In the search for a cutting issue that might reclaim their wandering blue- collar tribe from Ronald Reagan's spell, the Democrats believe they've finally found one. It is protectionism.
Not that it will be called that. It will be called "helping American industries victimized by unfair trade practices," or showing that the Democrats have a heart while Ronald Reagan "doesn't give a damn" (as Speaker Tip O'Neill said the other day) about the loss of U.S. industrial jobs.
But if the exercise takes the usual forms, it will come to the same thing. Indeed, the temptation to doctor painful symptoms, rather than basic causes, of the mounting trade deficit (now about $150 billion per year) looks all but overpowering this autumn in Congress.
The cries for help, moreover, are often plausible. Consider, for instance, the textile industry, a perennial petitioner for quotas on cheap foreign fabrics and garments. After many years of its crying wolf, the distress is real. The industry is in the most painful contraction in its history, old firms are closing by the week and laid-off textile workers lucky enough to find other jobs are often paid even less than before.
The textile case is meritorious; so are many others.
Moreover, as O'Neill observed, there are times when Ronald Reagan seems to display little real interest in distressed industries. When he rejects a Tariff Commission recommendation, as he did on shoe imports the other day, all he has to say is that protectionism is self-defeating.
That indeed is the history of the matter. But history isn't the favorite subject of congressmen under heavy pressure for quick fixes. Yet the president's allies in this session of Congress should not tire of reminding their colleagues of such past luminaries as Fordney and McCumber, Hawley and Smoot, McNary and Haugen. They -- these ghosts of Congress past -- were the high priests and designers of the high-tariff era of the 1920s.
The initial argument for protectionism, adopted in 1921 by Harding, was that war-crippled industries of Europe would pose the threat of "unfair" competition with U.S. workers. (Old arguments never die; they just change sponsors.)
Hawley-Smoot, in 1929, was the culminating embodiment of high-tariff policy. Then as now, the theoretical argument against protectionism was impressive. No fewer than 1,028 members of the American Economic Association warned that Hawley- Smoot would be self-defeating, but to no avail.
Protectionists snorted that these ivory-tower economists had their heads in the clouds. What did they know about trade? Alas, while they knew less than all, they knew more than Hawley and Smoot and the Congress of 1929. Soon more than 50 nations had retaliated with higher tariffs of their own. World trade slumped, and with it the major industrial economies.
At some stage in his shady past as a New Dealer, Ronald Reagan absorbed the lesson of Hawley-Smoot and became a free-trade fundamentalist. With a wobble or two -- such as the imposition of "informal" quotas on Japanese cars, now abandoned -- he has kept the faith.
This is not to say that the president is blameless. Even if the deficit- driven dollar had not risen so high against other currencies, cheapening imports and making our exports harder to sell, U.S. exports would be in trouble. The underlying reasons range from declining standards of workmanship to unrealistic wage-cost structures in capital-intensive industries left over from the day when U.S. industry ruled the world's markets unchallenged.
The Reagan high dollar turned disadvantage to disaster. The responsible route to improvement in the trade picture is above all to get the deficits down and the overpriced dollar with them.
Meanwhile, it's treacherous to lash out selectively at major trading partners. While the Japanese, on whom most of the protectionist wrath centers, sell us $50 billion worth of goods a year more than they buy, these earnings re-enter our own capital market. That recycling helps finance our huge deficits and keeps interest rates, already at historic highs (when adjusted for inflation), manageable.
World trade really is a seamless web, which can't be fixed string by string. That is painful conventional wisdom for many hard-hit industries. But it is no less wise for being conventional, or painful, and the Democrats will forget it at their peril -- and everyone else's.