In hindsight it’s hard to believe, but there once was a time when I thought I knew where President Obama stood on free trade. Just a year ago he was on the campaign trail in Ohio, claiming that “one million jobs have been lost because of NAFTA” and pledging as president to “renegotiate” the treaty to the satisfaction of labor interests in the U.S. In front of crowds of unemployed workers in Ohio and Texas, his beliefs were as simple as they were hyperbolic: free trade agreements “ship jobs overseas and force parents to compete with their teenagers to work for minimum wage at Wal-Mart.”
I was about to write Obama off as just another protectionist when the Canadian press got hold of a memo between Austan Goolsbee, Obama’s soon-to-be-former senior economic advisor, and the Canadian consulate general, in which Goolsbee assured the Canucks that Obama’s protectionism was mere “political positioning” and that there was nothing to fear from all that campaign trail hot air.
“Of course, it’s so obvious!” I thought. “A self-proclaimed intellectual such as Obama couldn’t actually be a protectionist, not when the vast majority of economists (myself included, MIT Bachelor of Economics, 2008) are so fully behind free trade. Clearly this anti-trade drivel is just his alter ego — as soon as he’s in the Oval Office, he’ll step discretely into some phone booth and emerge with blue spandex and a red cape, ready to do battle with tariffs and quotas everywhere.”
If anything however, Obama’s transition to the White House has only muddied the waters. Even as he signed a stimulus bill that included a “Buy American” provision, he warned other countries about the dangers of doing the same. He poked fingers in the eyes of China by alleging currency manipulation even as he swore oaths on a stack of bibles that he supports global trade. In 2005, he voted against CAFTA on the basis of poor labor standards in Central America, but just a year later voted to approve a free trade agreement with Oman, a monarchy where labor unions are banned and child labor is allowed. Today, when it comes to South Korea (where presumably the labor conditions meet Mr. Obama’s specifications), he opposes a free trade agreement because of the damage Korean imports could do to the American car industry while with Mexico he opposes the free exchange of transportation services because, well, because the teamsters told him to.
The latest Sybil act is Cuba. Obama is gradually making good on a 2004 pronouncement that it’s time to resume trade relations with the communist island. As a free trader, I have no objection, but I have to ask: why does Obama believe that freer trade is good political medicine for Cuba, an unremitting enemy of the United States, but not for Colombia, a long-time loyal Latin American ally?
Where is the method to this madness? Why is free trade supposedly a powerful source of leverage for democratic reform against one country, but utterly useless in another? How can the president blast one trade agreement as being tailor made for “special interests” while he shuts down another at the behest of a lobbying group? Why does Panama deserve free trade but not Peru?
One conclusion fits the data: Obama doesn’t understand the economics of trade. There’s no coherence between his policy positions because they’re not grounded to any common base of economic thinking. For Obama, there’s no hard foundation of academic belief underlying his views on trade, just an ever-contested quicksand, shifting back and forth between the near-unanimous support for free trade by economists on one hand, and the plaintive cries of labor unions and incumbent industries on the other. Obama is trying to square the circle and come up with a world-view in which both camps are right, but it can’t be done; Adam Smith was not a mercantilist.
In psychology, the way to excise a multiple personality disorder is to bring the conflicting personalities to the surface and have them battle each other until one remains. Or, maybe that’s the premise of a John Cusack movie (again, I’m Course 14, not Course 9) — whatever, the point is this: Obama is surrounded by MIT-trained economists. One of them needs to sit Obama down and tell truth to power, explain to him why economists support free trade, and how, as much as Obama would like them to, his policies do not share a common intellectual heritage. Maybe in the end, Obama will still choose the teamsters over the professors, but at very least he won’t be laboring under the delusion that his current actions serve both.
In 2008, economists gave Obama the benefit of the doubt. If the next four years are anything like the first 100 days, Obama won’t be so lucky in 2012.