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Free Trade and the Tea Party: Puppets or Rebels?

Politics / US Politics Mar 13, 2011 - 04:47 AM GMT

By: Ian_Fletcher

Politics

Best Financial Markets Analysis ArticleMy job deprives me of the luxury of partisanship, as I have to reach out to both sides on the issue of free trade--a disastrous policy one can give impeccably liberal or conservative reasons to be against. So I can't offer any opinion of the Tea Party movement per se. But I can tell you that the way they're handling the issue of free trade reveals a lot about them.


Over the last year, I've interacted with the Tea Party about the issue at both the local level and with some of their leadership. And I've observed a few things.

The main thing is just how utterly conflicted they are, in two very different ways.

The first way is simply that the base of the Tea Party has views of free trade very different from its Washington leadership, and very different from the Republicans they've elected to Congress. (In this respect, the Tea Party's base is not all that different from a lot of disappointed liberals who voted for Obama.)

Polls show that 61% of the grass roots of the Tea Party think free trade agreements have been bad for the country. (This is not a perfect proxy for free trade per se, but it's close enough to make the point, especially when these agreements are the flashpoints of the issue.) But there's no sign of such skepticism in their leadership, which seems to think that it's leading the Ayn Rand Party, not the Tea Party. The leadership is utterly gung-ho for new free trade agreements with Korea and now Panama and Colombia.

More importantly, the Tea Party's grass roots are themselves conflicted--between what they believe, and what they want.

What they believe about economics, if you ask them, is similar to what they say they believe about many other issues: America should return to this country's founding principles, get the overweening government out of the way, etc. It's the familiar classical liberal vision of society.

But if you ask them what they want in economics, i.e. what outcomes they want to see happen, you get a very different story: they want good jobs with good wages, an industrial base strong enough for us not to be beholden to foreign nations, no more endless accumulation of foreign debt, etc.

It's 1776 vs. 1956.

The problem here is that A doesn't follow from B. The reality, in both this country and abroad, both today and a hundred years ago, is that prosperous economies do not come from a pure less-government strategy. While government must respect its limits, every nation that has became a developed nation--and every nation that has stayed that way--has done so thanks to a long list of proactive government policies designed to make this happen. Laissez faire is simply false economic history.

This isn't just a liberal or Democratic insight, though obviously FDR and the New Deal would be obvious examples of effective government interventions. It's also a Republican insight, thanks to the interventionist policies of great Republican presidents like Lincoln ("give us a protective tariff and we will have the greatest country on earth") and Teddy "the trustbuster" Roosevelt.

Now here's where the Tea Party actually has a fighting chance to sort out its own conundrum, because, for all its intellectual limitations , it does at least claim to take history seriously. (By the way, the free trade issue will help reveal if this is, in fact, true.)

So if Tea Partiers ask, for example, what the Founding Fathers really thought about free trade, they will find out very fast that they were explicitly against it, thanks to Alexander Hamilton, America's first Treasury Secretary and the one serious economist among the Founders.

And if Tea Partiers want to get back to the original intent of the Constitution, Article I, Section 8 of the Constitution says plain as day that Congress has the power "to regulate commerce with foreign nations."

Clearly, a lot of the Tea Party grass roots already gets this. So--can this eventually put an end to the paradox that they have mostly elected Republicans who support free trade once in office? Obviously, that's a tough nut to crack, because conservatives in this country have a long history of being used as electoral cannon fodder by a corporate-centered Republican establishment that despises them and sniggers at their beliefs behind their backs.

But the Republican establishment doesn't have a magical grip on the Republican party. It has a grip that depends on certain finite kinds of institutional and financial power, and it has been challenged before. The most famous example, of course, is the revolt against liberal "Rockefeller" Republicanism that nominated Barry Goldwater and eventually put Ronald Reagan in the White House.

The Republican establishment has already lost a few battles in Republican primaries against the Tea Party. So it could quite possibly lose control of the party.

America's economic situation probably has to get quite a bit worse before trade will boil hot enough as an issue for this to happen, but this may, of course, be in the cards. And obviously there are huge risks involved whenever a populist insurgency takes over a party, as insurgents generally lack a lot of the political skill and prudential judgment that establishments, for all their flaws, bring to the table.

But yes, there is hope, and--to answer some of my liberal friends--no, the Tea Party is not entirely a puppet show orchestrated by selfish billionaires. Neither, as shown by its surprising willingness to countenance cuts in defense spending, is it a pack of mindless right-wing drones incapable of new thinking.

Somebody is going to have to save this country's economy from free trade, and honestly, I don't really care which end of the spectrum does it. If it turns out to be a right-wing-populist insurgency, liberals will have only themselves to blame for not having gotten the job done first.

Ian Fletcher is the author of the new book Free Trade Doesn’t Work: What Should Replace It and Why (USBIC, $24.95)  He is an Adjunct Fellow at the San Francisco office of the U.S. Business and Industry Council, a Washington think tank founded in 1933.  He was previously an economist in private practice, mostly serving hedge funds and private equity firms. He may be contacted at ian.fletcher@usbic.net.

© 2011 Copyright  Ian Fletcher - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


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