Trade Happens

Ramesh Ponnuru from the January 1997 issue

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Eckes, in a typical move, relegates the truth of the matter to footnotes (page 310, footnote 17: "If higher duties effectively blocked some imports, the average ad valorem equivalent might prove to be an unreliable measure"). In fact, Smoot-Hawley increased duties on 890 items, 50 of them previously duty-free, and at the very moment when the U.S. policy of combining export preference with foreign loans was creating a crisis in financial markets.

Eckes next turns to refuting Jude Wanniski's argument that the stock market crashed in anticipation of Smoot-Hawley's passage. Wanniski's interpretation is, to put it gently, eccentric, and it's easy enough for Eckes to knock down. But he can't resist the temptation to go Wanniski one better: "The stock market crashed after evidence of legislative gridlock"--i.e., because a Democrat-led coalition was delaying passage of the bill.

In tackling the third and fourth claims, Eckes's method is to create a series of elaborate sideshows to divert attention from the fact that he is conceding the main point at issue. So he admits that international trade collapsed after Smoot-Hawley, though why it did so is just the darnedest mystery. He spends page after page showing that complaints by other nations about Smoot-Hawley weren't formal "protests" as understood by the State Department. He downplays the amount of trade retaliation by not counting devaluations, currency controls, debt defaults, or expropriation of foreign industry as retaliation. Even tariffs aren't necessarily retaliation; tariffs on automobiles, for instance, are redefined as luxury taxes.

Once again, however, Eckes tries to retain the shards of academic respectability in footnotes, where he concedes that there was in fact a spiral of international trade restrictions. But these were "actions unrelated to Smoot-Hawley" (foreign governments doubtless were just having fun). Eckes's scholarship on this point is, in short, impressive chiefly as a feat of prestidigitation.

Eckes's coverage of the postwar period is only marginally more reliable. He argues that the United States has foolishly liberalized trade without demanding that other countries do so to the same degree. To prove his empirical claims, he would have to examine liberalization in other countries, particularly Japan, more carefully than he seems inclined to do. To defend his normative claims, he would have to refute the classical case for free trade, which makes no reference to the trade policies of other nations.

In any case, Eckes's account is marred by a number of background assumptions, which he never bothers to defend. First is the view that trade deficits are bad and surpluses good--and its corollary, that imports are bad and exports are good. Except, that is, when exports are bad too: It's wrong for trade negotiators to "sacrifice" protected industries for the sake of exporters. A nation that opens "its" market to foreigners is making "concessions." If you support free trade, you're a member of a cosmopolitan elite: "Outside the Beltway, ordinary Americans saw trade policy differently." Crackpots like Ravi Batra and James Goldsmith are serious thinkers. The interests of particular industries are equivalent to the national interest--unless they're exporters or importers.

I've only skimmed the surface of this book's weak points. But Eckes's cheapest shot shouldn't pass without comment. Eckes and Buchanan, as right-wing protectionists, are fond of Karl Marx's statement that "the free trade system hastens the revolution. It is in this revolutionary sense alone...that I vote in favor of free trade." What neither of them seems to understand is that Marx viewed capitalism itself as revolutionary, a necessary stage of historical development. He favored free trade for the same reason he favored the gold standard and the Union in the Civil War: because it would advance the productive power of capitalism. Are Eckes and Buchanan prepared to smear all goldbugs and abolitionists as incipient Marxists too?

In his epilogue, Eckes attributes the election of the Republican Congress in 1994 to public anger over the North American Free Trade Agreement, which is peculiar since GOP congressmen were more likely to vote for it than Democrats. Eckes's "ordinary citizens" turn out to be more gullible than ordinary. Eckes's book should be right up their alley.