Progressives Against Protectionism?

THE CONFLICT BETWEEN IDEOLOGY AND REALITY

I don’t know if this was an intentional strategy on the part of The Orange Don, or just another stumble into a policy propeller. With this president, it’s hard to tell. Regardless, Trump threw progressives through a loop with his announced plans to raise tariffs on steel and aluminum in an attempt to rebuild these industries and protect our national security from the likes of…um…Canada. (Look, you have to take this stuff as it comes with this administration.)

Progressives in the United States have a mixed history on tariffs, mostly supporting low tariffs in order to keep prices down for consumers, especially farmers. In the late twentieth century, however, as the United States started to compete more regularly with Europe and Japan on the world market, there was more support for tariffs. This was especially true when unions friendly to the Democratic Party supported protectionist policies. Despite this, tariffs have remained relatively low since the New Deal and the embrace of so-called free trade agreements like GATT and NAFTA.

Now, most economists agree that free trade has been an overall benefit for the country, and they have some convincing arguments. However, for significant segments of the population, free trade has been disastrous. Manufacturing, which briefly provided well paying, secure jobs and a middle-class lifestyle to the working class (read working-class whites) has been devastated, replaced by anemic service sector pay and benefits that don’t even allow the same workers to survive without a second or even a third job. The economic impacts of such policies pale to the destruction wrought to social identities and cultural disruptions.

So protectionism seems like just what progressives might have ordered. Tariffs designed to protect the working class from the depredations of the market, while still preserving capitalist structures. Furthermore, Trump famously hijacked this paradigm of standing up for the working man. Toward that end, tariffs on steel and aluminum appear to fulfill his promise to the white working class of the Rust Belt. Just in time for midterms. If progressives want to be competitive, they have to win back the working class with protectionist promises.

In the interests of reclaiming this target constituency as well as remaining ideologically consistent, many progressives from unions like the AFL-CIO, to commentators like Kyle Kulinski at his invaluable Secular Talk channel, to politicians like Sherrod Brown, are jumping on the Trump Tariff bandwagon.¹

They shouldn’t.

Protectionism might appeal to many of our ideological goals of protecting the working man and woman, but we ignore an analysis of real-life consequences at our peril. The first indicator that should make us skeptical about the real world application of the Trump Tariffs is that real economists, especially otherwise progressive economists like Paul Krugman, are against it.

Even for those of us who support protectionism ideologically, the first reason to reject the Trump Tariffs is that they are not, strictly speaking, protectionistic. They are, at best, selectively protectionist. As Krugman points out in his blog, placing a tariff on steel and aluminum is not the same as a fee placed on a final product. Steel and aluminum are raw materials, low on the commodity in the chain. Any increase in cost low on the commodity chain can only increase costs throughout the rest of the production process.

Look, we all want to see American steelworkers go back to work. But we also want American automakers and construction workers to keep the jobs that they have. Targeting selection of steelworkers at the expense of autoworkers, or workers for Boeing as the case may be, is not protectionism and not good for the economy as a whole.

Furthermore, the AFL-CIO and Rust Belt Democrats may want to make some demands before offering unqualified support. There’s no policy indication from the administration that even if steel and aluminum production returns to the United States as a result of these tariffs that workers are at all protected. The steel and aluminum industries may be protected, but for Trumpco this amounts to protections for owners, not workers. What guarantee does the AFL-CIO have that the few jobs that will return to the new American mills, those not automated, would be guaranteed a union voice? What guarantee do future steel and aluminum workers have that they will be compensated more than they would be in the non-union service sector?

Progressivish Democrats, like Sherrod Brown, have no guarantees that when the jobs start coming back, they will return to their old neighborhoods. More likely, any new steel mills built in the United States would move downriver to the anti-union south where the labor rates are cheaper. They will also negotiate huge municipal tax breaks and infrastructure built at the public’s expense if current trends are any indication. This doesn’t benefit the American working class.  It just opens the working class up to further exploitation.

Furthermore, we have to consider the ultimate potential of any consequent trade war in the hands of Donald Trump. The Orange Don doesn’t do de-escalation. We may be at the end of the pavement for the Bretton Woods System. Ideologically, I don’t have a problem with that. Bretton Woods was the lynchpin in the postwar system developed after World War II institutionalizing a global capitalist infrastructure. The exploitative role of the WTO and the IMF in world affairs is the fuel for multinational corporations. Bretton Woods did for capitalism what Lenin could only have dreamed of for Marxism. So I’m no fan of Bretton Woods.

However, the reality is that the Bretton Woods system is the binding structure of the global economy. The last time there was a major disruption in the Bretton Woods system, we got the seventies. Remember the seventies? Bell bottoms, paisley everything, and stagflation² leading to the rise the New Right and the dismal neoliberalism they wrought on the world. All of this is bad.³

Disruptions in the centerpiece of our economic system can only bring significant hardship to working Americans. Maybe, we could argue, that in the long run, everyone would be better off. Or maybe not. The reality is that this disruption would happen when a narcissistic reality tv show hasbeen with no functional knowledge of anything but self-marketing is the Chief Executive and his fawning lackeys control the legislature. Where does that leave working people, people who have yet to recover from the Great Recession, during this transition? In the cold. Nothing will be put in place to cushion the impact for the working class, while every effort will be made to brace and bail out the Armani clad.

Nor do we have any guarantee that whatever system comes next would be an improvement. the people who are in the best institutional position to influence such decisions and to build such structures are sitting around the boardroom conference tables of the S&P 500, not the kitchen tables of working Americans.

When we analyze policy we should do so in consideration of the real-life impacts on real-life people. Who will benefit? Who will suffer? A policy that satisfies our ideological assumptions may be bad policy when considered in full. Our world and our country have, at this point, moved beyond a reality in which protectionism is a viable policy. We cannot just assume that what’s good for the steelworkers is good for the world any more than we accept that a rising tide lifts all boats.

1. Kulinski offers a caveat for his support in that he hopes the President is able to negotiate a diplomatic solution to the probable trade war that will result from the Trump Tariffs. He is certainly, and quite rightly, skeptical of this. After all, the Orange Don doesn’t seem to be the master dealmaker he is portrayed. But even if he were, it’s unlikely that any amount of diplomacy could avoid the certainty that other nations will raise their own tariffs on American exports. That’s what nations do.
2. I know. I know. It’s more complicated than that. There were other variables. But Nixon removing the United States from the gold standard was a big one.
3. Lava lamps and Led Zeppelin. Those were pretty cool. But the rest? I’m not going back to leisure suits, people!