In a recent column unloading on Bernie Sanders and Donald Trump for being "anti-commerce," Cokie Roberts touts free trade. She says that it's easy to see the "losers" (i.e., the workers) but you rarely see what she depicts as the silent majority of those who benefit from trade deals, like "the mom who buys cheap sneakers from Bangladesh."
In the wake of Brexit, former IMF Chief Economist Kenneth Rogoff blasted free trade critics:
"The popular response looks at jobs, but would they like to pay twice as much for a car? Would they like to have a phone that they pay 100 dollars, cost 500? Would they like to buy things in Wal-Mart that are now three dollars for nine dollars? You don't see all the millions and millions of consumers that are behind this. We get an enormous benefit from trade. Our real standard of living will diminish sharply if we close our borders to say exports from China."
Let's take a closer look.
Putting aside the indirect costs associated with "no holds barred" free trade, such as child labor or toxic pollution that finds its way back to us, as well as, you know, losing your job and not being able to afford much of anything, the actual low-price claims are dubious as well.
Cokie Roberts brings up sneakers. Below is a graph from the St. Louis Federal Reserve tracking the average cost of shoes since 2000, adjusted for inflation. The cost of shoes has, overall, gone up even though most shoes bought in the United States are no longer made in the United States. Anyone who has bought Nikes, or any other name brand, over the last twenty-five years already knows this to be true.
Roberts notes that, largely because of U.S. imports, Japan has come to prefer wheat over rice, and she suggests that this has worked out great for wheat farmers. This is a successful trade story. But she leaves out one important point: It happened without a free trade deal with Japan. Even though Roberts chides Hillary Clinton for distancing herself from the Trans-Pacific Partnership (TPP), which includes Japan, she's making the point that trade can and does indeed happen without corporations writing sweetheart deals for themselves.
Plus, while free-trade deals have arguably been good for many agricultural sectors, if we're using the misguided logic that low consumer prices are the end-all be-all, we have to accept the reality that ag exports have an impact on our domestic supply and demand, which adversely impacts our food prices.
Kenneth Roggoff, brings up cars. The reality is that the average price of a new car hasn't gone down in the era of free trade and cars were cheaper in the 1980s:
What has happened in the U.S. is that the number of new cars being sold, per capita, has dwindled. This is in part because many of the American car-making jobs have been eliminated due to outsourcing made easier by free trade deals. The number of people who can afford to buy a new car is not what it once was.
The Henry Ford maxim that you won't sell as many cars if there aren't as many people making a decent wage is proving true.
And phones? Does Rogoff really believe that a phone couldn't be made in the United States for a low-end price point of $100? Considering Apple, the corporation that enjoys the world's largest profit margin, spends only $4.50 for the assembly of the latest $749 iPhone, it's easy to see that cheap overseas labor doesn't have much to do with setting consumer prices.
In Wisconsin, the nearly complete movement of U.S. bicycle manufacturing to cheap overseas locations was brought to light when a former TREK executive recently ran for governor. Even though, on average, TREK bicycles haven't reduced the price of their bikes, they've seen their profits soar largely because nearly all of their bikes are made in China instead of in the United States. Former gubernatorial candidate Mary Burke's brother, TREK CEO John Burke recently wrote a book and strangely did not include "eliminating corporate-written trade deals that make it easier to outsource jobs" as one the "12 Simple Solutions To Save America."
Obviously there are many sectors where corporations, in order to stay in business, are forced to outsource to a cheaper labor force to keep up with competitors, but this is nowhere near the "new normal" world we are now repeatedly told we live in by the neoliberal free trade zombies.
The reality is that the vast majority of corporations in the United States aren't living with threadbare profit margins and outsourcing to survive: Corporate profits are higher right now than at any time in our nation's history. And much of that profit is coming from corporations like Apple and TREK that are not satisfied with a healthy profit margin. They want an obscene profit margin, and can't bear the idea of spending a few more bucks to make their phones or bikes closer to home.
Jud Lounsbury is a political journalist based in Madison, Wisconsin and a frequent contributor to The Progressive.
Photo: 2012 NAFTA protest in El Paso, Texas by Billie Greenwood.