The Debatable Land

Plucky Honduras!

Meanwhile, there is good news from Latin America. Cato's Juan Carlos Hidalgo reports that the President of Honduras is the latest Latin American leader to call for an end to the "War on Drugs". Argentina and Mexico have made similar noises in the past. Some of this, for sure, is because the continent is turning to the left and is less concerned about upsetting Washington. Some of it, too, becase the failure of the "War on Drugs" is ever-more apparent. But Hidalgo suggests another reason too:

Another important factor is that many Latin American countries are now less susceptible to punishment from the United States, thanks in part to free trade agreements. A decade ago, all Latin American countries but Mexico depended on unilateral trade preferences to export to the U.S. market. Upsetting Washington could represent losing these preferences. Today, 11 Latin American countries have implemented (or are in the process of implementing) permanent trade agreements with the United States that ironically gives them more stability in their relationship with Washington.

This, I must say, is perilously close to a (rare) win-win situation for libertarian-minded chaps. As such I am, of course, suspicious...

The Problem With Non-Americans

At Culture11 there's some advice for the candidates before tonight's "debate." It's unlikely much of it will be taken. At her own blog Kerry Howley adds this:

I’ll just add that there is a massive gap between Obama’s actual rhetoric and the conservative portrayal of him as some sort of naive, starry-eyed internationalist. There is no globalist in this election, naive or otherwise. There is the candidate who insists that foreigners are bloodthirsty killers, and the one who keeps reminding you that foreigners will shutter your factories, poison your children, and destroy your domestic motorcycle industry. Yes, yes, I realize that we aren’t supposed to listen when the Obama campaign depicts economic engagement as un-American. That’s just smoke and mirrors for some nice folks in Michigan; the rest of us are supposed to shove our fingers in our ears, dream of container ships, and wait for Austan Goolsbee to fix the whole thing later.

Quite so. Alas. There are many reasons for preferring Obama in this campaign, not the least of them being that he's likely to be the better, more responsible, less ghastly President. But as Kerry says, his posturing on trade is perhaps the most depressing element of his campaign. Yes, we - foreigners that is - understand that it's "just the campaign" and yes we know we're not supposed to take it too seriously. And yes too we "know" that it's easy and convenient to blame the rest of the world for all manner of ills. Nonetheless, this is an area in which, shall we say, the promise of Obama is severely undermined by the reality of the campaign he has run. Fine.

But there comes a point when the people to whom you've written campaign cheques will want to cash them. Maybe not today and perhaps maybe not even tomorrow. But sometime. And for a political movement, that spells trouble. One reason the GOP is in such a parlous position today is that it has not, despite all the alarmist stuff suggesting otherwise, done very much for religious conservatives. Rhetoric is fine but after a while the base demands more. When that "more" doesn't arrive the movement loses interest and enthusiasm. And so you need to select someone such as Sarah Palin to keep the buggers believing...

Now obviously the Democrats are still some way short of reaching that point. But, still, Obama wants to restore America's "standing" in the world while also blaming them dirty furriners for America's troubles. He's fortunate the ret of the world just wants to be rid of the GOP. Nonetheless, this may all prove problematic once you're in office. I understand that you need to do what it takes to win first and then worry about governing. But still, this is an ugly, narrow-minded, ignorant, hostile element of Obama's campaign.

Like Kerry I guess, one just has to have faith in the candidate's faithlessness.

Department of Fancy That!

Like Philip Salter, I dinnae often agree with Gordon Brown. But fair's fair (especially the morning after a brutal by-election thumping), here's some of what the Prime Minister had to say at the Google Zeitgeist conference  this week:

The two great protected industries of the moment are the two industries that are causing us the greatest problems today: the oil industry, with a cartel run by Opec; and the food industry, with high levels of subsidy that are preventing prices for people that at are at a realistic level, and preventing people from producing in countries and continents like Africa at a level that they should. And we need to have flexible markets there.

Also this:

So here we have this contradiction. We know that the only way we can have a successful globalisation is following the principles of your industry - open, flexible, inclusive, empowering. We know also that public sentiment, just as at other times of rapid change, is moving to be protectionist.

So what do we do about it? It seems to me pretty obvious, that we have now got to put the case for globalisation. First of all we have got to show people that the growth in the world economy as Chinese and Indian people become consumers is going to be very substantial in the years to come. I expect the world economy to double in size in the next 20 or 25 years, and even although we are going through the credit crunch and growth is faltering in America and Europe at the moment, we must not lose sight of the basic optimism of a world where producers become consumers in Asia and the world economy is going to grow at a very rapid rate.

The second thing that I think we can tell people that is about an optimistic view of the future is of course this - that there are huge opportunities for people in every continent of the world. It is estimated that there will be a billion more people in skilled or professional jobs within the next 20 years. So the opportunity for social mobility, not just in China or India, but the opportunities for people to make the best of their talents in countries like ours and in America and across the whole of Europe are enormous indeed.

Whatever else one may say about him, Brown is on the right side here. and I'll just add that it's refreshing - after spending five years in Washington where, it sometimes seemed, Sino-Panic was the coming mania - to see a significant politician welcome the idea of millions of people across Asia (and Africa) being able to dream of a better, more comfortable, option-filled, life than their parents ever did. That's a great thing indeed and something that merits celebrating in its own right, free from any calculation of what our own economic interest might be in the matter. (Though happily, the rise of the east is also good for us in many ways. Hurrah!)

A Democratic Plan Colombia

Hillary Clinton on the proposed US-Colombia trade deal:

I am disappointed that President Bush has decided to send the Colombia Free Trade Agreement to Congress. As I have said consistently for several months, I oppose signing any trade deal with Colombia while violence against trade unionists continues and the perpetrators are not brought to justice. The United States should be pursuing trade agreements that promote human rights and worker rights, not overlook egregious abuses.  I will vote against the President's Colombia trade agreement, and will urge my Senate colleagues to do the same.

No surprise there. No surprise either that Barack Obama is bound to vote against the deal himself. Well, that's the way the wind is blowing: in favour of economic nationalism and state-run racketeering. So be it. Theoretically this might just be campaign posturing but it seems as though it might be hard for a Democratic president to abandon this sort of rhetoric once in office. So there we have it: Democrats will rebuild links with the rest of the world by slapping friends and allies in the face. How brilliant.

And the fig-leaf given to justify this (relatively modest) trade deal? Ah yes, dead trade unionists. Well, I don't approve of murdering trade unionists and it would be grand if more of those responsible for killing union organisers were brought to trial. But all sorts of people are liable to be whacked in Colombia and many of those responsible are never brought to trial either.

Of course, much of Colombia's violence is exacerbated by the United States' lunatic and criminal drug policies, but last time I checked I didn't see any Democratic presidential candidate calling for the abandonment of Plan Colombia.

And how many trade unionists were murdered last year anyway? Fewer than 40. This chart shows you how, happily, it's safer to be a trade unionist in Colombia than to used to be. In 2002, by contrast, there were more than 30,000 murders in Colombia - or 78 per 100,000 Colombians. Many, perhaps even most, of those murders weren't solved either.

Obama on trade: still not as grim as Clinton?

More on trade. Jagdish Bhagwati says that Obama's better  - or, rather "a less disturbing prospect" - on trade than Clinton. He gives five reasons:

First, Mrs Clinton, in an infamous interview with the Financial Times, responded to a question on support for the Doha round with the need for a pause, whereas Mr Obama has not done so. Second, whereas Mr Obama’s economist is Austan Goolsbee, a brilliant Massachusetts Institute of Technology PhD at Chicago Business School and a valuable source of free-trade advice over almost a decade, Mrs Clinton’s campaign boasts of no professional economist of high repute. Instead, her trade advisers are reputed to be largely from the pro-union, anti-globalisation Economic Policy Institute and the AFL-CIO union federation.

Third, Mr Obama’s main union support comes from the Service Employees International Union and the Teamsters, neither of which is protectionist: the SEIU’s membership is in the non-traded sector and, except on the issue of Mexican trucks coming into the US, Teamsters do well as trade expands. By contrast, Mrs Clinton’s support comes heavily from the AFL-CIO, which holds strong anti-trade views. This matters because the IOUs you sign during campaigns provide a straitjacket that can restrict your policy options.

Fourth, while Mr Obama’s anti-Nafta rhetoric is disturbingly protectionist, as is Mrs Clinton’s, remember that this is also strategic. If both are anti-Nafta in the campaign now, her opposition is reinforced because she carries the burden of having supported her husband in backing it.

Fifth, Mr Obama has smartly seized John Kerry’s proposal to remove the incentive to invest abroad and has gone further by proposing that those who invest at home will be given a tax incentive. It is dubious that this proposal will survive challenges from existing bilateral and World Trade Organisation agreements, or can achieve much when other countries can do the same. It is exactly the sort of policy that a constituency fearful of losing jobs demands but, by meeting that demand, President Obama would be left free to abandon the anti-trade rhetoric and embrace the multilateral free trade that has served the American and the world interest so well.

Not great, but better than it might be...

More Canadian Bacon

The Canadians say the Clinton campaign has also told them that her abysmal campaign rhetoric should not be taken too literally. One hopes that is the case. This leads Noam to add, tongue in cheek (I hope):

What is it with these Canadians? Are they running some sort of entrapment operation up there? Why do they keep trying to torpedo Democratic candidates?

But why shouldn't the Canadians respond to threats made against them? NAFTA isn't all about the USA after all, Canada and Mexico have interests too.

Or, to put it this way, imagine if a British would-be Prime Minister ran on a platform that called for opting out of NATO. Don't you think the Americans might point out that this was a bad idea and one that would have consequences for all areas of the US-UK relationship? I rather suspect they would, don't you?

And of course the Americans aren't always known for their restraint when it comes to interfering in other people's elections. At a (very) minor level, recall Ronald Reagan's refusal to meet poor old Neil Kinnock, leaving him to kick his heels in a White House ante-room. Mrs Thatcher was going to win the 1987 election anyway, but Kinnock's humiliation dealt a pretty severe blow to his pretences to statesmanship.

UPDATE: Dan Drezner gives you his indispensable Rules to Understanding Canadian-American Relations.

The Democrats' War on Canada

Megan McArdle suggested last year that one way to choose a candidate was to look at their economic advisers and pick the candidate with the smartest team. That being so, she lauded the University of Chicago's Austan Goolsbee, an advisor to Barack Obama. This week Goolsbee's in trouble for suggesting that the grotesque nonsense on trade being peddled by the Obama campaign was largely political posturing in advance of tomorrow's Ohio primary. Let us trust that he's right.

According to a memo written by a Canadian diplomat at the Chicago Consulate:

"Noting anxiety among many U.S. domestic audiences about the U.S. economic outlook, Goolsbee candidly acknowledged the protectionist sentiment that has emerged, particularly in the Midwest, during the primary campaign. He cautioned that this messaging should not be taken out of context and should be viewed as more about political positioning than a clear articulation of policy plans."

Of course foreign governments know that there are some things that candidates say on the campaign trail that are for purely domestic political consumption. Yet at the same time, when Obama promises to bring "the hammer" down on "unfair" deals* such as  NAFTA and when he joins Clinton in saying it's time to "opt out" of the treaty it's not unreasonable to take note of this. Political sophisticates are supposed to wink at this and remember that each candidate is simply throwing a bone to the poor, deluded rubes who think NAFTA is the source of all America's woes, but this sort of campaign rhetoric stores up trouble for the future. At some point the rubes are going to demand satisfaction and it will be harder

Jay Newton-Small and Noam Scheiber wonder why the Canadians are leaking this (Noam calls it a "shocking" and "egregious" breach of protocol, suggesting, like Bob Shrum, that it's "more like a dirty trick by an operative in a conservative government than anything else"). To which one must say: come off it. If Democratic presidential candidates are threatening Canada, the Canadians have every right to warn that such threats are a) unfriendly and b) have consequences - including on oil supplies (and Canada, not Saudi Arabia, is the largest supplier of energy to the United States).

I'm firmly in the Dan Drezner camp:

Democrats cannot simultaneously talk about improving America's standing abroad while acting like a belligerent unilateralist when it comes to trade policy.

Does it really need to be said that threatening your friends is poor policy? Apparently so.

UPDATE: Noam thinks the Clintons are gaining traction with this and that the stramash is causing Obama problems. Well, they're of his own making.

*Free trade is, of course, a moral good, but happily it's also good economically. Dan Griswold gave a useful summary of NAFTA's successes in 2004.

Nowhere were the predictions about NAFTA more apocalyptic than in regard to manufacturing. H. Ross Perot accused NAFTA of "deindustrializing our country," and Rep. David Bonior, the soon to be ex-congressman and Democratic Whip from Michigan, predicted flatly that NAFTA "will destroy the auto industry."

In the eight years since the implementation of NAFTA, those predictions have become laughable. Between 1993 and 2001, manufacturing output in the United States, as measured by the U.S. Federal Reserve Board, rose by one-third. Output of motor vehicles and parts rose by 30 percent. In fact, in the first eight years of NAFTA, manufacturing output in the United States rose at an annual average rate of 3.7 percent, 50 percent faster than during the eight years before enactment of NAFTA. (See figure.) Of course, this is not an argument that NAFTA was the primary cause of the acceleration in manufacturing output, but it does knock the wind out of the myth that NAFTA has somehow caused the "deindustrialization" of America.

Manufacturing employment has fallen in the past few years, but that cannot in any plausible way be blamed on NAFTA. In fact, the number of Americans employed in manufacturing grew by 706,000 in the first four years of NAFTA, from January 1994 to January 1998. The decline in manufacturing jobs since 1998 has not occurred because those jobs have gone to Mexico; it has occurred because of (1) collapsing demand for our exports due to the East Asian financial meltdown in 1997-98, (2) our own domestic slowdown in demand due to the 2001 recession, and (3) the ongoing dramatic improvement in manufacturing productivity--fueled by information technology and increased global competition--that has allowed American factories to produce more and better widgets with fewer workers.

That was true four years ago and it's still true today.

Department of Labelling

Ezra Klein writes:

Sources tell me that the Bush administration has stopped using the term "protectionist" because they found it polls really well. Instead, skeptics will now be termed "economic isolationists," so as to better smear them as people who would've lost World War II.

But how can it be a smear if it's, well, true? Protectionists are economic isolationists.

John Edwards: nativist brute

John Edwards on trade:

After growing up in Carolina mill towns, John Edwards understands the devastating impact trade can have on workers and communities.

That's why he favours protectionist policies that would reduce trade and throw workers out onto the street. Trade kills, you know. 

Also: why does Edwards hate poor people in poor countries so much that he wants to keep them impoverished? In many respects Edwards is just as much a nativist as anyone on the American right (Duncan Hunter for instance). It would be nice if people remembered this let alone, heaven forbid, mentioned it more frequently.

Three cheers for the Tories. Yes, really.

David Cameron is receiving some grief for zipping off to Rwanda to talk about the Tories' new policies on global poverty, leaving behind the whines of some that he is ignoring his flooded constituents so-called plight. Well, too bad. Cameron had a good, welcome message to deliver in Kigali:

Tory leader David Cameron has called for an end to trade barriers that put developing countries at an "unfair disadvantage", during a trip to Rwanda.

He said all rich countries should end trade tariffs unilaterally and British aid spending should be speeded up.

Launching a policy group's report on global poverty, he said trade rules were "immoral".

The group's proposals, which may or may not be adopted as Tory policy, include making aid spending more "transparent".

In a speech in Kigali, Mr Cameron called for an immediate end to trade barriers, saying: "Forget the endless tortuous negotiations about getting something in return.

"Just do it. We can afford it, Africa needs it, and we will all benefit from it."

Peter Lilley, who chaired the policy group that came up with the party's new approach, writes in today's Telegraph:

We want to see a campaign to achieve for developing countries' trade what Drop the Debt and Make Poverty History have done for debt relief and aid.

The aim should be to give all low-income countries real trade opportunities with the developed world - that is why we call the campaign "Real Trade".

We hope there will be popular pressure on governments in the EU and other rich countries to put a real trade package at the heart of a revived Doha round or, if it fails, in its place.

In our view, Real Trade would require rich countries to do five things: open their markets unilaterally to the products of all low-income countries; liberalise the "rules of origin" that result in 40 per cent of imports that should enter Europe tariff-free paying duties; give incentives to reduce the high tariff barriers between developing countries; abolish export subsidies that damage Third World agriculture; and give more Aid for Trade to help poor countries develop their exports.

We also want to see more emphasis on economic growth in aid programmes. The proportion of OECD donors' aid spent on infrastructure has fallen by two thirds and that on agriculture by even more over two decades.

Hear, bloody hear. Whatever one might think about the Cameronians "squishyness" on some issues, they're spot on here.

Is it too much to hope that other countries might follow Cameron? Probably. After all, the next President of the United States is (as matters stand) likely to be a Democrat and thus unlikely to be too sympathetic to this sort of thing. For some reason Amrican liberals - sorry, progressives - seem determined to resist moves towards free-er trade and, consequently, are quite happy (even determined?) to keep the Third World poor.

UPDATE: Julian Sanchez highlights "Afrobeat star Femi Kuti" saying much the same things as the Tories. Beat that, Iron Broon.