The naysayers of free trade are certainly a busy lot, starting with CNN's self-proclaimed champion of the American middle class, Lou Dobbs. "Free trade has been the most expensive trade policy this nation has ever pursued," the cable-TV personality warned a congressional subcommittee reviewing President Bush's fast-track trade promotional authority. "There is nothing free about ever-larger trade deficits, mounting trade debts, and the loss of good-paying American jobs.... The pursuit of so-called free trade has resulted in the opening of the world's richest consumer market to foreign competitors without negotiating a reciprocal opening of world markets for U.S. goods and services."
That's heady rhetoric, indeed. The silver-haired, well-spoken author of Exporting America even lardered his testimony with references to the Federal Reserve System and dropped the names of economic giants Adam Smith and David Ricardo. His was a seeming tour deforce.
The only lingering question is--Does Dobbs' rhetoric square with reality?
In the court of economic opinion, some jury members vote no. Take Donald Luskin of the investment-firm Trend Macrolytics LLC. Whereas Dobbs had testified that American had "earned less on investments abroad than foreigners earned on their investments in the United States [for the first time] since 1946," Luskin counterpunched with a hard fact. "According to the Department of Commerce's Bureau of Economic Analysis," Luskin said, "in 2006 the United States earned $57 billion more from investing abroad than all other nations earned by investing here." Which led Luskin to label Dobbs' presentation as "[a] cavalcade of error and statistical misinterpretation."
OK, enough Dobbs-bashing. (And don't attribute my gibing him as jealousy. My hair is just as nice, and nowhere near as silver.) The point is that all of us must resist the lure of overblown rhetoric regarding trade policy. Politicians--first cousins of...