The economy is tanking. Gas is headed to $4 a gallon. One in ten homes are “under water,” worth less than their mortgages. The International Monetary Fund predicts up to $1 trillion in financial losses, meaning banks and securities firms that have written off abut $230 billion are still staring at the abyss. The war in Iraq consumes $12 billion a month, as well as the attention of our leaders, and the lives of too many of our soldiers.
So the President of the United States steps up to the crisis and demands a fast-track vote in 90 days from the Congress on … a trade agreement with Colombia.
Immediately, the editorial pages and establishment columnists trot out their knee-jerk “free trade” arguments, demanding that Congress pass the bill. Immediately, both Sens. Hillary Clinton and Barack Obama—in the midst of a primary in Pennsylvania wracked by the loss of manufacturing jobs—come out against the accord. Their opposition is immediately dismissed as a pander to labor, since just as Obama was embarrassed in Ohio when his economic advisor apparently reassured the Canadian government that Obama really didn’t mean his rhetoric against the North American Free Trade Agreement, Clinton is forced to stage a public dispatch of chief strategist and pollster Mark Penn, who was advising the Colombian government on how to get the deal passed in his day job. (She couldn’t separate herself from her husband, who has profited greatly as a consistent supporter of this and all other corporate trade accords.)
The arguments for the trade accord are mostly insulting. The Colombians will benefit greatly, we’re told, although their goods already come into America duty free. The U.S. will benefit greatly, although any increased trade with Colombia will be a rounding error in our trade accounts.
It’s not really about trade at all, we’re told, it’s a question of national security, designed to bolster an ally against the hated Hugo Chavez of Venezuela and to counter the rising anti-American populism in Latin America. But the anti-American populism in Latin America is a backlash stemming from the calamitous failure of the “Washington consensus” that the trade accord expresses. And the most likely effect of the trade accord, as NAFTA demonstrated, will be for heavily subsidized U.S. food exports to displace to peasants from their lands, undermine wages in the cities and reward financial elites. This will only strengthen the rebellion in Colombia, feed the drug economy and bolster the backlash to failed U.S. policies.
But this entire debate is taking place as if Ronald Reagan were president and it was still “morning in America.” It is simply goofy to be talking about a trade deal with Colombia when the U.S. economy is declining, and the world financial markets are hanging on by their fingernails. You’re not in Kansas anymore, Dorothy.
In fact, our massive global trade imbalances are at the center of the current crisis. We borrow or sell off assets at the rate of $2 billion a day to cover our deficits with the rest of the world. The housing bubble expanded on low interest rates, cheered on by Alan Greenspan at the Federal Reserve, but fueled in significant part by Chinese and Japanese purchases of U.S. securities to keep their currencies low and sustain their mercantilist trade policies. The free trade lobby on Wall Street cleaned up by feeding the bubble with ever more exotic mortgage-backed securities and taking on ever more reckless levels of debt.
It is time to get serious. The president and the Congress—as everyone from the IMF to the hapless Alan Greenspan pleads—should be focused on getting us out of the recession. The hemorrhaging in housing has to be staunched. We need a serious stimulus package that forestalls state and local layoffs of teachers and police, and begins rebuilding America. We face a big-time struggle to curb the Wall Street addiction to gambling, imposing strict limits on the banks and investment houses that are “too big to fail.” We need to develop a new global strategy to get our trade more in balance, ending the staggering deficits that simply can’t be sustained. And we’ve got to find a way out of a trillion-dollar war that has no end in sight.
These are fundamental issues of national and economic security that can’t be ignored. The accord with Colombia is utterly irrelevant, a silly distraction. The ship of state is under fire—taking on water and headed into an iceberg—and the president and the free trade claque want to argue about how much to tip the band. That, my friends, is lunacy.