One of the arts of political life today is defining the "national interest." In policies, parochial interests always will triumph if broader interests can't be coalesced into understandable themes and workable coalitions. It is simply a matter of knowing and caring. There is too much going on for everyone to know all the details of everything. If broader interests cannot be identified from the morass of details, then those who command the details will shape government policy.
You can apply this rule of thumb to dozens of areas of political life, but nowhere is it more relevant today than in trade policy. Time was, of course, that "free trade" was accepted automatically as part of the national interest. No more. When a recent New York Times-CBS News poll asked respondents whether they would choose jobs over lower-priced imports, 70 percent picked jobs.
Times change and, if free trade no longer furthers the national interest, it ought to be abandoned. But the overwhelming evidence is otherwise and, if the public disagrees, we face a self-destructive political failure in which popular attitudes diverge significantly from concrete interests.
Overwhelming evidence? Start with a recent report -- "Study of U.S. Competitiveness" -- submitted by the Carter administration (the work was largely done by the Labor Department) to Congress. You undoubtedly have heard much about the deterioration of the U.S. trade balance, but once you remove oil imports, the trade balance remains remarkably strong.
Put in simplest terms, America today is a massive exporter of capital-intensive and technology-intensive goods (from computers to heavy power equipment), a massive exporter of food and a large importer of consumer goods. The amounts are immense: in 1979, a surplus of $17.9 billion in agricultural exports, a $32.6 billion surplus in capital goods and a $30.2 billion deficit in consumer goods.
It's difficult to imagine a more favorable trade structure. With the exception of oil and some minerals -- most of which can be stockpiled -- we are not dependent on imports for strategic goods. Japanese automobiles and stereos may be conspicuous, but if they stopped coming tomorrow the nation's physical survival wouldn't be in jeopardy. The same cannot be said for the import patterns of Europe and Japan, which depend heavily on overseas food and raw materials.
Our trade mix also corresponds with emerging national and global social realitites. Advanced societies such as the United States gradually are becoming areas of relative labor scarcity, while other parts of the world -- especially the developing countries -- have huge labor surpluses. Even in the recession, the U.S. unemployment rate remains near 8 percent; that's a far cry from the 15 percent to 30 percent of some developing nations. As the average age of the U.S. population increases, the labor pool will grow even more slowly.
What better division of labor, then, than to have more of our basic labor-intensive goods produced elsewhere while devoting domestic resources to more productive higher-technology industries? The nature of work in advanced societies makes this approach especially compelling. As the labor force becomes more educated, it is less willing (and able?) to suffer the indignities and low wages inherent in many regimented manufacturing processes.
To cite these trends is not to deny the intense pressures -- both in popular attitudes and in the grievances of specific industries -- for protectionism. Part of that is simply the temper of the times; Americans feel particularly annoyed and angry at foreigners. But part of it also reflects misinformation and basic changes in the world economy. p
The same competitiveness report documents some of those changes. America's once unquestioned technological superiority is increasingly thin. The report found that with two exceptions, aircraft and power generators, America's top 20 manufacturing exports' shares of world exports declined between 1963 and 1977. Although some drops were slight, others were severe: U.S. farm equipment slid from 40 percent of world exports to 25 percent.
In short, some of the self-confidence is gone. Industries that once enthusiastically boosted free trade now fear imports and are a little less active. And there's the additional suspicion that U.S. products are always the victims of "unfair" practices. When auto companies and workers urge import restrictions, for example, they correctly argue that the United States is the only major country without some limitations.
Against this background, practical politicians have continued to pay lip service to free trade while becoming increasingly protectionist in practice. What's missed in this drift are the huge, largely invisible, costs. A recent staff study by the Federal Trade Commission found, for example, that restrictions usually resulted in costs to consumers at least five times as great as benefits to workers and producers.
Sometimes arguments are misused. Does anyone really believe that the U.S. auto industry's problems are not home-grown? It may be true that the Europeans restrict Japanese imports, but it's also true that European car manufacturers are more numerous and competitive among themselves than are American companies. Imports in Britain have skyrocketed to about 60 percent of the market, with Japanese cars accounting for less than one-third of that total.
And so the greatest cost is self-deception. U.S. economic power, both at home and abroad, lies heavily in the vitality of our producing enterprises. We cannot insulate ourselves from the reality that our technological and management advantages over the rest of the world have narrowed. Nor can we protect ourselves into rejuvenation. Many high-technology firms rely on exports for between 20 percent and 30 percent of their sales. They need the opportunity of new markets abroad and the stimulus -- the fear and excitement -- of worthy competitors. Other countries' trading policies may not be as open as they ought to be. But the national interest lies in striving to make them better, not allowing ours to get worse.