Global Policy Forum

By Eamonn Fingleton

The United States is caught in a historic Catch 22: on the one hand, far-sighted and austere policies are needed to rectify the huge trade deficits, but on the other the American political system seems incapable of seeing beyond the next election. So is all lost? Perhaps not.

Some critics of America's naí¯ve brand of "one-way free trade" sense that the political pendulum may at last be swinging their way. This is the view in particular of Alfred E. Eckes, Jr., an Ohio-based historian who in the early 1980s served President Reagan as chairman of the U.S. International Trade Commission. He believes that the recent trend for key American service industries to emulate manufacturing industries by outsourcing work overseas could prove to be the last straw for hard-pressed American voters. This trend, whose rapid rise I predicted in In Praise of Hard Industries in 1999, began creating increasing serious joblessness in American suburbia in the last three years. And this, Eckes reasons, might finally foster the rise of a grassroots coalition with enough clout to make a real impact on the presidential election of November 2004.

"We may be watching a sea change in public attitudes, as people gradually awaken to the fact that free trade is not a free lunch," said Eckes. "Now that engineers, accountants, Wall Street analysts, and even physicians are facing growing competition from low-paid professionals in India, the Philippines, and potentially China (as English-language skills improve), the articulate professional classes may come to appreciate what blue-collar America discovered in the 1980s."

As for blue-collar America, the job implications of one-way free trade have long been understood but even in manufacturing the events of the last three years have greatly sharpened anti-globalist attitudes. The reason is not hard to find. According to the Washington-based economist Pat Choate, the pace of job loss in manufacturing has accelerated since 2000. The United States lost more than 4 million labor-intensive manufacturing jobs in the ten years to June 2003. Of these, more than half disappeared in just the last 30 months of the period. The result is that manufacturing's share of total employment had fallen to 10.7 percent by 2003 -- versus 18.2 percent in 1989.

That the mood about globalism is changing was also reflected in private meetings I had in various cities on a recent visit to the United States. I was struck by how far American attitudes had come since the last years of the Internet bubble. A particular revelation was a private dinner meeting I had with a small group of hedge fund investors in a West Coast city. They were all young, highly capable, hard-driving products of the best American universities. They not only understood how disastrously hollowed out the American economy has become in the last decade but were outspokenly critical of U.S trade policies.

Even in the media, there are signs of progress. One key convert to the cause of fair trade is the Paul Craig Roberts, the conservative columnist and former top government official.

On the moderate left too, the mood is encouraging. Witness, for instance, Nicholas von Hoffman of the New York Observer, who has also been doing superb work for some time.

But the really big news is at CNN, where Lou Dobbs in May came out forthrightly for commonsense on trade. Dobbs is in a unique position to influence the debate, in that, unlike so many other journalists, he simply cannot be reined in by the ad department. He is too gifted a communicator and his following in the American heartland is too large and devoted. As he proved by temporarily absenting himself a few years ago, his primetime Moneyline program is a dead duck without him. When he did a full week of daily searching takes on globalism last month, it was clear from the huge and overwhelmingly supportive viewer response that he had tapped a rich vein.

Encouraging though all this is, we should not underestimate the political strength of globalism. For a start, apart from a few self-confident opinion leaders like Dobbs and Roberts, most media people remain knee-jerk globalists (and so long as their jobs remain secure from low-wage competition from Bangalore and Shanghai, reporters and editors are unlikely ever to question the errors in their assumptions).

Moreover there is the weight of the Washington lobbying industry to contend with. The foreign trade lobby is probably the single most effective lobby in Washington. Meanwhile even corporate America, which once fought hard for fair trade, is now so dependent on outsourcing from abroad that it routinely sides with its former opponents in the foreign trade lobby. In view of the massed opposition of the lobbyists and the press, a disgruntled electorate alone will probably not be enough to effect far-sighted changes -- at least not in time to avert an Ottoman empire-style denouement for the United States.

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