Not Free Trade but Accountable Trade

Today (04 OCT 2007) The Wall Street Journal hosts an article by John Harwood: Republicans Grow Sckeptical On Free Trade. It isn't shocking that a business news outfit like WSJ would cover this, but it is of great note that the placement of it on their paper side is A-1. The front page. This is of high interest as the WSJ is unabashedly not to keen on any prospect of controlling illegal immigration supporting, instead, that businesses and foreign individuals have the 'right' to commit to labor contracts outside of Treaties and international law. That said this is also a division between the more Left leaning 'news' segment of WSJ and the more 'right' side on the editorial pages. That dichotomy is a fascinating one to see as time goes on, and having it put into stark contrast on the front page is quite profound: the attitude of Americans towards how business operates is slowly shifting.

On to the article itself, which examines polling data and some of the main things showing up not in those that consider themselves Republicans. First off in the article is taxation, a continual Republican applause maker in the cutting end of things. And without question that remains exactly where the Republican voter is today, by 60% favoring tax cuts. As is pointed out, however, a significant minority think it is time for disproportionate taxation shifting upwards in the earnings column, also known as 'tax the rich'. Something that could result in this on the Republican side, is the floating of tax 'cuts' that are 'graduated' to give larger percentage cuts at lower earnings brackets, so the overall trend, while that of tax cutting, is to cut more out at the bottom earnings segment of the population than at the top.

To date I am unaware of any Republican move to take advantage of this view amongst their voters, but do note that it would have some acceptance across-the-board as it would be seen as having the wealthiest Americans paying more in a terms of porportion of taxation. This first point is not a shocker, really, although the 'across-the-board' cuts folks and the 'trickle down' folks are slowly finding their views falling out of favor by that significant minority shift. While the majority can still put through such pro-business or 'fair' across-the-board cuts, the slow alienation of that minority should be a large worry to the Republican party.

That pro-business view of the Republican party takes a hard hit on the greatest marketing slogan put forward of: 'free trade freeing people'. To examine that I will now put a quote in from the article on this topic:

Six in 10 Republicans in the poll agreed with a statement that free trade has been bad for the U.S. and said they would agree with a Republican candidate who favored tougher regulations to limit foreign imports. That represents a challenge for Republican candidates who generally echo Mr. Bush's calls for continued trade expansion, and reflects a substantial shift in sentiment from eight years ago.

"It's a lot harder to sell the free-trade message to Republicans," said Republican pollster Neil Newhouse, who conducts the Journal/NBC poll with Democratic counterpart Peter Hart. The poll comes ahead of the Oct. 9 Republican presidential debate in Michigan sponsored by the Journal and the CNBC and MSNBC television networks.

That same 60% that is for lower taxes shows up *again* on the 'free trade' issue. This single issue pushed at least since the Reagan Administration and pushed hard by academics, pundits, and various business media outlets, including the WSJ, have not 'made the sale' on free trade. Quite contrarily, after seeing it NOT work for decades in China and having Mexico abuse NAFTA and export its unemployed northwards to the US and Canada, the Republican base is no longer supporting the concept of 'free trade'. The stated view is that this is bad for US local production, but some part of it is also attached to the illegal immigration issue caused by the relaxed views of NAFTA and the slow dissolving of US National Sovereignty because of free trade. Ross Perot, in 1992, indicated that NAFTA would create a major downward trend in US production of goods, but it has, instead, seen US firms penalized on various environmental issues that are NOT as strict in Mexico and has so attacked the US on its ability to regulate immigration and product standards that the Republican base is sending a clear message: enough is enough.

This is one of the few areas that some of the Democratic presidential candidates are actually *ahead* of their Republican counterparts: free trade. After initial sign-on to it, by President Clinton, the Clinton camp and a few other Democrats are feeling the free trade winds slowing. All the verbiage put forth by various academics, economics pundits and political supporters are not dealing with the paucity of freedom in China, or in other parts of the world where the view of trade being the balm of all things has not yielded significant results. The shift of Nations to democratic outlook is spearheaded by the vast Nation of India, and that, alone, would skew global demographics. Even worse, is the failing of democracy to address social ills across Africa, South America, and SE Asia, along with the newly formed Central Asian States. Democracy, even when present, has not dealt with organized crime, the narcotics trade, terrorism or money laundering due to political graft and corruption present even in democratic nations.

Increasing trade has, indeed, brought more *goods* to more people in India and China, but only where liberty and freedom have backing by the people and their governments can such goods be secured against government. That is the case in India, but not the case in China where increasing goods are an attempt by the regime to bribe its own population so as to keep its economic bubble inflated. The goods put out from China and parts of SE Asia that undercut the US domestic market via cheap labor and sub-standard goods is now seen as a detriment to the economy of the US.

This has been a shift over the last eight years as WSJ points out:

In a December 1999 Wall Street Journal-NBC poll, 37% of Republicans said trade deals had helped the U.S. and 31% said they had hurt, while 26% said they made no difference.

While this year's choices are somewhat different (59% con/ 32% pro/ 9% UNK) against the 1999 figures (37% con/ 31% pro/ 26% no change/ 5%UNK) the strong shift when the 'no change' is removed to the con side of the equation gaining all but 1% of the shifting 'no change' and unknown groups is startling. Out of the 31% on that latter in 1991 9% go in the UNK territory (+4%) and the rest move almost without exception to the con side on free trade. After long decades of pushing by the business portions of the Republican party, to see that equation of overseas production leading to greater prosperity is not resonating in their party. The shift of America to a majority 'services' based economy, now beating out industrial production, is a primary concern here. The can-do, pro-workforce of Americans making things is not having a high match-up with the services based economy.

This push-back is examined by the WSJ and using anectdotal evidence, examines those that have joined the Republican party:

Post-9/11 security concerns have also displaced some of the traditional economic concerns of the Republican Party that Ronald Reagan reshaped a generation ago. Asked which issues will be most important in determining their vote, a 32% plurality cited national defense, while 25% cited domestic issues such as education and health care, and 23% cited moral issues. Ranking last, identified by just 17%, were economic issues such as taxes and trade.

John Pirtle, a 40-year-old Defense Department employee in Grand Rapids, Mich., said he drifted toward the Republican Party in large part because of his opposition to abortion, but doesn't agree with the free-trade views of leading candidates.

"We're seeing a lot of jobs farmed out," said Mr. Pirtle, whose father works for General Motors Corp. Rankled by reports of safety problems with Chinese imports, he added, "The stuff we are getting, looking at all the recalls, to be quite honest, it's junk."

The conservative, working family that likes the Republican party for its support of traditional values (the religious conservatives and family values conservatives) do not like the movement on industrial outlook and values. In my own family this has been seen as the case with a family member working for a small aerospace firm farming out work to the Philippines: the work coming in needs large amounts of QA, re-work, acceptance and some being sent back as rejected. This is not only time consuming and adds into overhead, but it removes the feeling that 'Made in America' has any meaning at all: the workers who used to do the work farmed out know they can get it done on-schedule, to high quality standards and minimal time for re-work.

Unfortunately the Republican party does not understand the message being sent to it:

Economic advisers to Republican presidential hopefuls acknowledge the safety scandals have made defending free trade more difficult. "Americans are right to be angered at companies that take shortcuts" in importing goods, said Larry Lindsey, once the top economic aide in the Bush White House and now an adviser to Mr. Thompson's presidential bid. "The next president has to promote free trade by playing hardball, and to be seen doing so."

In the Republican campaign so far, elevating populist trade concerns has been left to the long shots. "The most important thing a president needs to do is to make it clear that we're not going to continue to see jobs shipped overseas....and then watch as a CEO takes a $100 million bonus," Mr. Huckabee said at a debate earlier this year. "If Republicans don't stop it, we don't deserve to win in 2008."

This is not a question of 'playing hardball' but of removing the workforce of America from industrial work and letting low-cost, low-quality competitors remove jobs overseas. By utilizing low cost foreign labor and placement, American quality work and ability to create efficient means of production are de-legitimized. Further, beyond the safety issues from China and other parts of SE Asia, both in products delivered and working conditions abroad, the idea that free trade is a sacrosanct part of how the capitalist system works is false. Americans deeply understand that trade is accountable to the needs of society, and that often does not mean just the lowest price on goods. For commodities price is a factor, but for such things as individual self-worth and having finished products made by Americans for Americans, this is a major support of the social structure of the Nation.

America has, at its basis, a deep understanding of this topic from the very start of the Nation and the main cause of the Revolutionary War starting with trade policy in the colonies. A rallying cry of 'No Taxation Without Representation'. America well understands that trade can be taxed, as it was, by the King, but the proportion of taxes to pay off debt being decided by the King was reason to raise up in arms against him. The rights of subjects to have a say in such things had already passed to parliament, and by not giving subjects that right, a basic and foundational part of how society was to operate was broken. The question was not 'free trade', as a concept, but social control over trade and the burden of society to be supported by trade.

As a concept this has been restated a number of times in America, mostly by its Presidents, as is seen in the following:

It is to be regretted that the rich and powerful too often bend the acts of government to their selfish purposes. Distinctions in society will always exist under every just government. Equality of talents, of education, or of wealth can not be produced by human institutions. In the full enjoyment of the gifts of Heaven and the fruits of superior industry, economy, and virtue, every man is equally entitled to protection by law; but when the laws undertake to add to these natural and just advantages artificial distinctions, to grant titles, gratuities, and exclusive privileges, to make the rich richer and the potent more powerful, the humble members of society the farmers, mechanics, and laborers who have neither the time nor the means of securing like favors to themselves, have a right to complain of the injustice of their Government. There are no necessary evils in government. Its evils exist only in its abuses. If it would confine itself to equal protection, and, as Heaven does its rains, shower its favors alike on the high and the low, the rich and the poor, it would be an unqualified blessing. In the act before me there seems to be a wide and unnecessary departure from these just principles.

Nor is our Government to be maintained or our Union preserved by invasions of the rights and powers of the several States. In thus attempting to make our General Government strong we make it weak. Its true strength consists in leaving individuals and States as much as possible to themselves in making itself felt, not in its power, but in its beneficence; not in its control, but in its protection; not in binding the States more closely to the center, but leaving each to move unobstructed in its proper orbit.

Experience should teach us wisdom. Most of the difficulties our Government now encounters and most of the dangers which impend over our Union have sprung from an abandonment of the legitimate objects of Government by our national legislation, and the adoption of such principles as are embodied in this act. Many of our rich men have not been content with equal protection and equal benefits, but have besought us to make them richer by act of Congress. By attempting to gratify their desires we have in the results of our legislation arrayed section against section, interest against interest, and man against man, in a fearful commotion which threatens to shake the foundations of our Union. It is time to pause in our career to review our principles, and if possible revive that devoted patriotism and spirit of compromise which distinguished the sages of the Revolution and the fathers of our Union. If we can not at once, in justice to interests vested under improvident legislation, make our Government what it ought to be, we can at least take a stand against all new grants of monopolies and exclusive privileges, against any prostitution of our Government to the advancement of the few at the expense of the many, and in favor of compromise and gradual reform in our code of laws and system of political economy....

That is an American President, talking not only of the value of work and self-worth,but the control exercised by the Nation on trade. Indeed, when rich industrialists and vested interests push 'free trade' as good for their own interests and the interests of the Nation are skewed to them and against the working man, the Nation becomes unbalanced to the profit of the few over the many. Government has no place in 'leveling the economic playing field', as the skills and abilities of each individual differ. Government has no place in over-rewarding the rich and successful, either, so as to create a priveleged class with their own separate laws.

The author of those words was President Andrew Jackson on 10 JUL 1832 on the Bank Veto, which he enacted so as to remove money interests in the National Bank concept out of the hands of foreigners. The more general point of the message, however, has resonated throughout America since then, and would come to be known under the concept of social and industrial justice. This viewpoint would continue on in America and be restated by a Republican:

A democracy can be such in fact only if there is some rough approximation in similarity in stature among the men composing it. One of us can deal in our private lives with the grocer or the butcher or the carpenter or the chicken raiser, or if we are the grocer or carpenter or butcher or farmer, we can deal with our customers, because we are all of about the same size. Therefore a simple and poor society can exist as a democracy on a basis of sheer individualism. But a rich and complex industrial society cannot so exist; for some individuals, and especially those artificial individuals called corporations, become so very big that the ordinary individual is utterly dwarfed beside them, and cannot deal with them on terms of equality. It therefore becomes necessary for these ordinary individuals to combine in their turn, first in order to act in their collective capacity through that biggest of all combinations called the Government, and second, to act, also in their own self-defense, through private combinations, such as farmers' associations and trade unions.

[..]

Of course, in labor controversies it was not always possible to champion the cause of the workers, because in many cases strikes were called which were utterly unwarranted and were fought by methods which cannot be too harshly condemned. No straightforward man can believe, and no fearless man will assert, that a trade union is always right. That man is an unworthy public servant who by speech or silence, by direct statement or cowardly evasion, invariably throws the weight of his influence on the side of the trade union, whether it is right or wrong. It has occasionally been my duty to give utterance to the feelings of all right thinking men by expressing the most emphatic disapproval of unwise or even immoral notions by representatives of labor. The man is no true democrat, and if an American, is unworthy of the traditions of his country who, in problems calling for the exercise of a moral judgment, fails to take his stand on conduct and not on class. There are good and bad wage-workers just as there are good and bad employers, and good and bad men of small means and of large means alike.

But a willingness to do equal and exact justice to all citizens, irrespective of race, creed, section or economic interest and position, does not imply a failure to recognize the enormous economic, political and moral possibilities of the trade union. Just as democratic government cannot be condemned because of errors and even crimes committed by men democratically elected, so trade-unionism must not be condemned because of errors or crimes of occasional trade-union leaders. The problem lies deeper. While we must repress all illegalities and discourage all immoralities, whether of labor organizations or of corporations, we must recognize the fact that to-day the organization of labor into trade unions and federations is necessary, is beneficent, and is one of the greatest possible agencies in the attainment of a true industrial, as well as a true political, democracy in the United States.

This is a fact which many well-intentioned people even to-day do not understand. They do not understand that the labor problem is a human and a moral as well as an economic problem; that a fall in wages, an increase in hours, a deterioration of labor conditions mean wholesale moral as well as economic degeneration, and the needless sacrifice of human lives and human happiness, while a rise of wages, a lessening of hours, a bettering of conditions, mean an intellectual, moral and social uplift of millions of American men and women. There are employers to-day who, like the great coal operators, speak as though they were lords of these countless armies of Americans, who toil in factory, in shop, in mill and in the dark places under the earth. They fail to see that all these men have the right and the duty to combine to protect themselves and their families from want and degradation. They fail to see that the Nation and the Government, within the range of fair play and a just administration of the law, must inevitably sympathize with the men who have nothing but their wages, with the men who are struggling for a decent life, as opposed to men, however honorable, who are merely fighting for larger profits and an autocratic control of big business. Each man should have all he earns, whether by brain or body; and the director, the great industrial leader, is one of the greatest of earners, and should have a proportional reward; but no man should live on the earnings of another, and there should not be too gross inequality between service and reward.

That author is from Theodore Roosevelt's autobiography, taken from CHAPTER XIII SOCIAL AND INDUSTRIAL JUSTICE. Here and again, the concept of individuals keeping as much as they earn and yet not bowing unjustly to larger organizations (which in our latter day would now include Big Labor as fitting into that category) to the detriment of the society and the social structure. There is a deep moral sense of America on this, and social and industrial justice in these terms is far from the Leftist terms of Marx, Lenin, Mao and others of that stripe. More properly this is societal justice to keep industry and large organizations fettered to the needs of the entire Nation so that all may be treated equally before the law.

It is in this realm that the Republican party and its presidential candidates are drifting from their 'base' that were invited in by the 'Big Tent' philosophy. Those American workers who see no accord with socialist doctrine or basis for legislation. This is the base that started to withhold contributions to the Republican party over the illegal immigration bills, and continues to rally to that cause to thwart those in the monied interests on Left and Right who wish to undermine the society of the Nation via that. The 'free trade' bloc aligns with the view of illegal immigration being just fine with them, so as to undermine the labor force of America via illegal labor.

This is social and industrial justice slowly coalescing not only in the Republican party, but in those parts of the Democratic party that remain pro-defense, but also pro-social justice on the terms of Andrew Jackson and Teddy Roosevelt. These individuals have not been convinced of the value of unfettered trade and, indeed, see that 'hardball' is necessary: not against illegal activities, although that is a part of it, but against the anti-working class conservative outlook that it fosters in America. That is industrial and manufacturing work, not 'services'.

So many have been turned off by this dichotomy of the Left and Right on this, both seeking to put a National imprint via the Federal Government to demean the industrial working class of America, that the working class no longer look to the two parties as capable of representing them. The Left stepped far away from those people starting with Franklin Roosevelt in the post-New Deal era, and the centralization of things to government that had never, ever been the purview of government before. Prior to that, however, the moralistic views of a religious segment of the population started to criminalize procedures that had been left up to doctors and patients previously, and to generalized trade agreements thereafter. Those first intrusions as part of the coalition of socialists and religious moralists, shifted the basis of government upwards to the benefit of the Federal Government and out of the hands of States and local organizations.

On a historic scale, starting in the mid-1960's, the trend has been clear and ominous of Americans slowly becoming unaffiliated with the two party system and seeing none of the 'alternative' or 'third party' organizations as supporting them. Those third parties have tended to be so ideologically pure that they cannot represent the diversity of America. This is troubling for a democracy when it has no alternative party organization that can represent even a minor plurality of opinions. When a two party system *itself* heads towards ideological purity on the part of both parties, the result is lowering of individuals voting as they no longer have connection to the limited views represented by the two parties.

At this point in time it would not be surprising to see a cross-coalition of social and industrial justice outlooks along with strong National Security interests start to form up over the next decade, and settle outside of the two party system. These are individuals feeling disenfranchised and put upon by the two party system, who are no longer willing to support the New Deal social compact and are unwilling to see invasion of the individual's private life by the Federal Government on much of anything. These individuals see that fairness in tax doctrine also has a progressive element to it, and also see that taxations should be limited, restrained and paid by individuals and corporations up front. Taxes on purchases are not a cause of rejoicing, but a cause for long term fears of encroaching Federal power. Better to have the States do that as they can be held accountable far more easily than the Federal Government can.

On a values basis this group is more pro-family and pro-work, with religious affiliation backed but not to extremist views. The moralistic wisdom of invading people's decisions on narcotics has, as a direct fall out, the attempts to place further strictures on individuals via the Federal Government in other areas, like abortion and the high cost of legal medications. By centering decisions on families and individuals, the view that government can 'insure' them on anything from retirement to health care is also diminished as it is now seen as a money 'sink' from which no one rightly expects a return equal to what can be gained by individuals investing and purchasing such things on their own.

Trade, the sore point in this, is not seen as a beneficence to all peoples, and 'free trade' and 'dumping' of cheap products an actual harm to the US worker. Tariffs are not only not 'out of the question' they are definitely 'in the realm of respect' for holding foreign Nations accountable to the activities of their companies. Illegal alien workers are also seen as a drag and detriment to this class of people, and they see no reason to have free trade with a Nation that abuses such and breaks its treaty agreements with the US.

That does not describe either the Democratic or Republican party of today, does it?

And yet it is exactly where those that felt left out from the Democratic party went to with the Republican party and now are disillusioned with it, along with many of their friends who have just stopped voting for either of these parties. Add in the 40% or so of Americans that don't vote (and still leaving plenty of space for the 5% perennially disaffected), put in 60% of the Republican party and perhaps as much as a 10% residual left in the Democratic party and you have a 'New Majority' in America.

It would not be without reason to see the Red/Blue divide in America gain the third color of the flag: White. Neutral white that wants to keep both the progressives and industrialists and monied interests on a short leash.

Small government, low but graduated taxation, pro-defense, pro-family, pro-individual and movement of any societal need of government down to the local venue.