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One of the odd turns of this primary season has been to see John Edwards - formerly the centrists candidate - pick up Dick Gephardt’s protectionist mantle and rail against NAFTA. And the news media - reporters and commentators alike - have devoted a lot of attention to corporate outsourcing. In the face of the well-meaning Chuck Schumers of the world, it’s difficult to restate enough the economist’s defense of open trade and labor mobility: namely, that a) much of the malaise we’re seeing has to do with the business cycle and not trade issues (people weren’t able to complain about NAFTA too much in 1998) and b) the downside of free trade and outsourcing is easier to see because we forget about or take for granted the upside, the white collar jobs that are created for each one lost. Ultimately, the total employment level in the US has to do with the Fed and the macroeconomic constrainst it works in, not trade. As the Economist’s article frames the issue of outsourcing,

As competition forces some jobs in services abroad, it will call forth the creation of new jobs in services in their place. And on average they will be better, higher-paying jobs than the ones that migrate. The evidence shows this is….In practice as well as in principle, the fusty old idea of comparative advantage still works.

I guess the protectionist rhetoric has heated up enough to lead Paul Krugman to end his curious silence on the matter (curious, because he so masterfully took on liberal-left anti-free-tradism in his books). In today’s op-ed gives a sense of why he hasn’t weighed in on the matter: his conviction that economic principal of free trade (like the economist’s case for tax cut repeal) will not likely be adopted full-on by the public and that some tightrope act is necessary as a political safety valve. Indeed, it looks like Kerry (as Wes Clark did) is trying to talk up the problems without committing himself to fighting NAFTA or insisting on an international minimum wage in trade negotiations. This may be one area where his fudging is an asset.

All this said, given my free trade positions, why have I been giving the Democratic candidates a free pass, regardless of how protectionist they are? In general, while protectionism will hurt living standards here in the long run, shaving points off productivity growth, these are questions that matter once the economy is functioning properly. Proper macroeconomic management is crucial, and the administration and Congress have been failing miserably in this. In my eye, the Wall Street Journal Republicans have been missing the wood for the trees when they laud (highly debatable) productivity gains from supply-side tax cuts without taking into account the basic drag on the economy of a government that perennially spends more than it taxes and a nation that consumes more than it saves. The crimes of the Democrats pale in comparison.