In the aftermath of yet another crushing set of victories by Barack Obama over Hillary Clinton, one of the horde of pundits sweeping through the cable networks made an intriguing point about NAFTA on Tuesday night. .
Jim Moore, author of “Bush’s Brain,” suggested that Obama’s NAFTA bashing would not play well in the border regions of Texas: specifically the four overwhelmingly Hispanic-populated counties that make up the Lower Rio Grande Valley. Hidalgo County, in particular, said Moore, is “booming” as a result of NAFTA.
There is some evidence that this is true. While a study published in 2000 found minor positive effects from NAFTA, more recent accounts support Moore’s thesis. There is even a theory that the vigorous cross-border trade in the region may insulate southern Texas from a broader recession in the United States.
If we accept this, we face a paradox. In Wisconsin, in what was obviously a trial run for Ohio, Barack Obama strove mightily to associate Hillary Clinton with NAFTA, and she tried just as hard to wash her hands of the stain of her husband’s advocacy for the trade agreement. But in southern Texas, where Clinton is pinning the waning hopes of her campaign on the Latino vote, attempts to back away from, or bash, NAFTA might backfire.
What fun! For the next two weeks, we can expect Obama and Clinton to trash NAFTA in Ohio while never mentioning it in Texas. Do we need a better demonstration of how tricky the politics of trade can be?
One obvious approach that would squares this circle is to focus on boosting the safety net for workers directly affected by trade patterns. The blog “Economists for Obama” made the case for such an approach this last Friday, while observing that both Clinton and Obama will be ramping up their appeals to “populist sentiment” as they campaign in Ohio.
There is much to dislike in the way corporate interests are carefully negotiated during “free” trade negotiations. Labor and environmental considerations are secondary concerns that tend to serve more as window dressing.
As unpopular and as distasteful as these agreements might be, and while it makes a lot of political sense to rail against them, they should not detract from the broader idea that there are large economic gains from trade to be had. Exports are one important factor that has helped keep the economy afloat during the housing downturn and credit crunch.
These gains from trade however, are broadly dispersed among all consumers (e.g. cheap toys from China) while the costs are highly concentrated in specific industries and specific regions (e.g. textile workers in the South). I think there is a reasonably strong consensus among many economists in Democratic policy circles that we finally have to stop paying lip service to the idea that we need a stronger safety net for displaced workers. Much of our current safety net is antiquated.
In 2004 during the Democratic primaries, there was growing talk about broader wage insurance policies that would help address the dramatic losses to permanent income that accompany job losses, irrespective of whether they are due to trade or other structural changes in the economy. I guess I’m a little bit disappointed that the candidates are largely avoiding talking about such policies.
Perhaps the candidates aren’t talking about wage insurance and trade adjustment assistance as much as they should because it’s tough to rally the troops with complexity. Talking to unemployed Ohioans about boosting the safety net doesn’t play as well on the campaign stump as does tarring your opponent with NAFTA advocacy.
But if the candidates are going to simultaneously be campaigning in regions where attitudes toward NAFTA might be markedly different, then some level of attention to nuance will be required. It will be interesting to see who can carry it off.
And on that note, a comment from Obama’s half-sister, Maya Soetoro-Ng, a resident of Hawaii, strikes How the World Works as relevant.
As reported in the Chicago Tribune on Monday:
“I’m not quite as compelling as he [Obama] is but I do my best,” said Soetoro-Ng who said she believes Obama’s island identity will resonate with voters.
“I’m hoping that the people of Hawaii understand that he shares their rhythm and perspective, their view of the world as complex, their sense that diversity is gorgeous,” said Soetoro-Ng. “He is a son of Hawaii although he is very much an Illinois senator.”
“Their view of the world as complex.”
We’ve heard a lot about Obama’s powers of oratory over the past couple of months. But the true test of his skill may still await. If I was the moderator of the debate between Clinton and Obama to be held Thursday night in Austin, Texas, I’d ask both candidates the following question:
Senators, one can argue that NAFTA resulted in job losses in Ohio and job gains in southern Texas. How would your administration’s trade policy balance those competing factors?
Only someone with a strong grasp of complexity is going to come out of that question alive.