Liberal Media Ignoring the Trade Deficit

Thanks to reader Ken for sending me the above link to an editorial that appeared on “In These Times,” a blog devoted to championing the cause of unions and the labor movement. 

First of all, understand that I’m neither pro or anti-union.  Unions have their place.  When labor is in tight supply, they’re very effective at winning improvements in the lot of their members, and when their lot improves, so does the lot of all workers.  (Some may like to deny that fact, but it’s a fact nonetheless.)  But, when labor is in a state of oversupply, as is now the case, they have no leverage whatsoever.

With that said, the author of this piece makes a very valid point, that the liberal media has been ignoring the role of U.S. trade policy – the blanket application of “free trade” – in driving the income disparity – the 1% vs. the 99% – that has become the overriding issue in the presidential campaign. 

The “Occupy” movement gets the credit for bringing this issue to the fore, but it too seems to have largely missed the role of free trade, save for the protestors in Oakland who have, on a couple of occassions, shut down the port of Oakland, one of very few deep-water ports on the west coast.  My hope is that the “occupy” movement will yet come around.  But I fear that the global element of the movement may preclude that.  “Occupy” protestors the world over are angry at income disparities.  None yet understand the inverse relationship between population density and per capita consumption and its role in exacerbating the imbalance between the supply and demand for labor, and so they certainly don’t get its role in driving trade imbalances.

Without that understanding, the debate over income disparities has devolved into the usual squabble over taxes – the left claiming that the rich are taxed too little and the right complaining that all are taxed too much (especially the wealthy), choking off the job-creating business explosion that would supposedly take place if taxes were just a few points lower. 

The author also points out that the liberal media doesn’t want to embarass the president over his horrible record on trade, and so is perfectly happy to have the attention diverted to the tax squabble where he’s able to make a better case for re-election.  They’re more interested in assuring that a Democrat is re-elected instead of addressing real root cause issues.  In that regard, they’re his partners in crime.

Here’s the problem:  like everyone else, the “occupy” movement and the liberal media can’t make a coherent argument against free trade.  If they blame the problem on currency manipulation, the administration can simply reply, “we’re working on that.”  “The exchange rate is improving.  Just be patient.”  Or if they blame cheating, the administration can reply, “We’re working on that; be patient.”  Or if they blame low wages, the administration can reply, “Wages are rising fast in China; be patient.”  But these are the same replies we’ve heard from the last several administrations.  Imagine if the media asked about the inverse relationship between population density and per capita consumption.  They’d be greeted with blank stares and a lot of hemming and hawing.  Unless they are implementing tariffs, no one could say, “We’re working on that.” 

It’s not going to happen.  Economists of the left are just as bought into free trade as economists on the right.  Until some economist grows a backbone, has the courage to risk the wrath of his/her peers and actually begins to ponder the most dominant force at work in the economy today – population growth – nothing is going to change.   We’ll continue to be the victims of blind economic policy and irrelevant tinkering at the margins with taxes and spending.

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