"The dangerous protectionism of Barack Obama"

Is his Patriot Employer Act "idiotic" pandering? Or is it how you win an election in Ohio?

By Andrew Leonard
Published February 26, 2008 5:06PM (EST)

Barack Obama's "Patriot Employer Act," say Willem Buiter and Anne Sibert, two prominent U.K.-based economists, is "idiotic legislation" -- "reactionary, populist, xenophobic, and just plain silly."

Tell us how you really feel!

The guts of the Patriot Employer Act, which Obama introduced in the Senate last August, would provide tax breaks for American corporations that keep their headquarters in the U.S., maintain a certain ratio of U.S.-based employees to foreign employees, pay a decent minimum wage and at least 60 percent of healthcare premiums, along with a few other worker-friendly goodies. For Buiter and Sibert, such heavy-handed government interference would be the worst kind of economic policy, a misguided, "unenforceable" attempt to pander to organized labor that would end up punishing workers all over the world.

From "The Dangerous Protectionism of Barack Obama":

The Patriot Employer Act seeks to transfer wealth from the truly downtrodden of the world to a limited number of favored U.S. workers: mainly those in once dominant manufacturing industries that have lost their global competitive edge. It is breathtaking hypocrisy to object to the often appalling conditions of work and employment in developing countries and emerging markets, including sweatshops and child labor, while at the same time trying to prevent the operation of the normal and effective mechanisms for remedying these deplorable circumstances: foreign direct investment, outsourcing, off-shoring and all other manifestations of free trade.

But for Sherrod Brown, the Democratic senator of Ohio who won an upset election in 2006 by campaigning on a strong economic populist platform (and who has signed on as a co-sponsor of the legislation), the Patriot Employer Act makes sound political sense. It's how you win in Ohio.

As he told Katrina Vanden Heuvel in the Nation two weeks ago, while comparing his success in Ohio in 2006 to John Kerry's failure in 2004:

[The Patriot Employer Act] does two things.. it helps win Ohio and helps them govern in the right way. I think you can really take the country in a very different direction building a progressive message around that kind of economic issue... We won 32 or 33 more counties than John Kerry did mostly in small towns in rural Ohio where they were very responsive to a populist progressive message. One town in particular -- this is something that just happened -- there's a company called American Standard, they make toilets, plumbing fixtures, you'll see them in near any public restroom anywhere. They're in Tiffin, Ohio, town of 20,000. They've just announced back around 3 months ago, the closing of the plant. It was bought by some investors, they're moving offshore, they're honoring the union contract as far as they have to, which is those who already have their 30 years. If you have less than 30 you're pretty screwed -- they give you something, but you can't get to the 30 years because they close the plant. And the company that came in and bought it was Bain Capital, Mitt Romney's firm.... These investors come in, take millions of dollars out of the company, and you know, it's pension and healthcare. And those are going on all over the country. And this is a town of 20,000. I carried that county, Kerry didn't. They had already laid off some people... It's those kinds of situations that cause small town Ohio to vote for somebody like me regardless of the social issues.

(Thanks to Ben Muse's Custom House for the link.)

How the World Works is sympathetic to economists who argue in favor of bulking up the social safety net and making investments in infrastructure and education, rather than attempting to micromanage corporate behavior, as a way of addressing the inequities catalyzed by trade. But if Willem Buiter ran for political office in Ohio with a stump speech that included a lecture on how the winners from trade outnumber the losers and how "Bill Clinton’s greatest achievement as President was his remarkable and unstinting support for a liberal international economic order" and therefore Ohioans need to stop moaning about NAFTA, he would lose. He would be pummeled. Economists pride themselves on understanding how the world is. But doesn't that imply that their calculus include political reality? The political reality is that voters in Ohio do not feel as if they have benefited from a liberal international economic order. And the political reality is that the voters of Ohio may well determine who the next president of the United States is.

It's tricky: There's a fine line between pandering and recognizing political reality. We have good reason to distrust politicians who say whatever it is they think will win them an election. When they are too obvious in their weather-vane spinning, we reject them, as Republican voters rejected Mitt Romney in this year's Republican primary contests.

But right now, that isn't happening to Barack Obama, which is either a sign that voters believe he's sincere, or that he is just superlatively good at electioneering. On Tuesday morning Rasmussen Reports released polling data from Ohio that indicates that the race between Hillary Clinton and Barack Obama in Ohio is continuing to tighten. Clinton now only leads by a margin of 5 percentage points, 48 percent to 43 percent, compared to a margin of 14 points in polling by the same firm two weeks ago. But the most interesting numbers relate to how voters perceive the candidates' stance on trade.

Just 16 percent of Likely Democratic Primary Voters believe the North American Free Trade Agreement -- NAFTA -- is good for America. Fifty-five percent say the trade agreement negotiated by the Clinton Administration is bad for the nation.

By a 53 percent to 14 percent margin, voters believe that Obama opposes NAFTA while there are mixed perceptions on where Clinton stands. Thirty-five percent believe she favors NAFTA, 31 percent believe she opposes it and 34 percent are not sure.

Barack Obama is playing to win. This may dismay some economists. Maybe they should try winning an election in the American Midwest in 2008.

UPDATE: At the New Republic, Noam Scheiber has a fascinating, in-depth look at Obama's team of economic and foreign policy advisors. But "The Audacity of Data" does leave one wondering what all these non-ideological, data-driven wonks think of Obama's economic policy prescriptions in Ohio. (Thanks to Tyler Cowen at Marginal Revolution for the link.)

SECOND UPDATE: The Economist magazine says Buiter and Sibert are too harsh on Obama, while providing their own substantive analysis of the Patriot Employer Act.

Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

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