All of that said, even Spoiler Alerts recognizes that the politics of trade has fundamentally shifted. Politics is all about who bears concentrated costs and who reaps concentrated benefits. At this point, even if the aggregate gains have massively outweighed the losses, it’s hard to deny that trade has wreaked some serious carnage on some parts of the American economy. If there’s one truism of political science that has held up this cycle, it’s that it is very difficult to expand policies that create concentrated costs on a powerful interest group. The prominence of trade and immigration during this election cycle, regardless of the facts, will make this policy arena that much more tangled going forward.
Binyamin Appelbaum’s latest for the New York Times does an excellent job of describing the shifting political terrain — and the ways in which antipathy to trade is mostly about antipathy to other dysfunctional aspects of the U.S. economy:
Mr. Trump and Mr. Sanders have also succeeded in focusing anger on trade as an explanation for broader economic problems afflicting many Americans. Trade flows make up a small part of America’s economic activity. The primary explanations for the stagnation of middle-class incomes are necessarily domestic.“They are following in the footsteps of politicians of all stripes who have found it convenient to blame the boogeyman of unfair trade for domestic economic problems,” said Eswar Prasad, a Cornell economist. “Tough talk on trade is an easy way to distract attention from taking on difficult domestic challenges.”
So trade has gotten a slightly bum rap, which means trade enthusiasts need to think hard about how to change the politics of it to make liberalization more possible. The problem is that such thoughts have some interesting implications that will unsettle the Republican Party in particular.
The truth is that there are a whole cluster of policies that redistribute benefits to the losers from trade expansion: wage insurance schemes, job retraining programs and other active labor market policies, stronger social safety nets, and so forth. But all of these have been anathema to the Republican Party for decades now outside of the occasional reformicon. Indeed, as reformicon Reihan Salam noted a few months ago on wage insurance schemes, “This is exactly the kind of social program that elite Republicans tend to oppose.”
To be fair, GOP leaders oppose these kind of expanded social insurance schemes for three reasons. First, they’ve been able to oppose them for decades without any political blowback — until this cycle. Second, GOP leaders are ideologically opposed to expanding government programs, and these forms of trade adjustment assistance make the United States start to look more like a Nordic country (and not the protectionist fantasy concocted by Bernie Sanders).
Third, and most important, Republicans would be hard-pressed to logically defend expanded programs aimed solely at the losers from international trade but not expanded programs for other Americans who lose their jobs because of automation or creative destruction or whatnot. It gets messy fast (Democrats are in a better ideological position on this, although I do wonder whether this kind of social contract talk on trade will work on Bernie Sanders’s hardcore supporters).
Republicans can try to ride out the Trumpstorm of this cycle and hope that post-2016 trade politics look more conventional going forward. They can decide that even if there’s no further trade liberalization, the tyranny of the status quo means that the U.S. economy remains pretty open without much in the way of painful votes to cast. Or they can start listening to the reformicons a bit more.
My hunch is that they’ll opt for the ‘do nothing’ option. Which, for someone who thinks that continued trade liberalization has a lot of economic and foreign policy benefits, is a sobering thought.