WTO. He ain't 'renegotiating' nothing!

[seabeckind]

25. Renegotiating means starting negotiations again

Tearing up a previous contract and saying it's garbage

is a starting position in that activity.

[pampango]

30. No 'tearing up' (Trump's words) NAFTA is tearing up NAFTA. Renegotiating means:

Simple Definition of renegotiate: to discuss again the details of a formal agreement especially in order to change them.

http://www.merriam-webster.com/dictionary/renegotiate

You are welcome to your definition of 'renegotiate' but the whole world may not share it.

Tearing up a previous contract and saying it's garbage is a starting position in that activity.

That's better than Trump's position anyway. "Tearing it up and saying it's garbage" is his ending position.

Tearing it up would mean that WTO rules come back for US-Canada-Mexico trade until a new 'NAFTA' was agreed to (unless the old US-Canada Free Trade Agreement was resurrected as part of the transitional process).

[geek tragedy]

23. the TPP is renegotiating NAFTA, both the US and Canada are members nt

[Recursion]

24. He did. That's what the TPP is (nt)

[JaneyVee]

20. Protectionism is a form of nationalism.

[Odin2005]

28. The answer to Globalist Late Stage Capitalism is Globalist Socialism, not Economic Nationalism.

The material conditions that allowed the American Middle class to prosper after WW2 (most other developed nations being devastated and a developing world under the thumb of colonialism) no longer exist, there is no going back to some idealized vision of the 1950s shorn of it's racism, sexism, and homophobia.

[bemildred]

29. "Free Trade" == "Cheap Labor", and everybody likes cheap labor except the labor. nt

[pampango]

31. Labor was plenty 'cheap' under Herbert Hoover who restricted trade. It was much more 'expensive'

under FDR who expanded trade. And labor is not 'cheap' in progressive countries that trade much more than we do. There is a reason for that.

[bemildred]

34. The difference was unions and "protectionism".

We protect companies, we can protect labor.

[pampango]

35. We protect labor by protecting labor like FDR did, not by limiting trade which FDR did not do

and modern progressive countries do not do.

If we limit trade and do not protect labor (like by repealing Taft-Hartley with its 'right-to-work' provisions and reinstating FDR's Wagner Act) then we acting like Herbert Hoover not like FDR. That did not and will not help labor at all.

Trump knows this. He has not intention of helping labor. While he is 'tearing up' trade agreements, he wants to spread 'right-to-work' nationwide. I call him Herbert Hoover, Jr.

[bemildred]

36. But we don't.

We haven't. It is plain as day that these free trade deals main result was to send our corporations off scouring the world for the cheapest labor place to move their factories too. Meanwhile said foreign countries have been competing to see who could gut their labor protections the fastest. And in the same period our own unions here have been degraded into irrelevance, which allowed said companies to do that with impunity. Anybody that is not willing to slap the corporations around about unions HERE, and still claims free trade is good for labor is blowing smoke.

[pampango]

45. We agree that we don't protect labor. Anybody that claims you can't protect labor and trade freely

is not paying attention to progressive history or what is happening in the progressive world today. When FDR set about protecting labor in 1933, he did not think, "What can I do with trade to protect American workers?" Instead he went about empowering unions legislatively and improving working conditions directly. That worked even while he expanded trade.

Progressive countries protect their labor very well and trade a whole lot more than we do, so it is not impossible - even if 'exceptional' Americans think that it must be impossible.

We are not going to protect labor no matter what we do with trade unless we enact legislation that protects labor. (We can trade as little as North Korea or as much as Germany and labor will not benefit from that alone.) Now if we have to attack trade because we have to do 'something', but we can't get republicans to go along with real solutions empowering unions legislatively, but some of them will join us if we go after trade. Fine. Take the wind out of Trump's sails and attract that wing of their party over to our side.

I suppose we can go after Mexicans or Chinese as an interim measure. As long as we understand that the 'something' we are doing is not going to improve the problem itself but may generate progressive momentum for providing real solutions (like those of FDR) to the problems of our middle class. After which we can go back and reengage with the rest of the world (as FDR did).

[bemildred]

46. Right, and until we do, I'm against any more of this "free trade", so far it's been a con. nt

[pampango]

47. It seems that there is no urgency to protect labor legally, I sense nothing will change -

unless Donald wins and wreaks his havoc on the world.

I would agree with you that we need trade with enforceable (national sovereignty be damned) labor and environmental protections - not 'free' trade.

[bemildred]

48. Glad we can come to an agreement.

[Adrahil]

32. Protectionism is a terrible idea, but....

we need trade deals that recognize the need for fair labor standards and environmental protection. If that means tariffs, so be it. But we need to avoid isolation. That will just harm opur economy in the long run and exports start to dry up completely, and the price of domestic goods soars. We've seen that movie before. Populist trade protectionism in the Great Depression made things much, MUCH worse.

[AntiBank]

33. being anti TPP, TTIP, CETA, etc does NOT mean you are a priori protectionist

Fair trade is more than possible.

[bemildred]

37. Indeed. Fair to whom is the question? Is is it fair to everybody? Or just people you like? nt

[AntiBank]

38. fair as in protecting all sides from the rapacious gaping maw that is

multinational oligarchic capitalism and it's global banking underpinnings.

[HughBeaumont]

39. "Fair Trade is Protectionism Lite" - Steve Forbes.

DU now apparently thinks along the lines of Steve Forbes.

Fair trade IS more than possible without conceding the salaries of or displacing American workers. These trade agreements are nothing more than low-cost-labor flim-flams.

[AntiBank]

40. my mind reels at how rightward we are drifting on most fronts

[HughBeaumont]

41. Yep.

Seriously not liking the economic direction this board is embracing. Feels like Classical Liberalism Underground or Austrian School Underground. No thanks to that.

[AntiBank]

44. One of Trump's biggest threats is that he is so intemperate and craven that he is being used

as a cudgel of emotionally-Inspired mass panic to shepherd the left into a soft embrace or tacit support (via silent acquiescence) of right wing economic and military expansionist projections.

[dmosh42]

42. The problem with our definition of 'free trade' is really allowing big business to 'do whatever'....

to make big profits. I recall when Clinton approved of NAFTA, there was all kinds of 'rules' written about countries being fair with their labor. That meant having to do with wages, working conditions, etc. As soon as the law went into effect, everything was forgotten, and with no enforcement slave labor was ok too. So this baloney about 'free trade', like most things these days is bullshit. Also your conclusion that Truman, JFK and LBJ were 'free traders' is wrong, because at that time, even big business wanted to restrict trade to protect American industry.

[closeupready]

43. These principled discussions are fun, until you consider the corruption of DC

and our national bodies of elected (and unelected) officials. In light of that, nothing discussed as 'free trade' is EVER going to be about free trade; instead, every piece of legislation is crafted in such a way so as to sound principled and healthy but instead serves the narrow interests of those who have bribed, legally, our representatives.

[Elwood P Dowd]

49. NAFTA, GATT Uruguay Round, CAFTA, TPP, etc are not FREE TRADE!

These are nothing but outsourcing/investment/corporate control scams masquerading as "FREE TRADE".
What's sad is that DUers are now suddenly falling all over themselves supporting the "trap" because Trump is against NAFTA, and Obama is pushing for TPP. I've read statements here such as "Trump is against it so I'm for it" or "Obama is for it so it must be good".

Wall Street and the giant corporations that write these agreements give them feel good names like North American Free Trade Agreement or Trans Pacific Partnership, spend millions buying enough politicians to pass the legislation, and then the population goes merrily along with the scam. When the people wake the hell up 10-20 years later, its too late to put the toothpaste back into the tube.