The Bush Administration has now backed away from its forecast that payroll jobs will rise by 2.6 million this year. Democrats had a field day attacking the administration for the retreat. Yet on Feb. 19 the Washington Post reported that Democrats are gaining little politically from the weak jobs situation. One reason may be their hostile attitude toward international trade, which has been one of the principal sources of high-paying jobs in the U.S.
As Gerard Baker of London's Financial Times observes, Democrats universally condemn President Bush for acting unilaterally in Iraq, alienating our allies, and showing disregard for multilateral institutions like the United Nations. Yet, often in the same speeches, they will demand that the administration act unilaterally to restrict imports, with no concern for its impact on our trading partners or our obligations to the World Trade Organization.
This approach to trade policy marks a sharp departure from the Clinton Administration. Bill Clinton may have had his faults, but on trade he was superlative. He refused to pander to the squeaky wheels demanding protection from foreign imports, and pushed vigorously to open U.S. and foreign markets to increased trade.
Clinton, being the consummate politician that he is, understood that trade is a two-way street politically as well as economically. Employment in U.S. businesses engaged in trade is large and growing, as is employment among foreign-based companies. In 2001, U.S.-based multinational corporations employed 33.4 million Americans and foreign companies employed another 6.4 million. To put these numbers in perspective, the entire manufacturing sector only employed 16.4 million Americans in 2001 and 2.2 million of those worked for foreign companies.
Restricting imports to temporarily save a few jobs would have threatened foreign retaliation and reduced foreign investment in the U.S., which would have cost far more jobs than the few that were saved. And the job losses would have been in businesses that pay above average wages, which is generally the case for workers in foreign-owned companies. Thus Clinton made the simple calculation that increased trade and investment was good for him politically and protectionism was not.
Bruce Bartlett is a former senior fellow with the National Center for Policy Analysis of Dallas, Texas. Bartlett is a prolific author, having published over 900 articles in national publications, and prominent magazines and published four books, including Reaganomics: Supply-Side Economics in Action.
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