Mourning In America

A New York Democrat on politics, journalism, and the Mets

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Friday, January 09, 2004
"Free Trade But..." I've been meaning to comment on this NY Times Column by Sen. Charles Schumer and Paul Craig Roberts, which I generally read as an effort to come up with an intellectual justification for the Democratic Party's move away from the free trade principles President Clinton embraced wholeheartedly in the 90s. I didn't know where to start -- the effort is just too strained.

Luckily, Michael Kinsley takes up the effort in Slate today. Schumer and Roberts' major argument is that the extreme portability of the "factors of production" today somehow renders the economic arguments behind Free Trade less compelling. Actually, there's really no difference between the agriculture trade envisioned when the theory was first stated, the industrial products trade that dominated the 20th Century, and the software trade that gets so much attention today:

Schumer and Roberts cling to the free-trade label and endorse the general principle while claiming it no longer applies because "the factors of production can relocate to wherever they are most productive." In fact, that makes the theory even more compelling. If the factors of production become more productive, the whole world becomes richer.

Traditionally, the most troublesome thing about free trade—apart from the difficulty of persuading people that it works—is the unequal distribution of its benefits. The whole country is better off, but there are winners and losers. Generally, the losers are lower-income workers, whose jobs are the easiest to duplicate in less-developed countries. It seems misguided to me to avoid a policy that makes the whole nation richer because it makes some individuals poorer. With more to play with, it ought to be easy to ease the burden on free trade's losers. Of course, under a Republican administration, we don't do nearly enough of that.

Kinsley gets to the real root of why the problem is getting so much attention from the media today:

the losers in new-style trade are more likely to be people that U.S. senators and fancy economic consultants actually know.

But does that make them more deserving of intervention?
These are people with advanced degrees and high incomes. Their incomes will likely be above average for our economy even if they are driven down by competition from poorer economies. Under these circumstances, denying the benefits of free trade to the whole nation—and denying opportunity to the rising middle class in developing countries—in order to protect the incomes of a relative few seems harder to justify, not easier, than it was back in the days when our biggest fear was Japanese cars.

That's the key thing you have to remember when talking about protectionism today -- we're not talking about curtailing the economic growth of already-wealthy and industrialized societies like Japan, we're talking about denying dirt-poor residents of India and China and other third world nations the ability to share in any of the comforts of modern society.

I'm not dismissing the risk of a "race to the bottom," in which an elite upperclass gains control of the world's capital investment decisions, exploiting the "portability of the resources of production" to exempt itself from the influence of the world's governments and the people they represent, ultimately eroding the standards of living for average workers everywhere.

But that risk has existed in any industrializing society, and history shows that, again and again, we've conquered it. We talk a lot about exporting Democracy, and that's important, but what American leaders ned to realize is that the greater challenge they face is to export the principles of the New Deal (essentially "compassionate capitalism"). The only channel for doing that is trade. Without being absolutist -- some practices, like child or slave labor are so despicable that they warrant prohibition -- we need to be very careful about steps that impede the flow.

Sputter Bad news for the economy today: Only 1,000 new jobs were created in December, far below the 150,000 analysts had expected, and not nearly enough to keep pace with population growth (that is, to keep the unemployment rate stable over the long haul). The Bureau of Labor Statistics also reported that job growth in November was weaker than initially thought -- only 43,000 jobs were created, compared to the 57,000 they reported last month.

The unemployment rate fell to 5.7%, but that's due to a 309,000 decrease in the number of Americans trying to find work, either because they don't think the jobs are out there, or because they have other responsibilities (schooling, childcare, etc.).

Economists have been warning for a couple of months that despite the quick growth in late 2003, there was no guarantee the recovery could last. This week's data, with surprisingly weak numbers on factory orders (which helps explain why manufacturing suffered a net loss of jobs in December, as opposed to the stable levels forecasters had expected), retail profitability (sales were strong, but apparently largely because stores discounted everything to the bone), and now employment indicates the seriousness of their warnings.

On the bright side for the economy, analysts say that means the Federal Reserve will not face much pressure to raise short-term interest rates to curb inflation. The problem is that long-term interest rates are influenced by other factors, increasingly including investors' willingness to buy U.S. securities -- a willingness that is likely to be tested in the coming months and years by the Bush administration's disregard for the cost of the deficits it is running and the continuing weakness in the dollar, which erodes the value of any gains foreign investors post.

The consensus is still that the economy will grow in 2004, fueled by an orgy of election-year spending by the Republicans who run Washington. But the long-term outlook continues to be gray.

Thursday, January 08, 2004
The Right Words on Taxes On that note of expecting more from society's blessed, Gen. Wesley Clark makes the argument on taxes that I've been waiting for a Democrat to make for a decade (since Steve Forbes and the flat-taxers first appeared on the scene):
At a town-hall meeting Tuesday night, one of Clark's biggest applause lines is his pledge to raise taxes on people who make more than $200,000 a year: "We're gonna ask them to be patriotic."

A core of the anti-taxer's mantra is that lowering taxes on the rich will improve their incentive to work harder. Why should we need to bribe them? Don't they love this country enough to do their share to fund its security?

If You Have Some Time... This Washington Post piece on the President's daughters is fascinating.

This excerpt is pretty illustrative:

There is plenty that the Bushes don't ask their daughters to do, that much is clear. They are college seniors now, 22, Jenna an English major at the University of Texas in Austin, and Barbara, like her father a Yalie, majoring in humanities. Both are considering graduate school, their parents say, but not before working first, perhaps as teachers.

Jenna and Barbara have not campaigned or reined in their adolescent rebellions. They have not appeared engaged in any of the pressing issues their generation will inherit, nor shown empathy for the struggles facing their mother and their father, the president of the United States. They have not treated with respect their Secret Service details, those highly trained men and women who literally would take a bullet for them. They don't show their faces at the White House often. So far, they have shown little inclination to embrace the life of public service modeled by their parents, uncle and grandparents.

They are girls born rich, blessed with intelligence, good looks, trust funds, loving parents, boundless opportunities, freedom from many of life's daily vexing challenges. Yet they persist in seeing themselves as victims of daddy's job. In this attitude, they have been subtly encouraged by their mother. Laura Bush would never permit herself to feel victimized by her husband's decisions ... No, any victimization she might have felt has all been transferred onto her girls. Once George sought political office when his girls were 12, Laura's guiding principle in mothering became "they didn't really ask for this."

You know what? George W's youthful indiscretions aside (that's not a cheap shot -- he alludes to it later in the piece), the Bushes really have the right and the responsibility to expect more from their daughters. I don't want to stretch too far, but there's a broader metaphor here -- he has the right and the responsibility to ask more of everyone in our society who has been blessed with the wealth and opportunities his daughters were given. The fact that he fails to do so is the number one failure of his presidency.

A Bit Harsh? The press release announcing a Jan. 22nd unveiling of the new design for the permanent PATH station at the World Trade Center includes this:
Governor Pataki said, “Akin to Midtown’s Grand Central Terminal, Santiago Calatrava’s design for the new and permanent World Trade Center Transportation Hub for Lower Manhattan will serve as an architectural icon for the ages, born of hope and forged of steel and glass. It will create a new grand civic space for Lower Manhattan, carrying natural light down to the platforms and into a place once made dark by evil.

Whether you liked the original WTC design or not, the builders did their best. I don't see why they should be called "evil."

Wednesday, January 07, 2004
Poll Update Check out Wes Clark's numbers in this new national Gallup poll -- he trails Dean only 24 to 20, and blasts the rest of the field. The Gender Gap is spotlighted as a major issue -- far more women side with Dean -- but Mark Kleiman's post points out that this actually ballasts Clark's "more electable in November" argument.

Clarification Please do not read my previous post about former Gov. Cuomo to suggest that if Dean stumbles, the Democratic party will be forced to turn to a popular, albeit somewhat polarizing politician who holds statewide elected office in New York as a compromise candidate. I do think the ultimate nominee is in the race already...

The Tipping Point? The only public daily tracking poll for New Hampshire shows Gen. Wes Clark surging past Sen. Kerry for second place for the first time today -- the numbers are: Dean 36%, Clark 16%, Kerry 13% (Clark and Kerry had been tied at 14% yesterday).

The development is not unexpected. Kerry's basically put his NH operations on hiatus to focus all of his attention on Iowa, theorizing that a surprisingly strong performance there would give him a credibility boost he could then apply in a last-minute push in NH. On the other hand, the expected poor performance in Iowa would basically leave him for dead. In addition, a daily tracking poll is clearly a volatile measure. We'll see.

Waiting for Mario? The other thing I find interesting about the poll interpretations is that while Dean's lead is commanding, his overall grip on the electorate is not. Josh Marshall and others have contended that Dean's support is "rock solid" at 38% -- enough to win in a broadly divided field, but weak enough for a strong "other" candidate to emerge.

In viewing that, I'm reminded of the 1992 NYS primary, when non-candidate Paul Tsongas and Jerry Brown (running only slightly closer to the mainstream than Dennis Kucinich) split 58% of the vote -- Bill Clinton won by more than 13 percentage points in the primary, and pundits cited that commanding margin in concluding that the race had essentially clinched his nomination. But had the not Clinton voters coalesced behind one of the others, history might well be different (specifically, one theory circulating at the time had NYS Gov. Mario Cuomo riding to the party's rescue at the resulting bitterly-divided national convention, which was held in New York City that July).

Evcen though the primary process is accelerated now, in some ways, the late-surge candidacy is easier, because the primaries do not award their delegates on a winner-take-all basis, so if several members of the field pull out after South Carolinia, there's still plenty of time for the resultant emerging "Not Dean" candidate to begin a winning streak.

Of course, that's all contingent on the idea that the pundits' interpretations of the "cap" on Dean's support is accurate. Given their track record of misunderestimating Dean, how much money do you want to put on that?

Monday, January 05, 2004
Sweet Dreams The International Space Station has apparently sprung a leak. MSNBC reports that its internal air pressure has been dropping slowly since Dec. 29th. Mission controllers decided to inform the station's current residents -- an astronaut and a cosmonaut -- of their situation "shortly before their bedtime" on Monday:
“There’s no action for you at this time and no immediate concerns,” Mission Control assured the two men. “We’ll continue to investigate this on the next shift and we may have some actions for you tomorrow.”

No offense to NASA's second shift, but the station's inhabitants (one of whom was on Russia's Mir space station when it sprang a similar leak several years ago) decided to put off turning in to run some checks of their own -- telling Mission Control about it after the fact.

Obviously, the idea that the space station and its inhabitants are at some risk is troubling, but so, too is NASA's response to the incident -- trying to manage the situation solely from the ground, and not involving the on-scene assets. This is the kind of culture that appears to have led to the Columbia disaster, and needs to be fixed. Fast.