Why NAFTA Beat Populism the First Time

During a campaign that saw perhaps six positions on almost every issue, there was one that Donald trump staked out that NEVER CHANGED: his opposition to NAFTA, the North American Free Trade Agreement. Established in 1994, the sweeping agreement changed the economic game in Canada, Mexico and the United States, and was the most debated issue in it’s time. Even more than HillaryCare.

Now, he’s issuing conflicting messages and threatening a trade war with Canada, literally over spilled milk. And some, like Sen Ben Sasse (R-NE) are speaking up with some common sense:

“Yes, there are places where our agreements could be modernized but here’s the bottom line: trade lowers prices for American consumers and it expands markets for American goods. Risking trade wars is reckless, not wise.”

Many trump supporters say, “it’s what he campaigned on.” So? He campaigned on many things. Sometimes, many opposing sides to the same thing. That doesn’t mean it should be carried out.

Still, on this, he was consistent. Why?

Donald spoke against it early on, even before adoption in the 90’s. He always brought it up in light of our trade history with Japan and other foreign markets with whom we didn’t have free trade agreements. And some concerns were legitimate. Our country had just gone through a massive structural economic change in the 1980’s, and many were unsure of what this agreement would do to stop that change, or reverse it. But this wasn’t Japan. This wasn’t a “bad deal.” Doing nothing was the “bad deal.”

There was a flaw in the premise of their argument: they believed the government should have worked harder to stop the natural course of things, in commerce, and protect special interests from the inevitable. Some didn’t want to simply slow down the impact, they wanted to return to the Laverne & Shirley days, where everyone could get a factory job, a steady paycheck, and pension. Mexico was just a place you saw in the movies, and went on a bender at the border. Lower skills, higher cost, less choice.

All his life, Donald has been a populist. He goes with what sells. And in business, you cannot blame him. In fact, it’s laudable. As a salesman myself, I relate to the impulse to sell what people want, and feed their most primitive desires. People buy what they love. And people love stability and gratification.

Yet as public policy, this is a terrible compass. And most leaders in business and government understand that certain truths exist about human nature, and the way a free market operates. Free businesses will always seek the easiest way to produce the most product, sell it to the most people, and to do it for the lowest cost. Likewise, free people will always seek to buy the most affordable products, from the easiest source, and for the lowest price.

Perhaps government can work to slow down the worst effects of a rapidly changing situation, but to stop it, or reverse it is terrible policy, and counterproductive.

Canada already had a free trade zone with Mexico for years, leaving the American market in an awkward disadvantage. So, NAFTA passed by a decent, bi-partisan margin in late 1993, and went on to create the most valuable, dynamic trade zone in human history. It was intended to slowly eliminate tariffs and conform standards on many aspects of trade in the next 10-15 years. NAFTA set provisions in place for intellectual property, environmental issues, agricultural standards, and transportation infrastructure. Before NAFTA, construction and transportation costs were higher, service industries were less efficient and things like fiber optic telecommunications were even difficult to complete.

In retrospect, this is why leaving NAFTA is a bad idea. It would reverse course on almost everything, cost us trillions of dollars in trade, and destroy agreements from the environment to agricultural standards. It would arguably cause far worse than the naturally-occurring damage that was sped up by the signing of the treaty. But also, because after all these years, many of the negative concerns have already been addressed by the free market, and no longer exist.

A mere four years after the passage of NAFTA, trade had already exploded with Mexico (it’s now 500% higher than 23 years ago), and costs had plummeted for American businesses. Yes, some jobs went south, but more were created up north, and the increased profit led to greater income and quality. Even I got caught up in the “trade deficit” argument for so long, that I failed to see the underlying point: trade is good for improvement, in everything. Now, industries have shifted, standards have risen, profits have increased, and even entirely new industries have come about, creating hundreds of thousands of unique jobs, while millions have been altered, or shifted from one sector to another. Now, the North American Free Trade Zone covers nearly 500,000,000 people and is the grease of a $21 trillion market.

While our trade deficits have doubled or tripled, our costs have plummeted. Meanwhile, their economies have improved, and over time, some industries even reversed. We saw this in the Japanese auto market, as the corporations eventually saw the benefit of moving operations back stateside. Hondas are built in Ohio. Toyotas are built in Kentucky. Nissans are assembled in Missisippi. Not Mexico. The free market at work. Even the union rag, Automotive News admitted that NAFTA led to better cars, lower costs and greater profits. I’m sure that was difficult.

All this talk about “tweaking” or “improving” NAFTA is counterintuitive. Where there is a free market, any “tweaking” is, by definition a backward step, away from the “free” part. Trade wars never work out in an economy that depends on the quick movement of goods, services, and information. Why would anyone want to slow it down?

One of the greatest arguments for free trade is the foreign policy impacts, reduction of intrastate conflicts and the pressure of democratization. These things are stronger today, and Mexico is changing, albeit very slow. Ultimately, the greatest fears of NAFTA, the loss of millions of jobs never materialized, according to a Congressional Research report. And the economic changes that occurred were a tradeoff for lower unemployment, greater profits, more choices, and better efficiency.

The entire argument against NAFTA, or TPP for that matter, comes from a place of progressive thought; the government should manage outcomes, subsidize preferred industries and protect economic interests from the natural effects of a free market. I disagree. And so do the principles of a free market.

Donald trump opposed NAFTA because it was a populist message that resonated with the common man.Even if it wasn’t in their best interest, the masses could be whipped into anger by a changing world because, well, most people don’t like change, and simple messages resonate. It was a simple one: “NAFTA hurts manufacturing jobs!” No, a changing economy hurts manufacturing jobs, and our government got out of the way of letting it change.

But, we got used to it, and eventually that change became our status quo, because freedom always wins over suppression. Change is hard, but a part of human progress.

Now, trump wants to go backward, because its a simple message, and he thrives on the simplest messages. Repealing NAFTA is a reactionary thing, and he’s nothing if not reactionary. Returning to the 1980’s reminds some of the “good ole’ days,” and that always appeals to the masses. But, it will meet more resistance than he thought. And NAFTA beat populism the first time because cooler heads prevailed, and economic freedom appealed to more people than not. That will always be the case in a nation of people who value freedom.

 

 

World Economy Grows, Liberals Hardest Hit

One of the things I absolutely loved about the 80s–aside from action movies where Arab terrorists could be the bad guys and those white jackets Don Johnson wore on Miami Vice–was the sense of optimism in America.  It was a huge shift from the days of Jimmy Carter’s malaise, when the country thought that its best days were behind it, to the era that Ronald Reagan ushered in–an era brimming with confidence and ambition, when nobody made any apologies for success and big dreams inspired us to build even bigger realities.  Sure, it led to some excesses (not to mention a strange fascination with Lee Iacocca)–but it was also a totally awesome time to be an American, when it really seemed as if there was nothing we couldn’t do.

All that was made possible by a booming economy, which didn’t happen by accident.  Looking back at Reagan’s average GDP growth of nearly 8% by the time he left office, it’s easy to forget the pain the country endured during those first two years, before the Federal Reserve strangled double-digit inflation with double-digit interest rates and tax cuts finally spurred enough job growth to put America back to work.  With a media forever anxious to revise history to make Republicans look bad, it’s also easy to forget how that boom carried the country through the Clinton years, with Slick Willie reaping the benefits of Reagan’s peace dividend.  Cut through all the noise, though, and the lesson really isn’t that complicated:  A government that goes lighter on regulations and taxes encourages productivity and growth.

Pretty straightforward, right?  Well, not when you’re one of those leftist types who takes a look at the rather breathtaking jump in economic activity since Donald Trump was elected and asks, “What’s wrong here?”  If eight years of Obamanomics–stuffed with $1 trillion worth of porkulus and a doubling of the national debt–couldn’t get us past a measly 2.9% average GDP growth, how could Trump be goosing things this hard when he hasn’t even been in office for three months?

Ah, it must be because he’s cruising on the Obama dividend.  Or at least that’s what The Economist thinks :

Economic and political cycles have a habit of being out of sync. Just ask George Bush senior, who lost the presidential election in 1992 because voters blamed him for the recent recession. Or Chancellor Gerhard Schröder, booted out by German voters in 2005 after imposing painful reforms, only to see Angela Merkel reap the rewards.

So obviously, it was Obama who primed the pump.  You know, with his EPA trying to kill off the coal industry, executive orders that effectively nullified immigration law and allowed millions of low-skilled workers into the country, issuing more regulations than any president in history–that kind of stuff.  It had absolutely nothing to do with Trump promising to cut corporate taxes, get the regulatory state off the backs of business, and bring manufacturing jobs back to the United States.

No, siree, can’t have that–because giving Trump’s policies credit might make them more popular:

But the political mood is sour. A populist rebellion, nurtured by years of sluggish growth, is still spreading. Globalisation is out of favour. An economic nationalist sits in the White House. This week all eyes were on Dutch elections featuring Geert Wilders, a Dutch Islamophobic ideologue, just one of many European malcontents.

 

This dissonance is dangerous. If populist politicians win credit for a more buoyant economy, their policies will gain credence, with potentially devastating effects.

What those effects might be, the article doesn’t say exactly–but I think we can safely conclude, based on The Economist’s worldview, that the most devastating effect would be a loss of confidence in the whole globalist scheme.  Trump’s rhetoric about putting America first encapsulates that fear perfectly, because heaven forbid that the President of the United States craft economic policies based on what he thinks is best for his own country.  Why, such thinking is so twentieth century!  But what else would one expect from a man who eats ketchup on his steaks?  Mon dieu!

Look, those of us who have studied politics know full well that presidents are not masters of the economy.  Point of fact, the best thing a president can do to help the economy along is to get out of the way as much as possible.  Reagan understood this, which is why he structured supply-side policies the way that he did.  Trump also understands this, and had made YUGE tax cuts and a rollback of the Obama regulatory state the immediate goals of his administration.  The markets, anticipating that these policies will lead to economic expansion, have reacted accordingly.  In other words, they are simply manifesting the confidence that things are going to get way better–confidence that was sorely lacking over the last eight years.  Whether or not The Economist editors like it, Donald Trump has a lot to do with creating that confidence.

And if it’s another thing that Trump understands, it’s that confidence is contagious.  That’s why we see all the braggadocio, and how everything is gonna be great, the best, the biggest you’ve ever seen, believe me.  Perhaps that’s what The Economist and like-minded leftists fear the most–because all they have to offer is doubt, self-recrimination, and the threat of boiling death because of climate change if we don’t change our consumerist ways.  To them, policies that create and maintain a thriving middle class are a threat to the planet, which is why they’ve been conditioning us to be happier with less.  Smaller cars, smaller houses, smaller incomes, more dependency–looking back, the anemic growth of the Obama years seems more of a feature than a bug.  Giving the people back their confidence causes all that to unravel.

Expect more of this panic from the left if Trump actually delivers.

I Increasingly Find Conflict Between My Faith and Some Conservative Discourse

“On the last day there will be a narrow gate. That makes me pessimistic about my future in politics and the future voices on the right”

Were I to recreate this site, I think it would have no comments section. Disqus is just horrible. I do not recommend it to anyone. And it just helps further what I see on so much social media these days. As much as the internet can bring people together of like mind, it also can help shrill minorities of people think their views are more mainstream than they are. That then emboldens them further.

In the past several months there have been three incidents that have solidified for me that my faith and my politics are starting to collide. While I am a firm believer in the idea of a conservative populism, I see a dangerous trend within the mix of unfortunate shrillness and hostility. That trend is playing out in the comments here at RedState and on social media.

To start, Christian conservatives were roundly assailed by other conservatives for daring to provide aid and comfort to children whose parents had shipped them across the border. Some could not distinguish between giving a child a teddy bear and supporting Mexican drug cartels. It was all one or all the other. In fact, many Christians, myself included, want expedited deportations and a secure border. But we also want to make sure the children, some victims of human trafficking, were taken care of, fed, and comforted.

But to some on the right, that is aiding law breakers. The anger and hysteria directed at conservatives engaged in private charity had all the makings of a leftist police state making us care about how we choose to spend our own money.

The second was bringing Dr. Brantly and his co-worker back to the United States. The number of angry calls into my radio program from well meaning conservatives, comments across social media, opinion columns, agreement thereto, etc. really boggled my mind. Here are two Americans risking their lives to help others and we are supposed to turn our back on them, leave them there, or criticize their decision to go in the first place? That’s not the America I know or love. The level of outright anger, fear, and bitterness over the decision to take care of American citizens and the lack of knowledge and understanding that formed the foundation for the anger, fear, and bitterness really left me wondering what is going on.

The last is the present situation in Ferguson, MO. The rush to win a fight and lay blame instead of mourning a loss and praying for a situation just leaves me perplexed. The rush to “change the narrative” with bad facts to replace bad facts by some folks who keep the ichthys on their car unsettles me.

I’m a conservative before I’m a Republican. I was once even an elected Republican. But before I’m a father or husband, I am a Christian. My politics have to be balanced by my faith. That faith requires me to put faith, hope, mercy, and grace ahead of much, including a lot of short term political gain. And sometimes that requires me to rely on Christ for justice, not the government.

Eschatology is the study of end times. It is the one area of biblical study people often view in their own time. In the 1800′s with the rise of the Great Awakening, students of eschatology viewed the end times rather favorably. The whole world would come to Christ, many of them thought. I view the ends times more pessimistically. I think there’ll be many more through the pearly gates than I want, but a whole lot less than I expect. And I think as we descend into more cultural and societal chaos on the road to the last day, it will be more and more important for those of us in politics to decide which comes first, faith or politics. They can be balanced. I try, sometimes fail, but keep trying. A growing number of people on the right are no longer trying to balance. They are either going completely out of the public square, or all in without Christ in their heart or on their tongue thinking they can just visit him on Sunday.

We should find balance. We may fail, but we should keep trying. We should not recede from the public square and a growing number of conservatives are showing more willingness to drive from the public square those who urge greater measures of Christian grace and charity than they prefer.

On the last day there will be a narrow gate. That makes me pessimistic about my future in politics and the future voices on the right when cultural and social issues come to the forefront. But for those here and elsewhere, though I may fall short because I’m a sinner, I’m with Jesus first and all the rest comes after.

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