Alex Massie

The Democrats’ War on Canada

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Megan McArdle suggested last year that one way to choose a candidate was to look at their economic advisers and pick the candidate with the smartest team. That being so, she lauded the University of Chicago's Austan Goolsbee, an advisor to Barack Obama. This week Goolsbee's in trouble for suggesting that the grotesque nonsense on trade being peddled by the Obama campaign was largely political posturing in advance of tomorrow's Ohio primary. Let us trust that he's right.

According to a memo written by a Canadian diplomat at the Chicago Consulate:

"Noting anxiety among many U.S. domestic audiences about the U.S. economic outlook, Goolsbee candidly acknowledged the protectionist sentiment that has emerged, particularly in the Midwest, during the primary campaign. He cautioned that this messaging should not be taken out of context and should be viewed as more about political positioning than a clear articulation of policy plans."

Of course foreign governments know that there are some things that candidates say on the campaign trail that are for purely domestic political consumption. Yet at the same time, when Obama promises to bring "the hammer" down on "unfair" deals* such as  NAFTA and when he joins Clinton in saying it's time to "opt out" of the treaty it's not unreasonable to take note of this. Political sophisticates are supposed to wink at this and remember that each candidate is simply throwing a bone to the poor, deluded rubes who think NAFTA is the source of all America's woes, but this sort of campaign rhetoric stores up trouble for the future. At some point the rubes are going to demand satisfaction and it will be harder

Jay Newton-Small and Noam Scheiber wonder why the Canadians are leaking this (Noam calls it a "shocking" and "egregious" breach of protocol, suggesting, like Bob Shrum, that it's "more like a dirty trick by an operative in a conservative government than anything else"). To which one must say: come off it. If Democratic presidential candidates are threatening Canada, the Canadians have every right to warn that such threats are a) unfriendly and b) have consequences - including on oil supplies (and Canada, not Saudi Arabia, is the largest supplier of energy to the United States).

I'm firmly in the Dan Drezner camp:

Democrats cannot simultaneously talk about improving America's standing abroad while acting like a belligerent unilateralist when it comes to trade policy.

Does it really need to be said that threatening your friends is poor policy? Apparently so.

UPDATE: Noam thinks the Clintons are gaining traction with this and that the stramash is causing Obama problems. Well, they're of his own making.

*Free trade is, of course, a moral good, but happily it's also good economically. Dan Griswold gave a useful summary of NAFTA's successes in 2004.

Nowhere were the predictions about NAFTA more apocalyptic than in regard to manufacturing. H. Ross Perot accused NAFTA of "deindustrializing our country," and Rep. David Bonior, the soon to be ex-congressman and Democratic Whip from Michigan, predicted flatly that NAFTA "will destroy the auto industry."

In the eight years since the implementation of NAFTA, those predictions have become laughable. Between 1993 and 2001, manufacturing output in the United States, as measured by the U.S. Federal Reserve Board, rose by one-third. Output of motor vehicles and parts rose by 30 percent. In fact, in the first eight years of NAFTA, manufacturing output in the United States rose at an annual average rate of 3.7 percent, 50 percent faster than during the eight years before enactment of NAFTA. (See figure.) Of course, this is not an argument that NAFTA was the primary cause of the acceleration in manufacturing output, but it does knock the wind out of the myth that NAFTA has somehow caused the "deindustrialization" of America.

Manufacturing employment has fallen in the past few years, but that cannot in any plausible way be blamed on NAFTA. In fact, the number of Americans employed in manufacturing grew by 706,000 in the first four years of NAFTA, from January 1994 to January 1998. The decline in manufacturing jobs since 1998 has not occurred because those jobs have gone to Mexico; it has occurred because of (1) collapsing demand for our exports due to the East Asian financial meltdown in 1997-98, (2) our own domestic slowdown in demand due to the 2001 recession, and (3) the ongoing dramatic improvement in manufacturing productivity--fueled by information technology and increased global competition--that has allowed American factories to produce more and better widgets with fewer workers.

That was true four years ago and it's still true today.

Written byAlex Massie

Alex Massie is Scotland Editor of The Spectator. He also writes a column for The Times and is a regular contributor to the Scottish Daily Mail, The Scotsman and other publications.

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