FOR MORE THAN 100 YEARS the one issue that distinguished the two major parties more consistently than any other was trade. The Democratic Party from the time of Andrew Jackson tended to favor low tariffs and was hostile to trade barriers. The Republican Party from the time of Abraham Lincoln favored high tariffs and protection for American producers.
One of the first things the Republicans did when they got into power in 1861, even as war was swirling around them, was to raise the tariff. One of the first things the Democrats did when they got a majority in Congress was move to lower trade barriers. Fights over trade were central issues in American politics. Smoot-Hawley was passed by a Republican Congress in 1930; the architects of the low tariff free trade policies after World War II were Democrats such as Cordell Hull and Dean Acheson.
Now the issue is on the front pages again, but turned upside down. The leading proponent of free trade is the Republican president, Ronald Reagan; you could almost say that support of free-trade principles is one constant that connects the young New Dealer movie star with the cheerful conservative president. And the leading fighters for trade barriers are the Democrats.
In the last campaign Walter Mondale called for a tougher trade policy, and this year leading congressional Democrats -- Sen. Lloyd Bentsen, Reps. Dan Rostenkowski and Richard Gephardt -- have sponsored a bill that would put a 25 percent surcharge on imports from Japan, Korea, Taiwan and Brazil, unless they lower trade barriers or cut their trade surpluses. Most Democrats supported domestic content legislation for autos and are now supporting the textile measure sponsored by Rep. Ed Jenkins (D- Ga.). Not all Democrats are going in that direction; the Democratic Leadership Council is about to announce a policy package aimed at increasing American competitiveness. But if there is a protectionist party today, it's the Democrats.
In a special congressional election this summer in rural Texas, Democrat Jim Chapman's tough talk on trade -- and his Republican opponent's gaffe when he said that he couldn't see how trade affected east Texas -- helped the Democrats hold a Deep South seat they had feared they would lose. Democratic congressional campaign chief Tony Coelho thinks the trade issue -- truculent protectionism -- will work like gangbusters for the Democrats next year.
Cordell Hull, who as a young congressman voted against the Payne-Aldrich tariff and as an elderly secretary of state helped put together the postwar free trading system, must be turning over in his grave.
What gives? Why have the Democrats switched from free trade to protectionism? There are two answers. One relates to the Democrats' short-term campaign needs. The other relates to their long-term policy prescriptions. Neither casts much credit on the Democrats or augurs particularly well for their future. In the short term, protectionism is not likely to do as much for the Democrats as some of them think. In the long term, it is not a viable formula for a sustainable policy.
Start with the short term. Imagine yourself a Democratic campaign strategist. You have commissioned a poll, and one of the questions asks voters which party will do a better job on a couple of dozen different issues. On some the Republicans have a huge advantage: maintaining a strong defense and asserting American interests abroad, holding down inflation, even -- despite the Reagan deficits -- restraining government spending. The old Democratic issue of maintaining prosperity now works for the Republicans. A lot of other issues are washes.
What works for the Democrats? Social Security, for one, and your guys are already milking that for maximum advantage. But it's not going to help you do better than you did in 1982 or 1984. Then there's reducing unemployment. But the Democratic edge is not what it used to be (see maintaining prosperity, above), and anyway there may not be a spurt of unemployment in 1986. Tip O'Neill, who foresaw the high unemployment of 1982, isn't so sure this time.
So what does a Democrat campaign on? You look down the list and don't see anything. You ask the people around the table if they can think of something. You get a few blank stares. Then someone says trade.
That begins to look very good when you think of a couple of other problems your candidates have. They've been losing white male votes in droves: Kennedy had over half the white male vote in 1960, Mondale had about one-third in 1984.
White males see the Democrats as too soft and too critical of America, as undermining American defense and American social mores. "They always," in the words of that favorite of white male voters, Jeane Kirkpatrick, "blame America first."
Protectionism puts a Democrat in a different posture. For once he or she sounds aggressive and nationalistic. None of that Andrew Young talk about how Americans must accept a new order in the world. Instead, we're telling the Japanese to take their Toyotas and . . . let them rot on the docks in Yokohama.
In one sense, the Democrats' protectionist initiative is a logical step in their own development. Once they were the party of laissez-faire economics. While Henry Clay's Whigs wanted the government to build canals and charter banks, Andrew Jackson wanted it to leave the field clear for individuals. Democrat Grover Cleveland in the 1890s declined to take action against a depression except to send federal troops in to suppress the Pullman strike. His Republican successors -- McKinley, Roosevelt and Taft -- backed a more active federal government and established a Republican majority that won most elections up through 1930.
Even Woodrow Wilson justified activist government on the ground that it kept the field free for individuals: The Federal Reserve would preserve the independence of local bankers and the Federal Trade Commission the ability of little businessmen to compete on an even basis against the giants. It was the Republicans, from their anti-slavery days, who were the meddlers and interveners. It was the Democrats up through the 1930s who were hostile to busybody government interference in the form of Prohibition or enforcement of civil rights.
In this context, free trade was consistent with the Democrats' bias against government interference. It was something of an anomaly that the Democrats, having abandoned in the New Deal years their unwillingness to intervene in the economy generally, nonetheless remained unwilling to intervene in foreign trade. The anomaly was attributable, arguably, to the enthusiastic efforts of well-placed free traders such as Hull and Acheson (who were also skeptical about government interference in the economy generally; the only reason Acheson supported FDR in 1936 was Hull's trade policy) and to the fact that free trade policies helped the pre-1930s Democrats' core constituencies of poor Southern and Western farmers and big city immigrants who produced low-priced commodities and wanted access to low- priced products in return.
In this view, it was just a matter of time before the Democrats would favor government intervention in trade. And now that many of the Democrats' core constituencies -- auto and steel union members most notably -- see themselves in need of trade protection, that time has finally come.
The problem with that view is that the Democrats have lost their faith generally in the efficacy of government intervention and planning in the economy. If the lesson of the 1930s, drawn in time by most Republicans as well as almost all Democrats, was that government works better than markets, the lesson of the 1970s, drawn by most Democrats as well as almost all Republicans, is that markets work better than government. You must look pretty hard for a Democrat who has a macroeconomic policy that he believes will bring inflationless prosperity and economic growth.
Keynesian demand management, they all agree, doesn't work too well in a world Keynes never imagined. The no-growth and "era of limits" politics popularized by the likes of Jerry Brown in the 1970s -- the notion that economic growth is icky and who wants it anyway? -- is not a view that you'll find many practical politicians embracing these days, outside of Colorado or Vermont.
Nonetheless, the reflex for government action is there. The reflex of Democrats, when they see a problem, is to call for the government to do something. The reflex may point toward such goals as the practical steps of raising taxes to cut the deficit or, as Bill Bradley and Dick Gephardt were urging in 1983, lowering tax rates in recognition and ratification of the erosion of the progressivity of the income tax. But they still wonder whether government can do something.
That wondering, when directed where the polls suggest, rouses such proposals as energy price controls in the 1970s, industrial policy in the early 1980s and trade protectionism now. All have the advantages of giving government a lot to do and of giving politicians the chance to say they'll do something themselves.
The problem is that trade policy is no longer a choice between the government doing something (trade barriers) and the government doing nothing (free trade). In a complicated economic world a complicated set of laws, economic regulations and customs has grown up which influence trade.
Politicians as sophisticated as Bentsen and Gephardt undoubtedly see themselves not as the equivalents of Britain's Joseph Chamberlain, who sought in the 1890s to replace free trade with what was quaintly called Imperial Preference, but as players in a complicated game who are changing the odds a bit.
They don't really want their 25 percent import barriers imposed; they are trying to put pressure on the Japanese and others to change the system in various ways. "We need a stick in the closet," Gephardt says. At the same time, they're playing quite a different domestic political game. Bentsen, in particular, when he advanced his initiative, surely had an eye on the special election in Texas. His political base is the rural counties, fundamentalist in cultural values and often rebellious against elites on the economic issues.
Trade lets Democrats say they're populists again -- populist in the sense that the word is usually used, which is to say, opposed to what the elites say is responsible. It's always fun to campaign, and to tell reporters you're campaigning, as a populist.
But like most populist appeals made by elite politicians, the Democrats' trade ploy is cynical and therefore not likely in the long run to work. Doubly cynical: first, because its supporters know it's not likely to have the intended effect on trade and second, because, as they sooner or later will become aware, it's not likely to have the desired political effect.
Even its eager initiators see that it is dangerous, as well. Elevating the trade issue even for a moment to the top of the political agenda invites retaliation by the Republicans and a bidding war between the two parties to court protectionist interest. The result could be a kind of feeding frenzy, with every lobbyist thrashing to the surface in wild pursuit of sustenance before everyone else gets his and the feeding period is over. The Democrats stimulated this kind of frenzy in 1981, when they tried to outflank the Republicans by offering bigger business tax cuts. We're still paying the price in the form of huge deficits.
The Republicans who championed protectionism for almost 100 years after Lincoln at least had a theory of how their policy would produce economic growth. So did the Democrats who championed free trade. The Republicans believed that infant industries, built up behind walls of protectionism, would grow so rapidly in a rapidly growing nation that they would come to be competitive by themselves, at least in the American market; and so for the most part they did. The Democrats believed that the increase in international economic growth that would be spurred by free trade would in turn build a stronger American economy; and so it did in the 25 years after World War II.
Doomsayers note that the United States accounted for half the world's gross national product in 1950 and a far smaller percentage today. But of course the absolute size of the American GNP today would be much smaller if the U.S. still accounted for 50 percent of world GNP. The growth of other countries -- first Europe, then Latin America and East Asia -- has helped the United States grow more than it would have alone as a Fortress America.
What vision of economic growth is there behind the Democrats' trade initiative? Not surely the vision of a world in which America has half the GNP again; we'd all be poorer. Not the vision of an American in which steel and autos again lead the economy; no one believes it can be revived. At best it is a vision in which politicians and officeholders tinker with the workings of a complex welfare and regulatory state, in the hope of getting it to work a little better. But that's not very inspiring stuff for a party that once promised to cure the ills of the one-third of a nation ill-clothed, ill-housed and ill-fed.
To see what's likely to happen to the trade initiative -- unless the Democrats and Republicans work together to inspire a feeding frenzy -- think back to what happened to their other recent policy initiative, industrial policy. This was never very clearly defined, but the idea was that government was going to work together with business and labor to (take your pick) revive industries in trouble or start industries with a potential for growth. It sounded appealing. It gave the Democrats, who had finally decided that Keynesian fine-tuning didn't produce economic growth, another recipe for it. But not for long.
Charles Schultze wrote a devastating column on industrial policy in The Washington Post in October 1983. "One thing the American political system cannot do well at all," he argued, "is to choose among particular firms, industries and regions, coldbloodedly determining, on grounds of economic efficiency, which shall prosper and which shall wither." Officeholders were quickly drained of confidence that government had the ability to manage an industrial policy well, and politicians quickly began to think an industrial policy plank would be attacked as a boondoggle. You heard almost nothing of the issue in 1984.
Protectionism, like industrial policy, can also be undercut by events. The rapid economic growth of 1983-84 made industrial policy seem unnecessary. The appeal of protectionism rests in large part on the trade deficit, which results more from the high value of the dollar than from foreign trade barriers. But the dollar may fall in value. The administration is already taking steps with other major economic powers to see that it does, and for all I know they may succeed. If so, the appeal of the trade issue will diminish greatly.
The protectionist initiative may continue to work locally for the Democrats where there are particular distressed industries: Of the five million-plus metro areas Mondale carried in 1984 two, Pittsburgh and Buffalo, were in steel country. (The others were Minneapolis-St. Paul, Washington and San Francisco, where Mondale grew up, worked for 20 years and was nominated, respectively.)
It will hurt in areas that identify themselves with growing industries in no need of protectionism. And it will simply miss the target in most of the rest of the country. It's just not possible for a party to win votes on an initiative which most of its politicians believe is a futile gesture.
As for 1988, a Democratic presidential candidate campaigning on protectionism will have to answer some uncomfortable questions. He will be asked why he is campaigning on an issue of economic interest to particular unions and local areas -- the "special interests" that dogged Mondale in 1984. He will be asked whether he wants Americans to pay more for videotape machines and stereos. He will be asked whether he had confidence in Americans' ability to work and produce and grow, or whether he is a doomsayer who concentrates only on a few isolated losers.
And he will be asked whether he has an actual plan for action, or just an attractive- sounding campaign slogan. Walter Mondale, a smart and for the moment underestimated politician, had as good a set of answers to these questions as anyone could come up with. But even he, with not a whole lot of other strong issues to choose from, talked less and less about trade as the campaign went on, and more about other things.
Democratic strategists, once they get over their glee at seeing how well their off- year tirades on trade play with friendly audiences, will need to give some thought again to how their protectionist initiatives can be made to work in election years.