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Home Publications Blogs Beat the Press Will the Washington Post Ever Learn Trade Theory?

Will the Washington Post Ever Learn Trade Theory?

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Sunday, 03 July 2011 08:35

The lead editorial in the Post tells us that they are very upset that Congress has not approved the trade deals negotiated with South Korea, Colombia, and Panama. The Post of course wrongly refers to them as "free-trade" deals. This is inaccurate since they do little or nothing to reduce the trade barriers that protect highly educated professionals (e.g. doctors and lawyers) and actually increase protection in many areas (e.g. patents and copyrights).

The Post also is more than a little off-base in telling readers that:

"Basically, each party is playing some last-minute hardball on behalf of its respective ideological bases. On the Democratic side, labor unions have been unable to prevent Mr. Obama’s belated conversion to the cause of the free-trade agreements. Trade adjustment assistance (TAA) money is the consolation prize labor demands — and the White House is determined to let the unions have it. On the Republican side, the anti-spending Club for Growth and affiliated back-benchers in Congress see TAA as yet another failed, expensive bureaucracy and want to kill it. GOP leaders on the Hill are committed to giving them at least a chance to vote 'no' on TAA."

Let's try an alternative explanation. This trade pact will mean lots of money to the companies most directly affected. These companies will be likely to reward the party with campaign contributions that is perceived as delivering for them. Companies seeking trade pacts elsewhere will also be impressed with this party's ability to deliver. This means that President Obama wants to get the pacts through to get more money for his re-election campaign, whereas the Republicans are trying to block him because they don't want him to get more money for his re-election campaign.

That's my theory: no ideology just money. Of course, I live in Washington.

Now for the Post's lesson on trade theory. The Post tells us:

"Both sides need to focus less on pleasing their bases and more on figuring out a politically realistic plan for passing both the free-trade agreements and trade adjustment assistance — ASAP. On Friday, as Washington dithered, a free-trade agreement between the European Union and South Korea took effect. In other words, German, French and Italian workers got a head start in the race for those jobs you’ve been hearing so much about."

Okay, in the world of trade theory that the Post is presumably relying upon for the basis of its editorials, more free trade is generally better than less free trade. However, they get it 180 degrees wrong with the European Union story. In trade theory, the deal with European Union and South Korea makes the U.S. better off, not worse off. We are better off when our trading partners get richer.

Maybe we can start a collection to get the Post's editorial writers an intro trade textbook. It might be good if they read one before lecturing the rest of us on the topic.

Comments (4)Add Comment
wow
written by Josh, July 03, 2011 11:35
That is the most brilliant political analysis of a trade deal I've ever seen. I wish news organizations were this reasonable.
...
written by izzatzo, July 03, 2011 11:48
We are better off when our trading partners get richer.


Bubba, get Michele Bachmann on the line. We got a talking point from a stupid liberal that's going to send her over the top.
which jobs would those be
written by Edward Ericson jr., July 04, 2011 1:04
for the European workers, again?
elect perot in 2012
written by frankenduf, July 05, 2011 9:20
i agree with Edward Ericson jr- one is more likely to hear a giant sucking sound as a 'free' trade agreement approaches- perhaps the implication is cynical and presumes that more jobs will be created simply because wage levels will fall

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.

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