One of the most important achievements in the U.S. Constitution, when the Founders turned it over to the state ratifying conventions, was the Commerce Clause. In effect, it turned the United States into a free trade zone, preventing the states from using their tax powers to discriminate against imports from other states. This is one of the reasons that the United States became the economic powerhouse of the world over the next two centuries. Europe only caught up with the U.S. in recent decades.
President Clinton (42) realized this, or anyway acted as if he did, when he pushed NAFTA through Congress. The Washington Post notes this:
PRESIDENT Bill Clinton had to fight many powerful lobbying groups to win approval of the North American Free Trade Agreement in 1993. None was more imposing than that most Democratic of constituencies, organized labor. Mr. Clinton stood up to the unions: He publicly condemned the AFL-CIO for its "roughshod, muscle-bound tactics" against undecided Democratic members of Congress. In the end, he was rewarded for his persistence. Not only did NAFTA pass, but Mr. Clinton won reelection in 1996 -- with the unions' support. Fourteen years after NAFTA was approved, the case for free trade remains the same. Though it imposes costly dislocations on workers in less-competitive industries, it benefits the country as a whole by increasing efficiency. Over time, the result is more jobs and lower prices.
Senator Clinton, with her eye on the nomination, has chosen to repudiate her husband's and her own good sense.
Yet Sen. Hillary Rodham Clinton (D-N.Y.) seems to have forgotten her husband's winning formula. Campaigning for president, she has been busily repudiating his legacy on free trade, voting against the Dominican Republic-Central American Free Trade Agreement in the Senate and backing away from NAFTA. In an interview published yesterday by USA Today, she called for a "timeout" on further trade agreements until their impact can be fully studied. Ms. Clinton even suggested that it might be time for NAFTA to be "adjusted." Her reasoning was not terribly clear: This is a candidate, after all, who has voted in favor of free-trade deals with Singapore and Chile.
Virtually all economists, and everyone who employs common sense, agree that free trade is good for all the economies involved, and that protectionism is bad. Protecting an industry against competition from abroad is only necessary if that industry cannot compete on its own. So protectionism always protects inefficiency. It hurts producers in the foreign country, who cannot export their products at a reasonable price, and it hurts domestic consumers who have to pay more for their shirts and shoes.
But the more important effect is on the economies as a whole. Trade is to economies what the blood stream is to the body: it gets stuff where it needs to be in the most efficient way possible. NAFTA promoted healthy circulation between the U.S., Canada, and Mexico. Despite Ross Perot's warning of "a giant sucking sound" as U.S. jobs were sucked south of the border, U.S. job growth has been strong under NAFTA. It is obviously a good idea to extend free trade to nations further south. Turning the Americas into a free trade zone will make the Western Hemisphere a giant compared to Europe, and keep us competitive with the growing economies of Asia.
Senator Clinton is smart enough to know this. Her earlier votes show it. But she has chosen the low road toward the White House. Maybe she will come around, should she win the Oval Office. She may be forced to. Bush (43) found his moment to pander to the steel industry. But in the contemporary world, it is a lot harder to protect one industry without a lot of others crying out in pain. When Bush coddled American steel, he hurt every other industry to consumes steel. We are probably moving toward a free trade world, like it or not. If Ms. Clinton could summon the courage to point this out, she might deserve the Oval Office.
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