On the Mark: Trade debates should include democracy goals

It’s puzzling how President Trump’s erratic trade initiatives aren’t prioritizing good relationships with democratic countries and nudging autocratic countries, like China and Saudi Arabia, to give citizens the right to debate and elect their political leaders.

U.S. trade policies have always had multiple rationales. One, perhaps the oldest, is to protect jobs in industries that are “infant” or strategically important. For example, in the latter half of the 19th century, the American government vigorously protected steel from British and German competition, both to supply the immense demand for steel for continental railroads and to ensure supplies for military hardware, such as steel plate for battleships.

Since the 1970s, U.S. policy has often protected steel and other major employing industries’ products to prevent massive layoffs, enrich shareholders and permit new investment in modern equipment or entirely new, “infant,” technologies. The desire to encourage democracy and penalize autocracy has also been important — ergo the durable embargo on Cuban sugar ever since that nation’s 1958 communist revolution. In some cases, a complementary goal to is generate flows of foreign payments to the national treasury, used by the Trump administration to cover sizeable hikes in the federal budget, primarily for military equipment.

I remember how shocked I was, as a young economist, when Nixon made his historic trade overture to China. It was well-understood that the People’s Republic was dictatorial and worse — imprisoning and murdering opponents. The Hong Kong demonstrations of the past months have taught us once again that the Chinese regime is not interested in democracy. Or freedom of the press. Fortunately, to date, the Hong Kong protests have been amazingly peaceful and broad-based. The Hong Kong executive backed down on the plan to let the Chinese Communist regime extradite whomever they wished.

Since World War II, U.S. diplomacy has been inconsistent on requirements for trading partnerships. Immediately after the war, the U.S. helped to rebuild Japan as a robust democracy and industrial powerhouse, a success story. Following the Korean War, the U.S. tolerated, even supported, the installation of dictatorships in South Korea. Dictatorships, as we understand well from more than 50 years of both repression and poor industrial performance in North Korea, can be stifling. They have for many post-colonial African countries as well. The U.S., however, fearing a Communist government in South Korea, acceded to the installation of a right-wing dictator followed by decades of military generals.

But South Korea’s generals, Bruce Cumings concludes in his mastery history of post-war South Korea, were disciplined. They wanted to best North Korea, with whom they waged decades of Cold War. They did not, as many dictators do, live in lavish style, eschewing wealth and investing in industries like machinery, energy, and eventually automobiles that they could trade internationally and provide better jobs and incomes for their population. Then, the late 1980s, the Korea people — a broad coalition of students, unionized workers, farmers and professionals brought down the dictatorship with a peaceful revolution. Almost immediately, their competitiveness improved, unionization spread throughout the economy, wages and income rose, and South Korea became a high-end producer and exporter of electronics, cars, heavy equipment, and household appliances. Both Japan and the U.S. invested in and traded with Japan and South Korea, a long-term good thing for all three economies, all three thriving democracies.

But China? What have 40-some years of trade with China brought us? Downward pressure on wages, deep erosion in industrial jobs, and a decline in organized labor’s ability to win workplace health and safety concessions, among others. An explosion in big box retail, where we can buy at very cheap prices items our neighbors once made their livings on. Theft of our technologies and intellectual property rights. Vulnerability in international currency and bond markets.

Shouldn’t our trading strategies be crafted to encourage democracy around the world? Imagine if we hadn’t opened our markets to Communist China? China might have gone the way of South Korea, or its neighbors Taiwan and Japan — all three vigorous democracies with freedom of the press, the right to form political parties and elect government leaders. Millions of Communist China’s farmers and workers are still working in poverty and living under corrupt and repressive local governments. Why not trade strategies that favor democratic trading partners?

Ann Markusen is an economist and professor emerita at University of Minnesota. A Pine Knot board member, she lives in Red Clover Township north of Cromwell with her husband, Rod Walli.