Razib Khan One-stop-shopping for all of my content

November 11, 2010

Tariffs, not trade?

Filed under: Economics,Free Trade,Politics,trade — Razib Khan @ 3:36 am

In the the 19th century the Democratic party, rooted in large part among Southern planters who were dependent on exports of commodities and imports of finished goods, was the party of free trade. The northern Whigs, and later the Republicans, were the party of tariffs. They were the faction which drew support from the industry of the North which benefited from protection against European competitors. The Republican support for tariffs and Democratic opposition persisted into the early 20th century. Only after World War II did this long standing division between the two parties diminish, so that by 1993 a much larger proportion of Republicans than Democrats supported the ratification of NAFTA.

Because of NAFTA’s prominence in my mind, as well as the tinge of economic nationalism on the labor Left and the maturing anti-globalization sentiment on the cultural Left, I had assumed that the Republicans tilted toward free trade more than Democrats. Not so. Pew came out with a survey a few days ago, and the results indicate that my preconception was wrong.


globalcapital

I don’t really want to litigate the issue of trade. Whatever your nuanced view, and I’m sure you have a nuanced view since you’re reading this weblog, I think we can agree that most Americans are not economically enlightened. These are gut emotional responses, drawn out during a time of economic stress and anxiety. The fact that ~1/3 of Americans think that trade makes prices higher seems crazy. You don’t need to know about comparative advantage, or track the CPI. Just consider how Walmart has flooded the US with cheap Chinese goods.

So we’re not talking about people who have a good grasp of international economics. What’s going on here? I think this has some element of xenophobia. Those with high school educations or less have rational reason to worry. But what’s going on with senior citizens? Many of these are retired and drawing fixed Social Security income, don’t have to worry about losing health insurance because of job loss, and might be deriving income from pension funds invested in the global pool of capital. The deflationary pressure of cheap foreign goods and services should be welcome to those on constant but modest incomes. Again, it isn’t a matter of reason, but reflexive aversion to the foreign. It is the young who are having to hustle in the globalized labor market, but the young are most pro-trade.

The Republican party has long had a tension between populists who oppose free flow of labor (immigration) and are suspicious of international capital, and the economic elites. If the populists turn against the free flow of goods & service then the problem will be compounded. As for the Democrats, it looks like the economic nationalists and anti-globalists are fading. I’m updating my stereotypes as of now.

Addendum: The outlines of this are kind of evident in the GSS. I think I ignored/didn’t see the patterns because of my preconceptions. Shame on me!

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