Many of you may have read Ben Bernanke’s speech on trade today in Butte, Montana.  I have enormous respect for the Chairman of the Federal Reserve Board and for his insights into the economy.  But I’m very disappointed that he fell into three very easy traps for policymakers, journalists, and others trying to frame the trade debate.

First, what’s with the name calling?  Highly-skilled American workers and efficient businesses trying to sell their products – but face: (1) competitors who are unfairly and illegally subsidized through currency manipulation and other means, (2) illegal barriers to selling their goods abroad, or (3) both — are not “economic isolationists.” 

These enterprises are not seeking protection or isolation—they are desperately calling for accountability and being given the same opportunity to compete in the global marketplace. When American manufacturers follow the rules and their competitors don’t, that’s not free trade—it’s trade crime. 

We need to have an honest debate about whether or not current trade rules and globalization are really working to the benefit of America that doesn’t resort to distortions and mischaracterizations. (Perhaps we should start calling Ben Bernanke and his colleagues “soft on trade crime.”) 

Second, when framing the trade debate, it’s important to draw on a variety of sources of information from different perspectives.  One look at the biography and footnotes sections of the Chairman’s speech demonstrates that his mind was already made up. 

There really is a serious academic and economic debate about the costs and benefits of globalization and trade; that debate was not reflected in any way in his speech.  Many distinguished scholars, practitioners, policymakers, and financial and business leaders have raised doubts about some of our current policies.

Third, avoid using overstated estimates, such as those included in the speech on the “consumer effects” of free trade.  We’ve lost more than 3.2 million manufacturing jobs, racked up a $764 billion trade deficit and accumulated a running current account debt that places a dangerous drag on our GDP.  The next generation will bear these enormous costs if we don’t make dramatic changes. 

The very modest “consumer effects” that result from many kinds of illegally dumped imports are more than offset by the loss of income, business activity and profits suffered by domestic manufacturers, according to new research done for AAM that will be released later this month.

This entry was posted on Wednesday, May 2nd, 2007 at 12:23 am and is filed under Manufacturing in the U.S., Economic Security, Enforcing Trade Laws. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.