Congress' decision this week to deny President Bill Clinton "fast track" status for free-trade negotiations was made for all of the wrong reasons-yet despite these wrong reasons, the question still remains: Was the decision was right or wrong?
Sound a bit confusing? Right decision, wrong reasons; Wrong decision, wrong reasons? Perhaps we should start with the question of why, regardless of whether or not they choose wisely or poorly, Congress' decision was made for the wrong reasons.
The answer is really quite simple: Bad reasons usually start with bad politics.
Ah yes, politics. Although Clinton is less than a year into his second term of office, it appears that the Democrats are already squaring off to decide who's going to be their candidate for the next presidential election. The party's current contenders: House minority leader Richard Gephardt and Vice President Al Gore. The party's first divisive issue: free-trade-Gore is for it, Gephardt against it.
The notion of free trade is probably the most misused and least understood idea in economic history. Typically thought of as a theoretical ideal that would fail miserably in practice, proposals for free trade usually get defeated by more tangible counter-arguments from special interest groups that cite its drastic effects on our domestic economy. Congress' decision to deny Clinton fast track status for his upcoming trade negotiations was no exception to the rule.
More often than not, however, these arguments against free trade are nothing but a veil behind which special interest groups can hide their protectionist trade policies. Such schemes, while greatly boosting the business of domestic producers and exporters, do so only at the expense of domestic consumers who end up paying higher prices resulting from the ensuing inefficient allocation of resources.
So then, why do these self-interested groups always prevail if they're supposed to be "in the wrong"? In a word: propaganda. If you told the average group of workers that, as a politician, you were endorsing an opaque economic hypothetical over a transparent increase in their production of overseas exports, do you really think they would understand-much less vote for-you?
Therefore, it should come as no great surprise that the special interest group that fought against fast track is the recently rejuvenated master group that fought against fast track is the recently rejuvenated masters of propaganda themselves: the labor unions. This is quite ironic considering that the unions have regained much of their stature due to their bogus contention that the number of part-time jobs is on the rise in the United States, thereby hurting the sacred American family. This is simply not true and neither are their arguments against free trade.
But right or wrong, votes are still votes and politicians like to be reelected. So when the labor unions recently regained their foothold in U.S. politics, the Democrats were forced to listen-especially when they threatened to vote against any member of Congress who voted for "Fast Track."
And it even appeared as if they came prepared with a presentable argument: the failure of NAFTA. Just take a look at the negative effects that NAFTA has had on both the American and Mexican economies, they said: The United States has lost too many jobs to new factories south of the border, and the Mexican economy hasn't experienced the increased standard of living that was all but guaranteed by the foolproof free trade agreement.
Then perhaps free trade really is economic hocus pocus after all. If that were truly the case, however, then every economist in the world would be out of a job. Therefore, the problem must lie with NAFTA, not because it promotes free trade, but because it promotes trade diversion.
The problem with NAFTA is that it's a red herring rather than a free-trade agreement-it's really a preferential trade agreement (PTA). In effect, this type of agreement redirect trade from efficient sources (i.e. countries outside the PTA) to inefficient sources (i.e. countries in the PTA that have a tariff advantage over non-members), thereby hurting the economies of both non-members and members. In fact, a rough estimate recently made by one economist suggests that NAFTA has already caused $3 billion of trade diversion. So what does all of this economic mumbo jumbo have to do with whether or not Congress was right in denying Clinton fast track negotiating power? The answer lies in how Clinton would have used the power had it been approved. It should now be obvious that the answer is: It depends.
If Clinton were to support true multilateral trade, then Congress would have been wrong for all the wrong reasons so conveniently provided by unionized laborers. If Clinton, however, were to encourage the expansion of NAFTA to include more South American countries-thereby increasing trade diversion, then Congress would have unknowingly been doing everyone a favor. But like the notion of free trade, this question is purely academic... or, dare I say, hypothetical.
Rod Feuer is a Trinity junior.
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