, , , , , ,

For nearly 20 years in my GLOBALIZATION FOLLIES series I documented how much of what passes for mainstream trade policy analysis is marked by major factual mistakes and manifestly absurd arguments that would almost never appear elsewhere in economics or even public policy work in general. So it was great to see the Economic Policy Institute’s Robert Scott rake Bradford DeLong over the coals this week for a genuinely laughable treatment of the North American Free Trade Agreement.

DeLong is anything but a think tank hack. Not only does he hold a chair in economics at Berkeley, but he also served in a senior Treasury Department job in the Clinton years (when he worked on trade deals like NAFTA). Nonetheless, as Scott demonstrates, DeLong apparently doesn’t know something as elementary as the fact that the headline category for U.S. exports on which he based most of his enthusiasm for NAFTA’s economic effects on America includes products sent to Mexico through the United States but produced elsewhere. Read Scott’s full post to see how dramatically counting the right exports affects bilateral trade flows – and therefore assessments of job creation and destruction. (I pointed out the same huge gap in this recent op-ed.)

DeLong’s blindspot of course raises the question: Were America’s other NAFTA negotiators and other Clinton administration policymakers equally ignorant? Or did they deliberately conceal the truth from the American people and Congress.

In this vein, and just as weirdly and troublingly, DeLong’s NAFTA defense insists that viewing the agreement solely through the prism of U.S. national interests is morally wrong. As he sees it:

“The U.S. is still a ne plus ultra superpower of a relative magnitude exceeded only perhaps in the mid-nineteenth century when Britain was the only industrial nation and the sun never set on the British Empire. A hegemon of such a magnitude has a strong moral obligation to the world as a whole–and to its own long-run comfort and, indeed, survival once it ceases to be a hyperpower–to be cosmopolitan, and to look at the broad effects of its policies on the world outside its borders.”

As I’ve written previously, nothing is likelier to produce policy disaster than basing America’s actions abroad on a belief in its international obligations – in part because views about these obligations are so hopelessly subjective, and because therefore no one holds a monopoly on wisdom. In DeLong’s case, he’s earned a Ph.D. in economics – but why should anyone attach any special importance to his views on ethics?

Only if a clear majority of the American people agrees on the paramount importance of these responsibilities should they shape Washington’s decisions meaningfully. That none of NAFTA’s main supporters inside or outside the Clinton administration based their case mainly on America’s obligations towards others indicates they fully recognized how resoundingly this claim would be rejected.

But even assuming that definitions of America’s international responsibilities should matter decisively in U.S. policy, DeLong’s position badly flunks the morality test – as well as crucial policy tests. For the offshoring-friendly characteristics of NAFTA wound up dominating the blueprint for U.S. trade policy writ large, and as I have explained previously, the resulting trade deals fueled the mammoth international economic imbalances that set the stage for the U.S. and global financial crises that have harmed nearly all countries.

A main reason? American consumption is the goose that has laid the golden eggs for a world that grew – and remains – heavily dependent on exporting to the United States for its prosperity. When offshoring-friendly trade deals like NAFTA stripped a critical mass of U.S. consumers (who of course are U.S. workers) of the job and income needed to finance their consumption responsibly, Washington recklessly encouraged them to fill the living standards gap with debt.

And I can’t resist closing by observing a supreme irony. DeLong’s pro-NAFTA post appeared on the website of the Washington Center for Equitable Growth. Unless Washington stops pursuing the offshoring-centric trade policies that began with NAFTA, both equity and acceptable, sustainable growth will continue to elude the United States and the rest of the world alike.