Taking Sides on Trade

Not too long ago, perhaps feeling a bit lonely after the latest post in support of free trade, I thought of posting a question: Who besides economists and multinational corporations supports free trade? Outside of those two groups, does anyone else support relatively open borders? This Financial Times commentary looks at the divide between politicians and business on this issue:

America’s divided global outlook, by Chrystia Freeland, Commentary, Financial Times: Hank Paulson, ... Treasury secretary-designate, made business trips to 21 countries over the past 12 months... He has travelled to China about 70 times... Senator Schumer’s visit to China in March was his first official congressional trip abroad in a career in national politics that began more than one-quarter of a century ago.

The jet-setting financier and the stay-at-home senator are an admittedly extreme pair. ... But the contrast between the two also points to a divide in America today that helps to explain the country’s ambivalent response to globalisation: the US business elite has gone global, but the rest of the nation, including much of the political establishment, is lagging behind.

Outside the US, the time-worn caricature of the parochial Ugly American has been lent fresh vigour by the Bush administration’s proudly unilateral and often inept approach to the world in general and Iraq in particular. Like most conventional wisdom, there is something to this stereotype. Just one-third of adult Americans hold passports. ... Americans prefer to read books and watch movies about the US or ... about Americans... Foreign-language teaching for schoolchildren is abysmal, yet the political preoccupation of the moment is ensuring that immigrant children learn English and not that native-born Americans learn something else.

Even more discouraging is the reality that this narcissism extends to much of the country’s political leadership. This spring, when I sat on a breakfast panel with a charming and gregarious US senator tipped as a possible presidential candidate in 2008, he offered a detailed answer to a question on internet neutrality. But, in recounting a story of his own recent visit to Pakistan, he stumbled when it came to identifying the language of his village hosts, falling back on “not English”.

Where the Ugly American caricature falls apart is in the executive suites of the nation’s top companies. It is easy to mock the private jet culture of American CEOs, especially when those planes are pressed into service ... to visit golf courses or one’s personal Tuscan vineyard. But most of the air miles are being racked up travelling to the international offices and international clients of companies for whom the world has been flat for some time. The result is an American business establishment with incredibly sophisticated and personal knowledge about the rest of the world. ...

There is good reason why America’s bosses are generally more worldly than its pols. As Rick Wagoner, chairman and chief executive of General Motors, pointed out..., there is a big difference between being responsible to shareholders, whose preoccupations are increasingly global, and domestic voters, whose concerns may not be.

That may understate the pressures on US legislators... While still a young congressman, John F. Kennedy toured Europe, the Middle East and Asia, meeting foreign leaders and educating himself about their concerns. Politicians who do that today risk being accused of indulging in foreign boondoggles at the taxpayers’ or, worse, corporate lobbyists’ expense. In a tight election race, according to the former staffer of a congressman from the heartlands, it can be downright dangerous to travel abroad.

The result is a deep and widening rift between business people and the political herd on issues ranging from foreign investment into the US, to immigration, to America’s engagement with multilateral institutions. ...

I believe there is a big disconnect between the two sides on this issue, but it will take a lot more that simply sending congress abroad to bridge the difference. Update: More on immigration and jobs.