In their rush to rail against free trade during the AFL-CIO debate, Democratic presidential candidates simultaneously pandered to unions and illustrated their unabashed ignorance of economics.
Daniel Ikenson, associate director of Cato’s Center for Trade Policy Studies, wrote a recent article on the subject of trade.
A free-trade agreement would increase U.S. national income by an estimated $17 billion to $43 billion per year.
Federal Reserve Board Chairman Ben Bernanke stated in a speech at the Montana Economic Development Summit in May of 2007:
As best we can measure, it [free trade] is critically important. According to one recent study that used four approaches to measuring the gains from trade, the increase in trade since World War II has boosted U.S. annual incomes on the order of $10,000 per household (Bradford, Grieco, and Hufbauer, 2006).2 The same study found that removing all remaining barriers to trade would raise U.S. incomes anywhere from $4,000 to $12,000 per household. Other research has found similar results.
But wait! There’s more: free trade not only helps the United States….
Trade and globalization are lifting hundreds of millions of people out of poverty, especially in Asia, but also in parts of Africa and Latin America (Bhagwati, 2004). As a source of economic growth and development in poor countries, trade is proving far more effective than traditional development aid (Easterly, 2006).
Finally, the Dems got mad about jobs.
Bernanke speaks to this, as well:
To see the irrelevance of trade to total employment, we need only observe that, between 1965 and 2006, the share of imports in the U.S. economy nearly quadrupled, from 4.4 percent of GDP to 16.8 percent. Yet, reflecting growth in the labor force, employment more than doubled during that time, and the unemployment rate was at about 4-1/2 percent at both the beginning and end of the period. Furthermore, average real compensation per hour in the United States has nearly doubled since 1965.
Clinton, Obama, Edwards, Dodd, and Kucinich would much rather listen to Chairman Mao than Chairman Bernanke.