Ramesh Ponnuru remarks at how public support for free trade has fallen since the 1990s, and that even politicians who nominally support open trade rarely do so full-throatedly:
Instead they make mercantilist arguments for free trade, in which we must regrettably open our markets to foreign imports as the price for getting other countries to do the same for our exports. In debates over trade agreements, both sides typically accept the notion that imports are bad and exports are good. The question becomes whether the agreement will do more to boost imports or exports.
Ramesh concludes: “Falling support for trade has many causes, but the failure of almost anyone in politics to make the real and unequivocal argument for it has almost certainly been one.”
One cause among many, I think, has got to be the rising cost of health care.
A RAND Corporation analysis of the burden of health care costs on typical families between 1999 and 2009 noted this:
Although family income grew throughout the decade, the financial benefits that the family might have realized were largely consumed by health care cost growth, leaving them with only $95 more per month than in 1999. Had health care costs tracked the rise in the Consumer Price Index, rather than outpacing it, an average American family would have had an additional $450 per month — more than $5,000 per year — to spend on other priorities.
This trend is lost on no one and lamented by everyone, but its connection to other issues, like trade, might be less so.
Here’s what I think is happening: What you might call the Clinton-Rubin-Greenspan Bargain didn’t pan out as advertised. A cocktail of deficit reduction and tight money would keep inflation in check. Liberalized global trade would make consumer goods cheaper, and check inflation further still. Sure, the process of de-industrialization would mean a steady erosion of the kind of stable, high-paying jobs that middle-class Americans had become accustomed to. But even comparatively lousy-paying service jobs (not to mention homes that seemed like they’d increase in value in perpetuity) might still increase standards of living because a strong dollar could buy more goods that it could under a protectionist high-inflation regime.
Enter the spike in health care costs.
Whatever material gains that workers realized under the Clinton-Rubin-Greenspan bargain have been outstripped by the burden of paying for health care. In this light, the benefits of free trade — and indeed low inflation — don’t seem like, well, a fair trade.
The old hands of the Clinton administration would no doubt respond by saying they didn’t get their way on health care reform, which might have preempted the subsequent years of inflation. But that’s another argument. We are where we are — and it seems clear that, in addition to driving our long-term debt and entitlement problems, the cost of health care is at least partially to blame for angst over trade.