Greg Mankiw: "Beyond the Noise on Free Trade"

Greg Mankiw says Republicans are better than Democrats on trades issues:

Beyond the Noise on Free Trade, by N. Gregory Mankiw, Economic View, NY Times: No issue divides economists and mere Muggles more than ... globalization and international trade. Where the high priests of the dismal science see opportunity through the magic of the market’s invisible hand, Joe Sixpack sees a threat to his livelihood. This gap in perspective grows especially wide whenever the economy experiences short-run difficulties, as it is now. By all indications, the issue could come to dominate the presidential campaign.

Economists are, overwhelmingly, free traders. ... The benefits from an open world trading system are standard fare in introductory economics courses. ... The basic lessons can be traced back to Adam Smith of the 18th century and David Ricardo of the 19th century: Trade between two countries creates winners and losers, but it leaves both nations with greater overall prosperity.

The general public, however, is less likely to take its cue from Adam Smith than from Lou Dobbs. ... As the economy continues to weaken from problems in the housing and credit markets, you can expect to hear more about foreigners stealing American jobs, regardless of the true merits of the case.

This shift of public opinion toward economic isolationism may well become a political problem for John McCain. Compared with those of either of his possible Democratic rivals, his track record shows him to be a more unequivocal free trader. Here are some examples:

• In 2002, Mr. McCain voted to give the president “trade promotion authority”.... Barack Obama was not yet in the Senate..., but Hillary Rodham Clinton voted against the measure.

• In April 2005, Mr. McCain voted to table a bill proposed by Senators Charles E. Schumer, Democrat of New York, and Lindsey Graham, Republican of South Carolina, that would have authorized a 27.5 percent tariff on Chinese imports if China failed to revalue its currency. Mrs. Clinton and Mr. Obama voted in support of the tariff proposal.

• Also in April 2005, when 58 senators asked President Bush not to offer large cuts in farm subsidies as part of the Doha trade negotiations, Mr. McCain declined to put his name on the letter. Mrs. Clinton and Mr. Obama were among the signatories defending the subsidies.

• In June 2005, Mr. McCain voted to ratify the Dominican Republic-Central America Free Trade Agreement... Mrs. Clinton and Mr. Obama voted against the treaty (although, in his most recent book, Mr. Obama wrote, “over all, Cafta was probably a net plus for the U.S. economy”).

• In recent months Mr. McCain has expressed support for the pending free-trade agreement with South Korea... Mrs. Clinton and Mr. Obama oppose it.

The most prominent recent flare-up in this debate is over the North American Free Trade Agreement. ... Today, Nafta could be hailed as a successful example of the bipartisanship that Mr. Obama promises. Most economists agree with Lawrence H. Summers ... who has said that Nafta ... “....contributed to the strength of our economy”... Instead of becoming a beacon of bipartisanship, however, Nafta is the latest whipping boy for the anti-globalization crowd...

With the two political parties apparently divided on trade policy, you might expect those free-trade-loving economists to be predominantly Republicans. But that’s not the case. One reason is that economists are not single-issue voters. ...

But another reason is that many economists don’t really believe the populist rhetoric coming from the Clinton and Obama campaigns. They expect that once in office, either candidate would pursue a policy more like that of Mr. Clinton... When reports surfaced recently of an Obama economic adviser telling the Canadian government to ignore his candidate’s anti-Nafta rhetoric, ... many Democratic economists I know were secretly relieved.

It is hard to be confident, however, that on issues of trade policy either Democratic candidate would act like the last Democratic president. Maybe the candidates’ records as legislators are not good indicators of what their policies might be as president. Maybe campaign rhetoric about Nafta is nothing more than that. But counting on it requires, one might say, the audacity of hope.

There's another difference between the parties that isn't discussed by Greg that is important. The winners from trade could compensate the losers with something left over making everyone better off, but without intervention and transfers, such redistribution will not take place -- there will be winners and losers. When you ask which party is most likely to step in and make such transfers, which party is most likely to ease the transition for the losers, I think the answer is overwhelmingly in the Democrat's favor. Compensating the losers is a key step in keeping markets open - without some compensation Lou Dobbs will reign supreme -  so those who believe in free trade have good reason to support Democratic candidates.