No matter who prevails in either party this primary season, there’s been a big loser in this campaign: the notion of free trade. It’s remarkable how far from favor the idea of further trade pacts has fallen.
Bernie Sanders, the leftmost of all the presidential hopefuls, points with pride to his long opposition to the array of trade deals that began with NAFTA.
Hillary Clinton, worried about Sanders gaining ground on her left, has executed a slow-motion turnaround, to mirror his stand against the Trans-Pacific Partnership, the latest manifestation of the free-trade regime.
Fulminating against trade deals is, of course, a Donald Trump stump-speech staple. Here in Wisconsin, he’s been highlighting the number of jobs trade has cost the state. For Trump, that’s a two-fer: A way to rally blue-collar voters to his cause and a cudgel with which to bash Wisconsin’s governor, Scott Walker, a one-time campaign rival who is now backing Ted Cruz.
Trump also uses free trade against Cruz. He told a capacity crowd in Appleton that Cruz “is in favor of TPP,” and warned that if “you think NAFTA was bad, TPP is worse.”
There, Trump was — surprise, surprise — taking liberties with the truth. Cruz once spoke favorably of TPP in concept, but he has since voted against fast-track approval authority and says he will vote against the deal itself, too.
Cruz’s rationale may be contrived — TPP, he says, would undermine US sovereignty and immigration laws — but here’s what’s notable: Even the most conservative of the Republican hopefuls opposes the deal. Indeed, of the five major-party candidates, only Governor John Kasich of Ohio backs TPP.
Why the hostility? Simple: Candidates are taking their cue from the people. Consider this, from a new Marquette Law School poll: Only 37 percent of likely Wisconsin voters think free trade agreements have mostly been a good thing, while 46 percent think the effects have mostly been bad.
Interestingly, Republican voters are more opposed than Democrats: By 48 percent to 32 percent, GOP voters look askance on those agreements, while Democrats are almost evenly divided.
And that aversion comes in a state where the official unemployment rate is only 4.6 percent.
You hear those sentiments voiced by backers of both Sanders and Trump. Most of the people I talked to at Sanders events in West Allis, a community near Milwaukee, and in Kenosha, a former auto-manufacturing town near the Illinois border, and at a Trump event in Appleton, about 40 miles southwest of Green Bay, had tales of companies that had closed down or pulled up stakes in the last few decades, leaving them or family or friends without a job, and destabilizing their communities.
“When I started in 1972, you could walk in almost anywhere and get hired, “ said Rocky Cannestra, a former factory worker who saw one of his former employers slash employment in Milwaukee while opening a facility in Mexico. “I don’t see it coming around.”
“Trade has been awful for the US,” said Dave Hietpas, owner of an Appleton engineering firm, and a Trump supporter. In no small part, he said, that’s because “countries like China manipulate their currency” to gain an unfair advantage.
“I think the effects have been a disaster,” said Dave Hietpas, who, like Cannestra, was waiting to see Sanders in West Allis. “The trade agenda succeeded in sending so many jobs overseas without the compensatory payoff.”
Now, classic free-trade theory asserts that, despite the disruption it causes, unrestricted trade benefits a nation overall, both by opening new markets for things it produces most efficiently and by letting its consumers buy cheaper good from other countries. But it’s hard to expect those working in jobs that are at risk due to trade pacts to welcome open trade with open arms.
Nor does the allure of less expensive foreign goods serve as much solace.
“If you don’t have a job, you’re not going to have the money for a lot of goods,” said Bill Breihan, a retired steelworker I met at Sanders’ West Allis event. The industry he used to work in, he notes, has been devastated by cheaper imported steel.
Traditional economic theory also says the economy will reallocate displaced labor to more productive uses, but there are plenty of hurdles in that path.
One is the skills question. In an era of sophisticated computer-aided manufacturing, it’s easier for lesser skilled, lower-paid workers in other counties to compete for work that once might have been beyond their skill level. A related issue: If a trade deal costs a nation reasonably well-paid employment, and its displaced workers can’t land a higher-skilled job, the opportunities left will likely be worse than those lost.
That’s particularly true if a considerable pool of workers displaced by trade effectively bids wages down.
Another hurdle, obviously, can be the necessity of relocating in pursuit of other opportunities.
You can see a paradigm for some of that in what’s happened to Kenosha, long an automobile-industry town. Auto work in Kenosha traces to the early 20th century, and the Thomas B. Jeffrey Company, which became Nash Motors, which merged with Hudson Motors to become American Motors Corp., which was later bought by Chrysler.
Thousands once worked in the engine and auto-assembly plants there. Carmaking itself shut down in 1988, but, as late as 2006, some 1,400 were employed in Chrysler’s Kenosha engine plant.
Then came the Great Recession and the auto-industry crisis. The federal government bailed out Chrysler — and then Chrysler bailed out of Kenosha, closing its plant there and opening one in Mexico.
Kenosha has struggled to reinvent itself. And the city feels lucky that Amazon opened a “fulfillment center” — read: massive warehouse and shipping facility — there last fall. Amazon now employs more than 1,000 full-time workers.
But warehouse work doesn’t create value the way engine-making did, and thus doesn’t match the wages of the old jobs.
So though Kenosha residents are glad to have Amazon, the wage level at the center — about $13 an hour, on average — has also contributed to a sense that economic opportunity has slipped a notch.
Rebecca Stevens certainly feels that sense of uncertainty.
She saw her own life fall apart with the Great Recession, when her husband’s small business failed and the couple lost their home. They divorced, their marriage in some part a victim of the stresses and strains of their struggles.
When she looks at trade deals, the big effect she sees locally was Chrysler decamping for Mexico. And when it did, she notes, Kenosha also lost the array of smaller companies that made parts for Chrysler and offered more good blue-collar jobs. Although she’s glad Amazon chose Kenosha, that just isn’t the same kind of work.
“The pay scale — it’s hard to make a living,” she says.
In classic free-trade theory, trade works overall because those who benefit can compensate those who lose.
In reality, of course, the only way that could happen systematically is through the mechanism of government. And in an era when the large income gains are concentrated in the top one percent, while government services are under continual budgetary pressures, it’s hard to argue that’s happening. Indeed, opportunity isn’t even being distributed in an equitable fashion, as evidenced both by the student-loan debt young people carry and in the decrease in upward mobility in America.
In part, that’s why people who suffer the negative impacts of trade have come to see it as yet another policy that upper earners are pushing, for their own benefit, at the expense of average workers.
Richard Thomas, one of the few African-Americans at Sanders’ Kenosha event, had come from St. Louis to visit his son, who lives in the area. A retired forester, Thomas said that free-trade deals have to be with countries that pay comparable wages, or they end up costing US jobs.
“I understand that if you are a business, you want cheap labor,” he said, “but you can’t just make all the money and have people suffer.”
In Wisconsin, a lot of heads would nod in agreement at that. And not just here, of course, but in many other places as well.
Politically, it leads one to this conclusion: No matter what the economic experts and advocates may say, average people simply don’t see trade pacts as a positive for them. Increasingly, the question free-trade advocates will have to answer is the one Wisconsonites are asking: What, really, is in this for me?