Adam Smith Opposes Free Trade!


Rep. Adam Smith (D-Wash.), that is. He's one of 42 members of the moderate (and traditionally pro-trade) New Democrat Coalition, which has turned against the Central American Free Trade Agreement, E. J. Dionne writes in his Washington Post column today. (Massive, byzantine treaties like CAFTA, of course, aren't really "free" trade, but I'll take a step in the right direction when I can get it.) They're not against more trade per se, but have come under pressure to cushion the blow to workers displaced by foreign competition.

A few observations: First, as Cato's Brink Lindsey observed in our July cover story last year, the declining share of the economy represented by manufacturing jobs is largely attributable to domestic increases in productivity, not foreign competition. It's just easier to point the finger at a Dark Other when jobs are lost—so at least it's someone's fault—rather than blame largely impersonal structural changes in the economy.

Second, it's not clear why there's any more reason to provide "adjustment assistance" for jobs lost as a result of import competition or offshoring than, say, jobs lost as a result of new labor-saving technology.

Third, if you look at GAO surveys of existing "trade adjustment assistance" programs, it's not clear how effective they are. Some of the program managers GAO interviewed suggested that people being retrained kept on in programs they had no expectation would increase their future job prospects just to continue receiving benefits. There are probably ways to make adjustment programs more effective if we're going to have them—they're probably necessary as a political sop to safeguard the greater benefits of expanded trade—but the need to improve those programs is a bad reason to hold trade liberalization hostage.