The populists are winning

Got into a discussion on Greg Mankiw's blog. Mankiw's post was about how even Republicans are turning protectionist.

http://gregmankiw.blogspot.com/2007/10/populists-are-winning.html

Politicians understand that protectionism makes nations poorer. They also understand that lumping blame on foreigners is easy.

The real question that needs answering is: how do politicians make free trade a vote-winning position? Even when times are not all that good.
___________________________

An interesting response to my comment was: "the responsibility for educating the public lies with those companies and those workers who would be harmed by restrictions on trade."
___________________________

It's a good thought, and is a beginning. But it's not going to win the war for the good guys who want all of humanity to live better lives.

The first problem is rhetorical. Corporations claiming the free trade will be no more credible than snake-oil salesmen claiming to cure erectile dysfunction. The fact that, in this case, the corporations are telling the truth will not matter.

The second problem is that most corporations are not for free trade. They like nothing more politicians shielding them from the tough world of real competition. Read Raghuram Rajan's "Saving Capitalism From the Capitalists" for a nice riff on this topic. One of the Bush government's failings is that it does not distinguish capitalism from the capitalists. Sweetheart deals for buddies who own companies is corruption, not capitalism.

The third, and possibly the deepest reason why this does not work is that corporations generally will not have the resources to do this important work. Most companies fail. Or just about survive. And even the few wildly successful ones like Walmart or Microsoft will become vulnerable. Because of capitalism. Talk to people who worked at Microsoft when Netscape had an 80% share of the browser market to know what that felt like. General Motors bosses haven't been shy about lobbying Washington for tariffs or handouts.

When the going gets tough, corporations inevitably look to friends inside the Beltway to help them out. Companies are fair weather friends of capitalism. Can't be trusted.

So who will fight the good fight?

Universities. It is not a coincidence that we are talking on an economist's web site. Ambitious academics looking for political appointments can have surprisingly convenient views. But in general, academic's standards of intellectual honesty are higher than those of businesses.

And politicians. Al Gore has done his share of 360 degree pandering. But he did sell NAFTA with passion and conviction when it mattered. John McCain took on the might of Mississippi catfish farmers to fight for Vietnamese farmers who can supply the same catfish cheaper. Tony Blair (on the left) and Kenneth Clarke (on the right) have sold the case for the Polish plumbers who might breathe some life into Britain's building trades. Vaclav Havel in the old Czechoslovakia and Chandrababu Naidu in Andhra Pradesh, India, have tried to sell a case for trade to their people. Anders Borg, Sweden's 39 year old pony-tailed finance minister is selling his people radical market oriented messages like "make work pay", if welfare is too generous people have less reason to work.

It can be done. The case for trade has to be made in the public sphere. It has to be digested and accepted by the public for trade and its soul-mate, democracy, to co-exist. Unfortunately, this takes more political skill than pandering to xenophobia.