Clicking on banner ads enables JWR to constantly improve
Jewish World Review July 24, 2002 /15 Menachem-Av, 5762

Amity Shlaes

Amity Shlaes
JWR's Pundits
World Editorial
Cartoon Showcase

Mallard Fillmore

Michael Barone
Mona Charen
Linda Chavez
Ann Coulter
Greg Crosby
Larry Elder
Don Feder
Suzanne Fields
Paul Greenberg
Bob Greene
Betsy Hart
Nat Hentoff
David Horowitz
Marianne Jennings
Michael Kelly
Mort Kondracke
Ch. Krauthammer
Lawrence Kudlow
Dr. Laura
John Leo
David Limbaugh
Michelle Malkin
Chris Matthews
Michael Medved
MUGGER
Kathleen Parker
Wes Pruden
Sam Schulman
Amity Shlaes
Tony Snow
Thomas Sowell
Cal Thomas
Jonathan S. Tobin
Ben Wattenberg
George Will
Bruce Williams
Walter Williams
Mort Zuckerman

Consumer Reports

New Democrats' unaffordable luxury


http://www.NewsAndOpinion.com | If America is to come bounding back, it needs further trade liberalization. And few parts of the country are more dependent on freer markets than high-technology regions. US computer- and chip-makers need to sell more abroad to grow. So do information technology service providers and their customers, banks and insurance groups.

One of the Bush administration's goals for the World Trade Organization's Doha round is to get countries that maintain barriers hurting high-tech regions to reduce them. Yet Silicon Valley's Anna Eshoo, the congresswoman representing the region that is the epitome of high technology, has not, at this writing, yet decided whether she will support legislation crucial to the Doha round's success. Ms Eshoo is sitting on the fence about the Trade Promotion Authority, which would grant administration negotiators the power to conclude trade treaties, confining Congress's say to veto power. This is despite the fact that Ms Eshoo is a centrist New Democrat and has been pro-trade.

Nor is Ms Eshoo alone: some other New Democrats, especially those from the high-tech west coast, have not promised to support the legislation. Because the vote, which may come as soon as this week, will be a tight one, their hesitation may well kill TPA.

The obvious and most discussed explanation for the New Democrats' reluctance is partisan politics. New Democrats are still Democrats. The House leadership is Republican. But additional institutional and cultural factors are also at work here.

The first is the power of America's unions, which oppose TPA vehemently. This may not matter because the sort of high-tech regions that these lawmakers represent are not, typically, heavily unionized. They are, on the contrary, often filled with non-union service workers.

Still, unions have outsize influence with even New Democrats. In the recent election cycle, Ms Eshoo, for example, received support from numerous unions, according to Federal Election Committee data. Among the donors have been the Amalgamated Transit Union, the United Mine Workers, the United Auto Workers and the Sheet Metal Workers.

Zoe Lofgren, another Californian New Democrat who has prevaricated on TPA, received cash from the American Federation of State, County and Municipal Workers, the International Brotherhood of Electrical Workers and the United Food and Commercial Workers. Adam Smith, a New Democrat from Washington state, who voted against the House version of TPA over the winter, has received similar union support.

A less visible form of union aid, non-cash help, is also vital to the New Democrats. Whether through posters, "get out the vote" drives or manning telephone banks, the unions routinely provide infrastructure for political campaigns. That infrastructure may disappear with union disapproval.

The second reason New Democrats are acting like trade hawks is a simple one: their constituents are not pushing them to act that way. This sounds paradoxical. Washington state, Mr Smith's home, is the most trade-dependent state in the nation. What is more, the average big New Democrat donor owes his fortune to an environment of free trade. But, born and bred as they have been in an era of economic freedom, citizens on the west coast and in other high-tech locales tend to take open markets for granted. Not so abortion, civil rights, the protection of the environment or social benefits. In the case of TPA, the New Democrats want more cash for displaced workers. These are the issues they insist lawmakers achieve results on.

But what about donors who do recognize the primacy of trade to prosperity? Why do they tolerate a non-trade agenda? Here the coolness factor comes into play. If all the people you know and socialize with are Democrats, you tend to be a Democrat too. Intellectuals, professors - the sort of people techies grew up with, or are married to - are Democrats. There is also the attitude, a product of the 1990s, that all the new wealth is somehow dirty and must be redeemed through collective social projects. This is despite the fact that, over the past 18 months, the simple sustaining of growth has become far more urgent than the building of any utopia.

The net effect of such constituent attitudes is that lawmakers have a number of pressures on them to support protectionism and few to fight tooth and nail for the abstraction of freer trade. There simply is no strong "Coalition for Openness" galvanizing Washington.

Nevertheless, if Silicon Valley and other high-tech areas are to continue to grow as they did in the 1990s, they will need freer trade. As the Information Technology Association of America noted recently, the US IT market grew 1 per cent last year, while it grew 10 per cent in India, China, and Brazil. But with TPA, more is at stake than the growth of a sub-sector of high technology. This spring, the US took two damaging protectionist steps on trade. The first was to protect "Big Steel". The second was to protect agriculture. Both these measures will slow recovery. It is certainly the wrong moment for a third protectionist step, which is what the failure of TPA would amount to.

Persistent protectionism, as the historians are recalling this week, is one of the few policies that can practically guarantee that a slowdown becomes something more serious. Seventy-odd years ago, the US Congress helped to ensure the Great Depression by passing the now-infamous Smoot-Hawley Tariff Act.

It would be hyperbole to equate that moment with the current one. Still, blocking TPA is myopic and a dangerous luxury inappropriate to the current era.

Enjoy this writer's work? Why not sign-up for the daily JWR update. It's free. Just click here.


JWR contributor Amity Shlaes is a columnist for Financial Times . Her latest book is The Greedy Hand: How Taxes Drive Americans Crazy and What to Do About It. Send your comments by clicking here.

Up

06/26/02: The evolution of eminent domain is the story of the lasting power of Supreme Court decisions to alter the American cultural fabric
06/20/02: The distinction between known risk and uncertainty: What was lost in the Martha Stewart flap
06/11/02: Europe, long waiting for a chance to assert itself as independent from the US on the world stage, is clueless to terror's threat
06/04/02: A Cold Warrior's lessons for the Middle East
05/21/02: Geography does matter when it comes to development, but aid must nonetheless be linked to good governance
05/14/02: The increasing number of new claims is hurting innocent companies and making a mockery of the Common Law system
05/09/02: Aid, development and guilt in our times of terror
04/30/02: Wine lovers may at last be able to stray across state borders. The Internet is coming to the aide of free trade
04/23/02: Taxation by way of Madison Avenue
04/17/02: Special relationships and free trade do not mix
04/08/02: Is terror the flip side of globalization?
03/20/02 Bush gives aid but seeks results
03/13/02 The Danger in policy by numbers
02/26/02: States' smokescreen for tax hypocrisy
02/20/02: Echoes of leadership against a global threat
02/13/02: Jackson Vanik May be a Useful Analogy When Thinking About the Middle East
02/07/02: Budgeting for victory: Requiem for a peace dividend
02/05/02: The detectives of 1930s pulp fiction had a nose for clients bearing gifts. Sadly, those consulted by Enron did not
01/22/02: Allow all American children a decent chance
01/15/02: Do not disturb the profit-sharing revolution
01/09/02: It is dangerous to elevate a currency as a political emblem if the need for other economic reforms is obscured
01/03/02: There is only one way for a free thinker to bring up children
12/20/01: Why America's economy always bounces back
12/18/01: When it comes to taxes, Washington lawmakers can learn a thing or two from The Honeymooners
12/13/01: Bush opens a new era
12/12/01: A flamboyant reversal for the Democratic party
12/06/01: Threat of an oil embargo on the U.S. is a bluff
11/29/01: Which is more important--the war or diplomatic comity?
11/20/01: Unbalanced by a wealth of oil and diamonds
10/17/01: Afghanistan Needs a General MacArthur
09/27/01: The US has gained an understanding of the costs of war for which its European allies have hitherto wished in vain
09/13/01: War against terrorism will rise from the ashes
08/15/01: Geography is no excuse for the state's economic stagnation. Its policymakers should take a leaf from Ireland's book
08/07/01: Teamsters may pay a heavy price for winning its batle in Congress
07/25/01: Towards a patent-free nirvana?
07/17/01: History proves the lasting value of tax cuts
07/10/01: Stem cell research has awakened a bitter debate in Washington but voters care more about other electoral issues
07/03/01: America foots the bill for Europe's largesse
06/26/01: America the litigious, land of the lawyer's fee
06/20/01: Five reasons for gloom about global growth 06/18/01: Show pity for Alice in Tax Wonderland
06/13/01: America must take a French lesson in trade
06/11/01: Time to dream the impossible dream for Iraq
06/07/01: Whatever happened to simple?
06/04/01: When the relationship between companies becomes as close as a marriage, the eventual break-up is often very painful
06/01/01: Loving and hating the Bush tax bill
05/30/01: Will Grisham soon be unemployed? In America's courts these days, there's no room left over for legal fiction
05/22/01: Republicans sample the rhetoric of confidence
05/16/01: Boeing has been promised $60m to site its headquarters in Illinois. The deal looks a poor one for taxpayers
05/14/01: Adam Smith in love
05/09/01: Those rotten Russian capitalists
05/07/01: Why tax havens provide shelter for everyone
05/04/01: Middle classes pay for get-the-rich folly
05/01/01: Money can't buy happiness? Think again.
04/26/01: Calling America's rogues and entrepreneurs
04/19/01: High earners right to feel lonely at the top
04/11/01: The right must learn the comfort of strangers
04/04/01: When domestic law arrives by the back door
03/30/01: A Lexus tax cut suits the jalopy driver
03/27/01: The unchallenged dominance of King Dollar
03/20/01: Natural selection of an intellectual aristocracy
03/16/01: The hidden danger of a regulatory recession
03/14/01: Is the American condition that boring? Why so many Oscar nominated movies aren't set in America
03/07/01: Trampling on the theory of path dependence
03/05/01: Fighting the good fight
03/01/01: It is time for Fannie and Freddie to grow up
02/27/01: IT's important
02/22/01: The guilty conscience of America's millionaires
02/14/01: The benefits of helping the 'rich'
02/09/01: The Danger and Promise of the Bush Schools Plan
02/05/01: Crack and Compassion
01/31/01: Debt is good
01/29/01: Clueless
01/24/01: A gloomy end for a half-hearted undertaking
01/17/01: The challenge of an ally with its own mind
01/15/01: An unexpected American family portrait
01/10/01: A fitting legacy for America's beloved dictator
01/08/01: The trick of tax 'convenience'
01/03/01: Time to stop blaming Greenspan over taxes
12/11/00: So smart they're dumb
12/06/00: How economic bad news came good for Bush
12/04/00: The Boies factor
11/30/00: "The inevitable demands for recounts erupted like acne…"
11/28/00: Fair play and the rules of the electoral game
11/23/00: The shining prospect beyond a cloudy election
11/21/00: Try the Cleveland model
11/16/00: A surprising winner emerges in the US election
11/09/00: Those powerful expats
11/07/00: What's right for America versus what works
11/02/00: Time to turn off big government's autopilot
10/30/00: Canada beating America in financial sensibility
10/26/00: When progressiveness leads to backwardness
10/24/00: The most accurate poll
10/19/00: The Middle East tells us the hawks were right
10/17/00: The split personalities of America's super rich
10/10/00: 'Equity Rights' or Wake up and Smell the Starbucks
10/04/00: Trapped in the basement of global capitalism
09/21/00: The final act of a grand presidential tragedy
09/21/00: Europeans strike back at the fuel tax monster. Should Americans follow?
09/18/00: First steps to success
09/13/00: America rejects the human rights transplant
09/07/00: Minimum wage, maximum cost
09/05/00: Prudent Al Gore plans some serious spending
08/31/00: A revolution fails to bring power to the people
08/28/00: A reali$tic poll
08/21/00: "I Goofed"
08/16/00: Part of the union, but not part of the party
08/09/00: Silicon Alley Secrets
08/02/00: Radical Republicans warm up for Philadelphia
07/31/00: I'll Cry if I Want To
07/27/00: Cold warrior of the new world
07/25/00: The Estate Tax will drop dead
07/18/00: Shooting down the anti-missile defence myths
07/14/00: A convenient punchbag for America's leaders
07/07/00: How to destroy the pharmaceutical industry
07/05/00: Patriots and bleeding hearts
06/30/00: Candidates beware: New Washington consensus on robust growth stands the old wisdom on its head
06/28/00: White America's flight to educational quality
06/26/00: How Hillary inspired the feminist infobabes

© 2001, Financial Times