Margaret Thatcher once admonished her critics with the assertion that, like it or not, “there is no alternative” to free markets and free trade. The great economists, she argued, have long taught us that such trade regimes are superior to all others. The New York Times has taken the same position in its coverage of the North American Free Trade Agreement (NAFTA) and the Central American Free Trade Agreement (CAFTA). And like Thatcher, the paper’s reporters invariably support this position by reference to scripture, that is, to the opinion of “most economists.”
Economists have become the keepers of the hegemonic faith, endeavoring to make the narrow, particular interests of ruling groups in the free trade debate appear to be those of society as a whole. This is evident in the Times’ bias in portraying opponents of free trade treaties as “special interests,” while supporters are “most economists,” who support free trade on the basis of universal, objective, value-free arguments.
In “Free Trade Pact Faces Trouble in Congress” (May 10, 2005), reporter Elizabeth Becker notes that CAFTA, in addition to “facing unusually united Democratic opposition,” must contend with “well-entrenched special interest groups like sugar producers and much of the textile industry,” together with labor unions, which are raising “questions about labor rights and lost jobs,” and arguing that CAFTA, as currently written, does not impose real sanctions to enforce “existing labor laws in Central America.”
Nowhere in the article are CAFTA supporters referred to as having “special” interests. This has been typical of the paper’s recent NAFTA coverage, some of which has been genuinely sympathetic to groups harmed by free trade provisions. In a Gretel C. Kovach article titled “For Mexican Trucks, a Road Into the U.S.” (September 9, 2007), we learn that “Mexican truckers are expected to begin transporting goods throughout the United States in coming days, after a decision Thursday night by the Transportation Department that provisionally lifted restrictions confining them to the border region.” But special interests strike again: “The Teamsters, the Sierra Club and other groups said they would continue their legal fight to stop the program because of ‘serious safety, environmental, smuggling and security concerns.’ ”
And in “Select Speed Bump at the Border” (November 28, 2006), Thomas B. Edsall reports that “Democrats preparing to take over Congress appear to have a perfect issue for the party of the left: the rich are getting richer, but sizable productivity gains and rising corporate profits are not paying off for the working and middle classes.” He then sarcastically characterizes free trade opponents as self-interested, outdated protectionists whose critique is a “paint-by-the-numbers portrait of the greedy picking the pockets of the needy.”
“The villains are C.E.O.s, investment bankers and corporate managers who refuse to pass on profits in the form of higher wages,” Edsall continues. “The victims are workers who struggle to deal with an increasingly unreliable and, for many, unrewarding marketplace—producing more while under the constant threat of job, health care and pension loss.” Why, we should ask, do these serious questions constitute a “paint-by-the-numbers portrait”?
But power within the Democratic Party is the real issue in this article, rather than a serious consideration of the benefits of one trade policy over another. Edsall observes that power has shifted within the party “in favor of the protectionist wing, and especially in favor of such major unions as the Teamsters, the Steelworkers and the Autoworkers, all key party supporters with money and manpower.” But reality will triumph: “Over time . . . [the protectionists] are likely to fail. The forces of international competition have proved more powerful than any government, and advocates of aggressive policies to constrain them face a porous, borderless and now highly electronic international economy.”
A Helene Cooper piece titled “Democrats’ Third Rail: Free Trade” (August 12, 2007) opens by noting that the Democratic presidential candidates “all sounded the same critical note about the North American Free Trade Agreement when they debated in front of an audience of union members in Chicago.” Will the candidates follow through on their opposition to free trade policies once in office, or will they face reality and do what’s obviously right? “There has always been a huge space between what candidates say when they’re running for president and what they actually do in office,” Cooper writes. “When it comes to trade, that space is bigger than on most issues—particularly for Democrats.”
The reporter then quotes a free trade opponent who acknowledges that Democrats, after arguing against free trade pacts, have pushed most of them through after taking office. But there is a sleight-of-hand here: This acknowledgement of realpolitik becomes an endorsement of free trade theory, as Cooper shifts a critique of Democratic campaigning to the argument that “most economists still agree that free trade, for the most part, helps the economy, through increased job creation and lower prices, more than it hurts it, through jobs lost to low-wage competitors around the world.”
This universalized position is underpinned by the theory of “comparative advantage” proposed in the 19th century by English political economist David Ricardo. Countries maximize the mutual benefits of trade, the theory goes, by specializing in goods that they have an edge in producing efficiently. Ricardo’s famous example was the trade of British cloth for Portuguese wine. Even though both countries could produce cloth more efficiently (at lower cost) than an equivalently valued amount of wine, Britain’s “comparative advantage” in producing cloth was greater than Portugal’s; it was thus in Portugal’s interest to specialize in producing wine and trading it for cheaper English cloth. “Most economists and policy makers now accept Ricardo’s argument,” wrote former labor secretary Robert Reich in the Times, “although the popular debate over the merits of free trade continues” (April 2, 2006). Again, the opinion of “most economists” trumps the “popular debate” and settles the issue.
But many critical economists, largely ignored by the Times, have pointed out that Portugal’s specialization in wine kept it in a backward, underdeveloped state for two centuries, while England developed an industrial economy based on steam-powered textile production. Nonetheless, “most economists” advocate an abstract model. But reality does not always conform to free trade models, such as when Times reporter Louis Uchitelle asks why NAFTA didn’t diminish illegal immigration to the United States in ways it was supposed to (“Nafta Should Have Stopped Illegal Immigration, Right?” February 18, 2007). Uchitelle finds that “a major factor lies in the assumptions made in drafting the trade agreement, assumptions about the way governments would behave (that is, rationally) and the way markets would respond (rationally, as well).”
Thus, sometimes reality is inconvenient for neo-Ricardian theory because people do not act “rationally.” “When Nafta finally became a reality, on Jan. 1, 1994,” Uchitelle writes, “American investment flooded into Mexico, mostly to finance factories that manufacture automobiles, appliances, TV sets, apparel and the like. The expectation was that the Mexican government would do its part by investing billions of dollars in roads, schooling, sanitation, housing and other needs to accommodate the new factories as they spread through the country.”
But that did not happen. Neither the Mexican nor the U.S. government complied with the model’s requirements; without the proposed investments in infrastructure, foreign-owned maquiladoras appeared only near the U.S. border, “where some infrastructure already existed.” Mexico’s economy did not boom, jobs were not created, wages did not rise, and workers migrated to South Carolina, Kansas, and New York. What led to this failure? Uchitelle quotes economist J. Bradford DeLong, a Treasury official in the Clinton administration: “We underestimated Mexico’s deficits in physical and human infrastructure.”
“Most economists,” it seems, are hardly infallible. Why, then, does the Times so frequently invoke their opinions as gospel?
Fred Rosen is NACLA’s senior analyst.
