Jacob Weisberg writes about the illiberal, Lou-Dobbs Democrats:

For some reason, economic nationalists never seem to complain about job-killing Dutch or Irish competition. The targets of their anger are consistently China and Mexico, with occasionally whacks at Dubai, Oman, Peru, and Vietnam.

...Economic nationalism is not unique to Democrats—nor is it a new theme. The protectionist wing of the party emerged in the 1980s when America's manufacturing decline was first linked to imports and foreign competition. For years, the protectionist urge was exemplified by Richard Gephardt (who focused on Japan and Korea rather than China). But during his 1992 campaign, Bill Clinton made a key decision to support NAFTA. Clinton espoused a strong free-trade position and embraced globalization through his presidency. This set the direction for his party, despite significant resistance in Congress. Clinton's argument was always that government should address the negative consequences of open trade through worker retraining programs and by providing benefits not tied to employers, like health care and portable pensions. But that human-capital part of Clinton's globalization agenda never went anywhere, which partially explains the current backlash.

Free trade was one of the few things that the Clinton administration actually got right (at least, in the absence of pressure from the Republicans). Aside from the war, this is one of the worst potential consequences of the election.

[Via Virginia]

[Update at 8:15 Mountain Time]

Jeff Flake says that one of the reasons that the Repuplicans lost Congress is that they forgot these lessons as well:

The Farm Bill probably provides the best example of where we've gone wrong, and what we need to do to hew back to our first principles.

During the 1990s, then-Sen. Phil Gramm accurately described U.S. farm policy as "enough to make a Russian Commissar puke." The Republicans assembled the "Freedom to Farm Act," which, starting in 1996, put U.S. farmers on a glide path toward an end to subsidies. Somewhere between the field and the silo, however, we became mired in the political mud. In 2002, we repealed the Freedom to Farm Act and in its place installed the "Farm Security Act" -- those who value the adage about trading freedom for security can pause and shudder here -- with even more lavish subsidies.

Now, with reauthorization of the Farm Bill on the horizon next year, we have to decide whether we will up the ante with Democrats in terms of red state/blue state politics in the heartland, or whether we believe our own rhetoric about free markets. This debate will have implications larger than the fiscal one. Most notably, it will determine if we are serious about the future of free trade.

But it's about more than that. Read the whole thing.

The whole argument about cost and price differentials leading to lower-cost production of goods and provision of services overseas may need some reappraisal. Protectionists are extremists taking advantage of having some facts on their sides, as much as unfettered open-borders types are. The reality is that some industrial base needs protection for national security, if nothing else. It would not be reassuring to have US Army tank parts resupplied by a European country if that country went Islamofascist, for example.

However, the facts on the ground tend to support going in a different direction than either one.

For example, when it comes to off-shoring, I keep reading about companies who off-shore services (like programming), and some stories about those who abandon the efforts because they're not cost-effective. Some of this is a fad or mania. A small additional incentive in the form of a corporate tax credit for refusing to off-shore might go a long way towards ending this kind of irrationality (most of the times that I have seen, off-shoring doesn't even come close to paying for itself when subject to full scrutiny of the actual costs involved).

For manufacturing, it clearly is not a fad: today, it costs for a foreign company to make cars than a US company. Note that I didn't say that making the cars themselves overseas was cheaper; Toyota, BMW and others are building cars here, but the holding company that pays taxes is overseas.

There's already been a lot written on lower wages, union vs non-union, pension fund pyramid-scheming by the Big Three here over the past 50 years, etc. But, there * is * one area that does involve the government and it is involved directly.

The most recent FairTax study indicated that the compound effect of both corporate income taxes on manufacturers and income taxes on their employees leads to a significant cost premium compared with other countries providing lower-cost products to American markets.

Put simply, replacing income taxes with a national sales tax (note, * not * a VAT or value-added tax) can actually serve to make US on-shore manufacturing more competitive. Both the import and domestic product (such as a car) would have a comparable sales tax, and that would be it: the domestic manufacturer would have one less disadvantage in setting retail pricing (and their analysis was that it is substantial).

Here's the URL:

http://www.fairtax.org/PDF/TheFairTaxlowersthecostofUSautomobiles-110206.pdf

I don't claim to know enough to know if these folks have a point or not. However, getting rid of the IRS while utilizing the existing state-level bureaucracies to collect both state and national sales taxes sure sounds like it would save money. And, possibly, with an increase in the earned-income tax credit, the poor could still get tax relief, but they would be the only people filing tax returns (my idea, not theirs).

Just a thought ...

The whole argument about cost and price differentials leading to lower-cost production of goods and provision of services overseas may need some reappraisal. Protectionists are extremists taking advantage of having some facts on their sides, as much as unfettered open-borders types are. The reality is that some industrial base needs protection for national security, if nothing else. It would not be reassuring to have US Army tank parts resupplied by a European country if that country went Islamofascist, for example.

However, the facts on the ground tend to support going in a different direction than either one.

For example, when it comes to off-shoring, I keep reading about companies who off-shore services (like programming), and some stories about those who abandon the efforts because they're not cost-effective. Some of this is a fad or mania. A small additional incentive in the form of a corporate tax credit for refusing to off-shore might go a long way towards ending this kind of irrationality (most of the times that I have seen, off-shoring doesn't even come close to paying for itself when subject to full scrutiny of the actual costs involved).

For manufacturing, it clearly is not a fad: today, it costs for a foreign company to make cars than a US company. Note that I didn't say that making the cars themselves overseas was cheaper; Toyota, BMW and others are building cars here, but the holding company that pays taxes is overseas.

There's already been a lot written on lower wages, union vs non-union, pension fund pyramid-scheming by the Big Three here over the past 50 years, etc. But, there * is * one area that does involve the government and it is involved directly.

The most recent FairTax study indicated that the compound effect of both corporate income taxes on manufacturers and income taxes on their employees leads to a significant cost premium compared with other countries providing lower-cost products to American markets.

Put simply, replacing income taxes with a national sales tax (note, * not * a VAT or value-added tax) can actually serve to make US on-shore manufacturing more competitive. Both the import and domestic product (such as a car) would have a comparable sales tax, and that would be it: the domestic manufacturer would have one less disadvantage in setting retail pricing (and their analysis was that it is substantial).

Here's the URL:

http://www.fairtax.org/PDF/TheFairTaxlowersthecostofUSautomobiles-110206.pdf

I don't claim to know enough to know if these folks have a point or not. However, getting rid of the IRS while utilizing the existing state-level bureaucracies to collect both state and national sales taxes sure sounds like it would save money. And, possibly, with an increase in the earned-income tax credit, the poor could still get tax relief, but they would be the only people filing tax returns (my idea, not theirs).

Just a thought ...

This set the direction for his party, despite significant resistance in Congress.

If I remember correctly, a majority of the Dems in a Congress they controlled voted against NAFTA. Have the Dems ever had a majority of their members vote for any subsequent free trade agreement? Some "direction".

Like the Civil Rights acts in the 1960s, it was the GOP that provide the numbers to get something passed over the Dems wishes, yet people like Weisberg, who should know that, seem to forget it. T

I strongly agree with this passage:

Clinton's argument was always that government should address the negative consequences of open trade through worker retraining programs and by providing benefits not tied to employers, like health care and portable pensions. But that human-capital part of Clinton's globalization agenda never went anywhere, which partially explains the current backlash.

Health care and retirement savings should not be dependent upon one's employment as that causes people to more vigorously resist economic re-structuring in response to changing global conditions.

Loss of a paycheck is bad enough but loss of health insurance for a sick child because the jobs go overseas will push people's buttons and encourage support for protectionism regardless of the fact that freer markets really do benefit everyone in the long run.

And in relation to all of this, the following is interesting....

THE NATIONAL VOTE....The average result of the five generic congressional polls taken over the final weekend before the election showed Democrats ahead by about 11%. So how does that compare to the final actual House vote? And how does that compare to the number of House seats the Democrats won?

First, the national House vote. Steve Sailer added up the votes in all the House races, did a little bit of extrapolating, and came up with the following two-party numbers:

Party
Vote
%

Democrats
40.2 million
53.7%

Republicans
34.6 million
46.3%

So Democrats beat Republicans by about 7.4 percentage points, which means the generic polls overestimated Dem strength by about four points. I think this is in line with what most people expected.

And how did this translate into House seats? Answer: Democrats won about 53.7% of the two-party vote, and assuming that they eventually win 232 seats, they won 53.3% of the seats. That's a pretty close match.

So the Democrats don't have an 11% advantage. I thought this was too high anyway. But 7% isn't bad at all. It's higher than the Republicans have ever been.

The Republicans had a 7 percent advantage in 1994 and swept over 50 seats.

An interesting postscript on the Maryland Senate race: Exit polls suggest that the "white lie" phenomenon, in which more white voters tell pollsters that they'll vote for the black candidate than actually go through with it in the end, may have helped doom black Senate candidate Michael Steele. This is a phenomenon more often noted against Dems, of course, since African-American candidates are Democrats much more often than they're Republican, but in this case, it may have harmed GOPer Steele as well.

Steele lost by 10 points — a higher spread than some pre-election polls suggested. Exit polls show that white voters split their vote evenly between Cardin and Steele, well short of the percentage of whites that ordinarily back the GOP candidate in seriously contested races in Maryland. In pre-election polls, meanwhile, respondents were promising to vote for Steele at a higher rate: a Baltimore Sun poll from five days before the election had Steele leading Cardin among whites by seven points. So the Republican candidate may have been victimized by the "white lie" after all.

PS -- Holding the Senate is better but having Dick Cheney show up routinely to cast the 51st vote on a repeated number of tied votes isn't a complete disaster for the Democrats either.

Joe will not switch (he made it official today). He would have less power and influence if he did that.

Interesting about the "white lie". Seems like Republicans might say they will vote for a black guy but can't ever really bring themselves to do it. In Massachusetts on the other hand, the Democrats had no problem voting for a black governor by a hefty margin. Goes to show that every other or so Republican is a racist at heart, which is another reason they hated Clinton so much. Exclude Bush though..whatever his other failings the man hasn't a racist fiber in his body. Pity, he would have made a good Democrat.

" The protectionist wing of the party emerged in the 1980s when America's manufacturing decline was first linked to imports and foreign competition. "

I can sympathise a bit with the protectionists, though I still think we need to retain our capital by competing, not by demanding shelter from greater competence overseas.

I've always been somewhat skeptical of people who believe we can run a pure "information economy", producing wealth, but leaving the actual production part of it to someone else. What does this mean? That other countries will come to us for their engineering and development work, yet have the machine tools, factories, technicians and enterpreneurs in their own country focus solely on running other people's plans? I think that technical competence is wedded a little more closely to firsthand industrial experience than that. A nation that has never seen a shop floor will not be the go-to guys for designing a car engine or rocket nozzle, IMO.

We certainly don't want to run an agricultural economy, or a tourist economy. These things, with their fixed amount of capital, hence wealth (arable land/popular landmarks) will devolve into some sort of fuedalism, with a few landowners clinging to the only domestic source of value, and everyone else being tenants.
In a manufacturing economy, you can always build another factory to make another thousand people well-off to rich.

I just wish we would fight harder for industry. People treat it like it's something dirty or unnecessary in the modern world. The modern world was built with industry! It's integral in the creation of wealth.

"but the holding company that pays taxes is overseas. "

And this is one facet of our nation not valuing it very highly.

"Interesting about the "white lie". Seems like Republicans might say they will vote for a black guy but can't ever really bring themselves to do it. In Massachusetts on the other hand, the Democrats had no problem voting for a black governor by a hefty margin. Goes to show that every other or so Republican is a racist at heart, which is another reason they hated Clinton so much. Exclude Bush though..whatever his other failings the man hasn't a racist fiber in his body. Pity, he would have made a good Democrat."

Everytime you open your mouth, your stupidity multiplies. Or is it just your overpowering anti-semitic nature causing you to talk like a retarded cretin?

What mostly Republican Southern State elected the first black US Governor in 1989?

Guess you shittly little hypothesis just got shoved way up your ass huh? Must be hard to talk out of it right now.......

Goes to show that every other or so Republican is a racist at heart, which is another reason they hated Clinton so much.

Better check the math on that. If we take the figures provided by one of our other nameless contributors a few posts back at face value, the difference between white Republicans polled and white Republicans voting was seven perecentage points - approximately 57% polled vs. 50% voted, apparently. This means the GOP "white lie" crowd cannot exceed roughly every eighth voter, not every other. Not even close.

Is a one-in-eight ratio of weasely racists in the GOP remarkable? Not really - unless perhaps to blinkered lefties who just know the right wing is uniformly pining for the return of the Confederacy. As talk radio host Larry Elder often notes, roughly one American in eight thinks that if you mail Elvis a letter, he'll get it. What, I wonder, is the "white lie" rate among Democrats?