The New Congress and Trade

The balance of power in Congress has been tipped in favor of the Democrats. With the Democrats in power there will finally be a check on executive power and some oversight on the Iraq War. The most unfortunate possible change from this freshman class of Dems is that Congress may turn against free trade.

These aren't Democrats in the mold of Bill Clinton, who believed in free trade and investing in infrastructure. This freshman class of Democrats promises to be fiscally and socially conservative and, unfortunately, anti-free trade and anti-immigration. These democrats represent the more nationalist constituencies of this country.

Slate's Jacob Weisberg has given the incoming Democrats the “The Lou Dobbs Democrats” moniker. Like Lou, they blame free trade and immigration for the ills of the middle class. It's misplaced blame.

With trade, the costs are targeted. Anyone can point to the loss of jobs and tie that to lower wages abroad. It is much more difficult to point to the widespread benefits of trade. You would have to imagine the world without trade. Prices for basic goods at the supermarket would be higher, you couldn't get certain produce, like tomatoes, year-round. Prices at Wal-Mart, and you may not believe this, would actually be higher. Cloths, cars, computers, plane tickets, phone bills and any other good or service provided by business that cut costs by outsourcing work or importing cheaper raw materials would have higher costs, and thus, higher prices.

Who would this hurt the most? Not the super-rich CEOs. It would hurt the single moms and middle-class families who makes ends meet by shopping at Wal-Mart. It would hurt the very poorest people trying to buy basic goods.

Stifling free trade won't solve the problems of those who lost jobs due to outsourcing.
Investment in education, infrastructure and technology will. Don't expect these new Democrats to understand that, but hope that some of their older counterparts will be wiser.