The end of the free-trade consensus.
Dec 4, 2006, Vol. 12, No. 12 • By DAVID M. SMICK
The one saving grace is that financial markets may simply be too powerful for the carping of politicians to matter. Democratic senator Charles Schumer of New York must have surprised himself a few years back by garnering 67 votes for his 27.5 percent tariff, unless the Chinese revalued their currency significantly. Today that legislation, highly unpopular with the senator's Wall Street constituency, is on hold. A similar reluctance to bang the antiglobalization drum has also resulted from the realization that London is fast replacing New York as the world's financial center. Still, most Washington politicians lack Schumer's sophistication. It is estimated that of the 28 Democrats who beat GOP House incumbents on Election Day, 22 are unabashed protectionists, with five being pragmatic protectionists. All six losing GOP senators were free traders. Even free trader Jim Jeffords of Vermont is being replaced by the reliably antiglobalization Bernie Sanders.
There is a new scent in the air, and if you're not convinced, consider the life and times of Lou Dobbs. The CNN television host suffered for years from flat ratings as the young upstart Fox News regularly cleaned his clock. Then Dobbs began pounding the antiglobalization theme, night after night bemoaning the American jobs lost to foreign competition. His ratings suddenly shot up by more than a third.
The record of globalization over the last quarter century is impressive--creating a historic golden age of both poverty reduction and wealth creation. The implications of a reversal in policy are clear. It is time for the pro-globalization forces to step forward and boldly make their case.
David Smick, founder of the Washington-based consulting firm Johnson Smick International, edits and publishes the International Economy magazine.