Race to the bottom? The presidential candidates' positions on trade.

• Author: James, Sallie
• Position: Political Landscape

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"Only when the American people are free to exchange goods unimpeded by the often faulty judgment of politicians will freedom and prosperity prevail."

IN RECENT MONTHS, the economy has been in the headlines and in the sights of politicians seeking the presidency. Particularly on the Democratic side, the candidates have sought to paint a picture of a doom-and-gloom economy and a convenient culprit: the trade policies of the Bush Administration. Although Sen. John McCain (R.-Ariz.) largely has stuck to his free-trade principles, even when it might have been politically expedient to pander to voters' worst instincts, Sens. Barrack Obama (D.-III.) and Hillary Clinton (D.-N.Y.) have engaged in a war of words over the alleged damage done by trade liberalization. As news about the economy worsened and crucial primary contests in industrial states approached, the rhetoric reached a nadir.

Although trade votes by Congress are a necessarily imperfect yardstick with which to measure future policy--packaged as they often are with other, sometimes contradictory, legislation-they seem to be consistent with the campaign pledges of the candidates. Voters could expect a Republican Pres. McCain to promote freer trade and cuts in market-distorting subsidies, and a Pres. Obama to view free trade between voluntary actors as something to be restrained, loaded with conditions, counterbalanced by an expansion of the welfare state, or both.

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The 2008 presidential election is one of the most open since 1952, with no incumbent president or vice president seeking to return to the White House. Many Americans are concerned about the direction of the country, with an Associated Press-Ipsos poll conducted earlier this year showing that 71% of respondents believe that the U.S. is on the "wrong track." A theme of "change" consequently has been featured prominently in the campaign, adopted most obviously and early by Obama, but soon followed by the other candidates.

Much of the pessimistic sentiment probably can be attributed to the unpopular war in Iraq but, as the economy slows, and as changes in Iraqi policy yield enough progress to remove the conflict from the front page, the candidates' positions on economic issues surely will come to the fore--and, to the extent that the Democratic candidates were willing to blame government policy, including trade liberalization, for the slowdown, the attention may be economically damaging. As long as the Democratic presidential aspirant claims to be able to "fix" the economy, potential exists for misguided policy to follow populist rhetoric.

That is a shame, because free trade is a vital component for maximizing economic growth. The U.S.'s ongoing commitment to expanding trade--a commitment shared by previous Republican and Democratic administrations--has resulted in lower prices and greater product variety for consumers, job growth for exporters, and higher levels of productivity and innovation that increase prosperity in this country and abroad. Accounting for the phases of the business cycle, indicators of American worker and household well-being and prosperity continue to improve. The decades-long decline in manufacturing employment (although not matched by a decline in manufacturing output) has corresponded with an increase in service-sector jobs, with a net 26,000,000 new jobs added since NAFTA took effect, and an increase in real compensation of nearly 23%.

How likely is it that the good news on trade will come to the fore later in the election cycle? While campaign rhetoric can sound the most extreme during the primary season, a more centrist tone tends to emerge during general elections--and let us not forget the tempering effect of sitting in the Oval Office--as candidates vie for the allegiance of independent voters. Sen. John Kerry of Massachusetts, for example, referred to "Benedict Arnold CEOs" (i.e., those who moved production offshore) during his campaign for the Democratic nomination in 2004, but spoke little of the matter or of trade generally once he had secured the nomination. Candidates' policy platforms, as indicated through press releases, speeches, and formal issues papers, therefore are an imperfect guide to their thinking on made (notwithstanding the risk that candidates can be boxed in by their campaign rhetoric). Yet, supplementing that literature with their voting records should provide some clue as to the ideology of the candidates and how they might go about implementing trade policy.

The continuing fallout from the subprime mortgage meltdown and some worrying financial indicators suggest a slowing economy. The Federal Reserve Bank has increased its projection for inflation and unemployment, while lowering its projection for growth. Obama (and Clinton while she still was in contention) exploited that news, linking the slowdown to what they see as faulty policies of the Bush Administration and to global events that they feel adversely have affected the American middle class. They implied that more government management of made flows will reverse an economic slump.

Thus, a clear distinction is emerging between the two major...