Although the name of Sen. Reed Smoot of Utah might not ring a bell, you may recognize the notoriously protectionist Smoot-Hawley Tariff he co-sponsored in 1930 with Rep. Willis Hawley of Oregon. Virtually every economist who has studied the matter, regardless of ideology, agrees that the Smoot-Hawley Tariff, by stifling trade flows, contributed mightily to the depth and length of the Great Depression of the 1930s. Even at the time, 1,028 economists — an extraordinary number for 1930 — called upon President Herbert Hoover (in vain) to veto the Smoot-Hawley tariff.
{mosads}Both Smoot and Hawley were conservative Republicans. Protectionism was a singular policy position of conservatives until well into the 20th century. As late as the 1996, one of the most conservative of presidential candidates, Pat Buchanan (then running for the Republican nomination), made protectionism a key point of his campaign for the Republican presidential nomination. In contrast, every progressive president of the last hundred years has favored free-trade agreements. The litany includes Woodrow Wilson, Franklin Roosevelt, Lyndon Johnson and Barack Obama.
Now Sen. Bernie Sanders (Vt.), running for the Democratic nomination, has somehow transformed protectionism from an icon of America’s right-wing into a “progressive” panacea. He has done so with the claim that free-trade agreements have cost the jobs of many Americans, because U.S. businesses can’t compete with low-wage operations abroad. This is the same argument that Smoot and Hawley made nearly 90 years ago.
Sanders has added an even more fanciful twist. He claimed in a recent interview with the New York Daily News that he would replace our trade agreements with “fair trade.” This is a euphemism for all protectionists, especially given that under Sanders’s, foreign nations must meet wage standards “roughly equivalent” to those in the United States, another fairy tale.
One searches in vain, moreover, through Sanders’s speeches and website for concrete proof of his claim that our free-trade agreements “have cost this country millions of jobs.” It is possible, though, to conduct a real-world test of Sanders’s acumen on trade issues. Sanders, who strongly opposed the North American Free Trade Agreement (NAFTA) in 1993, said that it took him about “13 seconds” to realize what a disaster the trade deal was for the American economy.
Well, here’s what happened after NAFTA went into effect on Jan. 1, 1994. For the remainder of Bill Clinton’s presidency, the American economy experienced seven years of the greatest prosperity in the history of the nation. In 1994, the economy created 3.85 million jobs, a record that is yet to be broken. By 2000, the economy had some 20 million jobs, real gross domestic product (GDP) had risen by 25 percent and the federal government had actually balanced its budget. Real wages rose by nearly 10 percent, after declining for two decades.
Despite some disagreement among economists, the vast majority agree that on balance, free trade is good for the American economy. According to a 2006 survey of American Ph.D. economists published in The Economists’ Voice, “the overwhelming majority (87.5%) agree that the U.S. should eliminate remaining tariffs and other barriers to trade.”
In truth, the future of American jobs lies not in protectionism, but in the transformation from a fossil-fuel economy to the new green economy of the future. The old smokestack jobs are not coming back to America.
Even if we assume counterfactually that the repudiation of free trade would bring some jobs back to America, the result would still be disastrous for the United States and the world. Consider the effects on consumer prices and on the battle against climate change.
Harming low- and middle-income Americans: One consequence of protectionism is rising consumer prices. According to an analysis published in the International Business & Economics Research Journal, protectionism “contributes greatly both to the cost of goods and to the cost of doing business.” Who would be hurt by rising consumer prices? Not the 1-percenters Sanders rails against, but the poor and middle-class Americans he claims to represent. A study by Federal Reserve economist Susan Hickok found that 1980s trade restrictions on just three products — clothing, sugar and automobiles — cost Americans of middling income the equivalent of a 12 percent surcharge on their income taxes.
Losing the battle against climate change: Sanders rightly says that climate change may be the most important challenge facing humanity in our times. However, the United States cannot go it alone in the fight to reduce the carbon emissions that contribute to global warming. Victory will require broad international cooperation, as illustrated by the nearly 200 nations that signed on to the recent Paris accords on climate change. However, if we repudiate our trade agreements with other nations and return to insular protectionism, there is little chance of persuading other nations to join with us in achieving the transition from fossil fuels to clean and renewable forms of energy.
Sen. Sanders had advanced some truly progressive positions on income inequality and access to healthcare and education. However, his position on trade, an increasing important issue for his campaign, is neither progressive nor beneficial for the vast majority of Americans.
Lichtman is distinguished professor of history at American University in Washington.