Protectionism: bad politics, bad policy

February 25, 2004|By Michael J. Marshall

WASHINGTON - The American people are often more sophisticated and able to digest complex issues than many politicians assume, including, it seems, Massachusetts Sen. John Kerry.

One of the Democratic front-runner's big applause lines has become his attack on "Benedict Arnold CEOs," whose traitorous activities include their search for lower wages and rising profits and "sticking Americans with the bill," as Mr. Kerry puts it. While this may be considered a crime in some circles, most Americans are not fooled by the rhetoric.

Mr. Kerry believes he can keep jobs displaced by open markets at home by subsidizing U.S. companies or offering tax incentives to prevent them from moving their operations overseas. His rhetoric sounds patriotic, but the truth is it's bad politics and bad policy.

The Web site of H. J. Heinz, the company that bears the name of Mr. Kerry's wife, Teresa Heinz, boasts of operations in Africa, the Middle East, the Americas, Asia and the Pacific Rim.

Moving jobs overseas, or outsourcing, has touched a raw nerve within protectionists, and even among traditional free-traders who discovered that not only manufacturing jobs but also white-collar service sector jobs are not immune to the laws of supply and demand.

Just about every economist in modern times, and every president, including New Democrat Bill Clinton, has recognized the net benefits of free trade and open markets - including labor markets. History has proved that the United States creates better jobs and more of them - supported by those jobs that move overseas.

Countries with larger pools of labor have a comparative advantage in labor-intensive goods. They are wise to specialize accordingly. Countries with natural resources (oil, agriculture, minerals, etc.) will do the same. Trade facilitates the process of specialization and raises living standards in participating countries. Countries that refuse to open their borders are tragically left behind. The longer we distort markets through protectionism, the longer the world uses its precious resources less efficiently and diverts more efficient economic patterns, to the detriment of everyone, including the United States.

While the process of replacing old jobs with new ones is painful for those who benefit from the old order of things - in this case, families and workers - any form of progress has this same characteristic. The longer we subsidize and consequently postpone the laws of supply and demand, the more difficult that inevitable transition becomes.

Moreover, free trade and open markets are part of any successful foreign policy. If you want to make certain that the disaffected poor in the least-developed nations are not drawn into terrorist training camps against the United States, the greatest policy is to help them through trade-related jobs.

On the war, Mr. Kerry attacks Mr. Bush for not making nice with the French. But when it comes to trade, something that arguably does more than anything to develop good relations with our neighbors - not to mention gives the poorest of the poor a chance at economic development - the senator appears to want a pass in the name of the fictitious idea that he, as president, can "keep" certain jobs here at home. As nicely as French fries go with ketchup, open markets go with sound foreign policy.

America is always about the future. That future, by definition, cannot be about the jobs of the past - those that are headed overseas - but the jobs of the future, those we cannot even see. What will matter in the end is our focus on the productivity and quality of our own labor force, not the relative cheapness of another's. The beauty of a free market is that consumers have proved to be excellent at sorting out the best combination of each.

Politicians who claim to represent the working class by vowing to keep these jobs at home represent the past. This can explain the early defeat of the most protectionist candidate in the race, Rep. Richard A. Gephardt. The American people understand that putting a wall around the United States will never be the answer and will never keep jobs at home.

Responsible presidents always recognize that open markets benefit our country in terms of our good neighborliness and jobs. As a shareholder and a presidential candidate, Senator Kerry should recognize what is good for both.

Michael J. Marshall, who studied economics at Georgetown University, is communications director to former Sen. Bob Dole.

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