2016 presidential election

Restricting Free Trade to Save Free Trade

Globalization has come under sharp scrutiny in the 2016 presidential election, exposing deepening political fault lines. Harvard professor and author Dani Rodrik offers ideas for how to save international trade by giving individual nations a license to restrict trade to protect domestic economic and political institutions. (Illustration by Andrew Holder/New York Times)

Globalization has come under sharp scrutiny in the 2016 presidential election, exposing deepening political fault lines. Harvard professor and author Dani Rodrik offers ideas for how to save international trade by giving individual nations a license to restrict trade to protect domestic economic and political institutions. (Illustration by Andrew Holder/New York Times)

Globalization has gotten a black eye in the 2016 presidential election and in the Brexit vote in the United Kingdom, but populist opponents have offered few tangible alternatives other than a trade war, rejecting the Trans Pacific Partnership or trying to renegotiate existing trade deals.

Dani Rodrik, a Harvard professor and author, offers suggestions in a New York Times op-ed that will annoy populists, labor unions and globalization cheerleaders. He says to preserve free-flowing trade – and the democracies the engage in it – will require giving individual nations the autonomy to protect their own interests. 

“Globalization has deepened the economic and cultural divisions between those who can take advantage of the global economy and those who don’t have the resources and skills to do so” Rodrik wrote. “Nativist politicians like Donald J. Trump have channeled the resulting discontent as hostility to outsiders: Mexican or Polish immigrants, Chinese exporters, minorities.” 

Rodrik’s solution is to cap “hyper-globalization” and replace it with a form of globalization with increased national autonomy. For example, he says nations should be able to place restrictions on cross-border transactions that involve worker or environmental rights violations.

That sounds eerily similar to the kind of trade restrictions that globalization and free-trade agreements have sought to eliminate. Rodrik claims some trade trimming will be necessary to salvage the basic idea of free trade, which he notes has “pulled 700 million people out of poverty." “Globalization,within limitations,” he says, “has been good economics. Globalization, within limits, can be good for our democracies, too.”

In his op-ed, Rodrik offers four specific suggestions:

  • Give individual nations the autonomy to choose trade-related institutions that best represent their interests and reflect their risk-tolerance.
  • Countries should be able to prevent “regulatory arbitrage” whereby corporations circumvent national labor or environmental laws by moving operations to offshore locations.
  • International economic negotiations should pivot on domestic policy autonomy combined with increased trade transparency to ensure both sides keep their commitments.
  • Global governance should focus on enhancing democracy, not globalization.

“Global governance cannot overcome major problems like inequality, social exclusion or low growth,” Rodrik says. “But it can help by devising norms that improve domestic policy transparency, public deliberations, broad representation, accountability and use of economic evidence in domestic proceedings.”

Interesting by its omission is mention of reforms to trade adjustment assistance, which has drawn criticism for being inadequate and training dislocated workers for jobs that don’t exist in their community – or at all.

The fundamental question raised by Rodrik’s call for a “little-less-free trade” is whether a little would turn into a lot. Nations already file actions alleging unfair trade practices that range from “dumping” products at low costs to self-serving tariffs that make imported products noncompetitive. The license to protect domestic economic interests could embolden industry, labor and environmental advocates to push for greater protections, which could trigger what amounts to trade wars between nations or international regions.

Rodrik also doesn’t address the issue of globalization of financial markets, which dwarf the movement of goods and services across national boundaries. Restricting the flow of money is considerably more complex and can be tied up with another international bugaboo – concessionary tax policies and tax havens.

None of this discounts the value of the conversation Rodrik’s op-ed started, which highlights the many moving pieces that must be addressed to find a balance that benefits consumers without unduly exposing workers to economic discoloration and ultimately posing a challenge to democratic governance.

The Slow Suffocation of U.S. Market Competition

Elizabeth Warren says competition is dying a slow death in the American marketplace, hurting consumers, small businesses, innovation and workers.

Elizabeth Warren says competition is dying a slow death in the American marketplace, hurting consumers, small businesses, innovation and workers.

While Donald Trump’s poll numbers slump and Hillary Clinton continues to stumble in explaining her use of a private email server for official State Department business, Elizabeth Warren has plopped a major public policy option on the table. She has called for stronger antitrust action to restore competition to U.S. markets, from banks to cable operators to technology companies and health insurers.

In an election punctuated by insults and insinuations, Warren said, “Today in America, competition is dying. Consolidation and concentration are on the rise in sector after sector. Concentration threatens our markets, threatens our economy and threatens our democracy.” It’s only surprising that the presidential candidates haven’t raised the topic.

Warren gave the keynote speech at New America’s Open Markets program the day after she appeared alongside Clinton to endorse her. Her premise was that “reigniting competition” in a broad range of increasingly monopolized markets will benefit consumers, small businesses and workers.

“The first problem is that less competition means less consumer choice,” the Massachusetts senator said. “When consumers can purchase similar products from multiple competitors, they force market players to constantly seek out new ways to reduce prices and increase the quality of goods and services to get their business.”

Lack of competition “can lock out smaller guys and newer guys,” she said. “Google, Apple and Amazon have created disruptive technologies that changed the world, and every day they deliver enormously valuable products. They deserve to be highly profitable and successful. But the opportunity to compete must remain open for new entrants and smaller competitors that want their chance to change the world again.”

Revenue of Top 200 U.S. Corporations as Percentage of Total Business Revenue, U.S. Economy, 1950–2008

Source : Data for the top 200 corporations (see notes) were extracted from COMPUSTAT, “Fundamentals Annual: North America” (accessed February 15, 2011). Total revenue was taken from “Corporate Income Tax Returns” (line item “total receipts”) Statistics of Income (Washington, DC: Internal Revenue Service, 1950–2008).

Source: Data for the top 200 corporations (see notes) were extracted from COMPUSTAT, “Fundamentals Annual: North America” (accessed February 15, 2011). Total revenue was taken from “Corporate Income Tax Returns” (line item “total receipts”) Statistics of Income (Washington, DC: Internal Revenue Service, 1950–2008).

When competition declines, small businesses can be wiped out. Warren cited the “Walmart effect” created by a single company delivering more than 30 percent of the products Americans consume and controlling critical supply chains.

Key Facts From Warren's Speech:

  • The number of major U.S. airlines has dropped from nine to four in the last 10 years, due to consolidations. Last year, those four airlines brought in a record profit of $22 billion.
  • Five companies control more than 83 percent of national health insurance market.
  • CVS, Wallgreens and Rite Aid own more than 99 percent of the drug stores in the U.S.
  • Four companies own about 85 percent of the U.S. beef market, and three control nearly half of all chicken in the U.S.
  • More than half of all cable and internet subscribers in America have service through Comcast, which has consolidated by buying up rival companies.

Concentrated markets tend to lead to concentrated political power, Warren asserted. “This is a big one, and it should terrify every conservative who hates government intervention.... Concentrated markets dominated by a handful of powerful players, on the other hand, don’t produce the consumer benefits that flow from robust competition. Instead, benefits are sucked up by a handful of executives and large investors.” Their lobbying, in turn, focuses on protecting their market advantage and resisting restoration of competition.

The ultimate victim of market concentration, Warren said, is America’s middle class. People at the top get richer, she claimed, while others struggle. “Concentration is not the only reason for rising economic insecurity, but it is one of them. Concentrated industries result in concentrated profits. It’s the ultimate price squeeze."

Her solution is to hold the line on what she called anti-competitive mergers, give close scrutiny to so-called vertical mergers and require all federal agencies to promote market competition. Warren also believes that businesses can’t be allowed to become “too big to fail.”

“For much of our history, Americans organized and protested against the forces of consolidation,” Warren concluded. "As a people, we understood that concentrated power anywhere was a threat to liberty everywhere. It was one of the basic founding principles of our nation. And it threatens us now.”

The market threat Warren points to is easily of greater consequence to average Americans than Mexican immigration or careless handling of sensitive emails. In the 90 days between now and Election Day, perhaps it will be mentioned on a presidential stage.

The Unsettled Presidential Election

Donald Trump and Hillary Clinton have their respective party presidential nominations sewn up, but their general election campaigns face a lot of uncertainty and unfamiliar political terrain.

Donald Trump and Hillary Clinton have their respective party presidential nominations sewn up, but their general election campaigns face a lot of uncertainty and unfamiliar political terrain.

By default or delegate count, the 2016 Republican and Democratic presidential nominations appear set. However, the campaigns and party unification processes are anything but settled.

Presumptive GOP nominee Donald Trump faces high-profile defections from prominent Republican leaders and Democratic presidential frontrunner Hillary Clinton keeps losing primary elections to Bernie Sanders.

Trump meets this week with House Speaker Paul Ryan, who has withheld his support from Trump. For Trump’s part, he claims he is ushering in a new-look Republican Party that may make party unity efforts a nice, but not necessary sidelight. That new look also may not include conservatives who say they won’t vote for Trump or Clinton.

Clinton has turned her political guns on a general election showdown with Trump, despite a still vigorous challenge by Sanders. However, just when it appeared Clinton would trounce Trump in a landslide, a poll by highly regarded Quinnipiac shows Clinton is in a dead heat or losing to Trump in the key swing states of Ohio, Florida and Pennsylvania. Sanders’ double-digit win in West Virginia this week added further doubt to whether Clinton can attract votes from disaffected white voters and political independents.

Trump and Clinton have the shared distinction of being the two most disliked presidential candidates in recent history. As such, both are having trouble appealing to their respective party bases.  Trump has shaky support on the conservative right and Clinton on the progressive left.

The Trump-Clinton race may come to a battle of identity politics. Trump scores with male voters, while Clinton does well with women and minority voters. Trump does poorly with establishment Republicans. Clinton flunks with younger Democratic voters.

In previous presidential elections, the candidates' experience and what they stood for counted most. In 2016, not so much. Trump touts his lack of political experience and has lurched around on issues like a bumper car driver. Clinton has been criticized for her experience and her wonkish policy views.

After Ted Cruz and John Kasich bowed out following Trump’s decisive primary win in Indiana, Trump told NBC News he looked forward to a principled general election campaign centered on policy. The next day, Trump returned to form and resumed his “Crooked Hillary” refrain. He hasn’t let up since.

Clinton immediately put up attack ads pointing out Trump’s outlandish statements and dubious policies, only to be warned by supportive political observers that getting into a gutter fight with Trump was a losing strategy. Strategists said Trump methodically disposed of GOP opponents who attacked him,  who famously noted that he could shoot someone on New York’s Fifth Avenue and it wouldn’t cost him a vote.

Perhaps a more troubling concern in the Clinton camp is the political viability of “outsider” messaging, especially when it comes to international trade and “rigged” systems. A West Virginia voter told a reporter after he voted in his state’s primary that he cast his ballot for Sanders because he “spoke the people.” The only other person running for president he would vote for is Trump.

One Democratic pollster said the problem boils down to a good “origin story.” Trump and Sanders pinpoint what and who is to blame. Clinton tells a more complex and conflicted story. Trump has mastered sloganeering. Sanders has powerful sound bites. Clinton has nuanced, detailed policy papers.

Presidential nominating conventions are more than a month away and there are still a few primaries left, including contests in Oregon and Washington. The eventual nominees are clear. How their campaigns will unfold and the odds on either’s ultimate success remain as unsettled as ever.

Untypical, Unelectable Politicians Prospering

Anti-candidates and unconventional politicians once thought unelectable now are dominating political polls, suggesting politics as usual and traditional American optimism may be in for a vacation.

Anti-candidates and unconventional politicians once thought unelectable now are dominating political polls, suggesting politics as usual and traditional American optimism may be in for a vacation.

Politics-as-usual has never been popular. In the coming election year, it may be lethal.

A new Washington Post-ABC News poll reveals 72 percent of Americans believe politicians can't be trusted and 66 percent think the country's political system is dysfunctional. Not exactly a solid foundation to run for re-election. Twenty-one percent want a President who will tear down the current system and start over.

This perhaps explains voter attraction to anti-candidates such as Donald Trump and Ben Carson and unconventional politicians such as Bernie Sanders. Policy positions matter less than style. Deliberate thought takes a back seat to brash talk. Compromise is scorned and anger is rewarded.

The mood has shivers running down the back of incumbents. Even establishment outsiders have felt the chill. Jeb Bush is still treated in the media as the likely winner, even though 60 percent of Republicans prefer someone from outside the political establishment. South Carolina Senator Lindsay Graham has been stonewalled in his home state. Wisconsin Governor Scott Walker has gone from pack leader to a camp follower in the Republican presidential primary.

The non-politicians are playing to this electoral discontent with dark rhetoric, as laid out in a story in the Sunday New York Times.  Trump calls America a "hell hole" run by "stupid" leaders who are steering the nation toward becoming a "third world country." Texas Senator Ted Cruz sees menaces from without and within, as evidenced by the "lawlessness" of jailing a Kentucky county clerk for refusing to issue marriage licenses to same-sex couples under "authority from God."

The trend is confounding GOP pollsters who have pushed candidates to follow Ronald Reagan's example and stress optimism. Bush and Ohio Governor John Kasich have generally optimistic messaging, but they are drowned out by strains of negativism.

"Today, conservatism is much more mean spirited, angry, not optimistic and much more viscerally divisive," according to Matthew Dowd, a former top strategist for President George W. Bush.

Bill Kristol, editor of the conservative Weekly Standard, told the New York Times, "I know everyone should be optimistic, should be sunny and cheerful. And there's something weird and wrong if you're not. But really? Is the country on the right track or the wrong track?"

The Washington Post-ABC News poll shows the wariness of voters has taken its toll on Hillary Clinton's credibility as her private email soap opera has continued. According to poll results, less than 50 percent of Democrats want Clinton as the party's nominee and the largest defections from her earlier support are among white women. The beneficiary of Clinton's decline has been Sanders, who pushes his liberal economic agenda in convincingly earnest tones that seems to connect with disaffected Democrats.

For the first time, Clinton finds herself neck-and-neck with Trump in a prospective general election battle, which challenges mainstream logic about Trump's electability. That same belated realization about who is electable and who isn't could give Sanders another bump, pushing him into the lead.

For those who still believe the 2016 presidential election will pit the family dynasties of Clinton versus Bush, there is the overwhelming election of Jeremy Corbyn as leader of Britain's Labour Party. Corbyn's far-left agenda may not appeal to rank-and-file Labour Party members, but their voices were swamped by more than 100,000 new voters who weighed in on the choice. Not long ago, Corbyn was considered too liberal to gain power. But politics as usual seem to be out of favor in a lot of ways and a lot of places.

A Presidential Race with Unexpected Suspense

The ranks of Democratic presidential candidates could soon swell, making the the 2016 election more suspenseful than expected with a Clinton and a Bush in the running.

The ranks of Democratic presidential candidates could soon swell, making the the 2016 election more suspenseful than expected with a Clinton and a Bush in the running.

The GOP presidential primary field now totals 17 candidates, but suddenly there are signs the Democratic candidate list might swell as well.

There were hints Vice President Joe Biden might honor his dying son's request to make a bid for the White House. And New York Times columnist Maureen Dowd tossed the hat into the ring of the Lord of Lattes, Starbucks CEO Howard Schultz.

Rekindled interest in the 2016 Democratic presidential nomination follows polls that show frontrunner Hillary Clinton's favorability ratings dropping, especially in critical swing states that she would need to win election next fall. [Clinton will be in Portland this week for a small-group "conversation" with supporters.]

Vermont Senator Bernie Sanders has demonstrated unexpected appeal on the political stump as he espouses a more full-throated defense of stronger government action to address issues such as income inequality and climate change. Few observers believe Sanders can win the nomination, but his strong showing will push Clinton and perhaps other Democratic candidates more to the political left. Last week, Clinton called for a "fairness economy" that pushes up wages for middle and lower income workers and closes corporate tax loopholes.

Biden's decision to enter the race would have an emotional tag. On his deathbed, Beau Biden urged his father to run. Biden is no stranger to campaigns tinged with personal tragedy. His first wife and a 13-month-old daughter were killed in a car accident a few weeks after he was elected to the U.S. Senate in 1972. He considered resigning, but was persuaded to serve. Biden was sworn in at a ceremony attended by Beau Biden, who was injured in the accident.

In a weekend column, Dowd touted a Schultz candidacy because of his passion as a CEO to repair what he calls the "fraying American dream." She says colleagues have urged Schultz, who grew up in Brooklyn housing projects to enter the race. Schultz wrote a book about the treatment of U.S. veterans that carried the message of making government work again and finding "authentic, truthful leadership."

The burst of candidates on the Democratic side comes on the eve of the first GOP presidential debate this Thursday. There will actually be two debates to accommodate all the candidates, with a prequel for the candidates whose poll numbers are lacking and the main stage for the top 10 challengers, led by Donald Trump.

Trump's brash statements have generated a lot of feedback, both pro and con, and appears to have incited other candidates to amp up their rhetoric. Trump has shown little hesitation to trash-talk others in the field, which could lead to a debate that is more like a food fight than a discussion of policy issues.

Trump managed to suck more air out of the GOP balloon by reserving the right to mount a third-party candidacy if he fails to win the GOP nomination. Pollsters and columnists seized on that possibility to predict Trump would siphon off enough votes to guarantee a Democratic victory in 2016.

However, the actual caucuses and primary elections that count are still a fair distance off. It is not unheard of that candidates emerge from the back of the pack or political obscurity to take command. Barack Obama emerged by surprising the Democratic frontrunner in 2008 – Hillary Clinton – in Iowa caucuses.

If the Democratic field for the 2016 nomination expands, there may be a lot more suspense than anyone could have predicted or expected with a Clinton and a Bush in the race.

The Intractable Trade Issue

Oregon Senator Ron Wyden finds himself in the middle of a high-stakes debate over a major free-trade agreement with Asian Pacific partners and the rules by which the Obama administration will need to follow to negotiate the deal. Photo by  SenateEnergy .

Oregon Senator Ron Wyden finds himself in the middle of a high-stakes debate over a major free-trade agreement with Asian Pacific partners and the rules by which the Obama administration will need to follow to negotiate the deal. Photo by SenateEnergy.

Oregon Senator Ron Wyden finds himself in the middle of a major trade policy debate that could affect the ultimate fate of a Trans-Pacific trade agreement sought by the Obama administration.

Oregonian political reporter Jeff Mapes says Wyden, despite a history as a free trader, is the cause of a delayed hearing on so-called fast-track authority for the administration to negotiate a trade deal.

According to Mapes, the hang-up is over how many senators it would take to retract fast-track authority. Congressional Republicans want 67 senators, while Wyden wants 60. Wyden's view matters because he is the ranking Democrat on Senate Finance, the committee that would scrutinize any trade deals.

A free trade agreement with Asian Pacific partners is viewed as one of the major legislative opportunities this Congress for Republicans to work with President Obama in his final two years in office.

Wyden isn't retreating from his free-trade position, even though he has been pressured to do so from organized labor leaders, including Oregon AFL-CIO President Tom Chamberlain. Mapes says Wyden is trying to find middle ground.

For example, Wyden has agreed with opponents that trade pact negotiations are too secretive. "Transparency, congressional accountability ... and enforcement is really the key to coming up with a sensible, bipartisan trade agreement," Mapes reports Wyden as saying. Wyden says he wants a "good deal."

Senate Republicans seem less worried about how trade negotiations are conducted. That is somewhat ironic in light of the controversial letter 47 GOP senators sent this week to Iranian officials expressing their strong desire to approve any nuclear arms limitation deal negotiated by President Obama. 

Trade agreements have special importance to the West Coast and Oregon. The Port of Portland is one of the largest export platforms on the West Coast, which Wyden has acknowledged.

"People want to buy our wheat, they want to buy our computers, our wine," Wyden told Mapes. "The Oregon brand is just on fire all over the world and we ought to be able to get our exports, particularly, into Asia. ... If I could get in a sentence for my economic philosophy, it is  grow things in Oregon, make things in Oregon, add value to them in Oregon and then ship 'em somewhere."

However, Wyden, who is up for re-election in 2016, faces electoral pushback. Chamberlain, while crediting Wyden for working hard to reach out to both sides of the debate, said the senator's position for fast-track authority and a Trans-Pacific trade deal could cost him official labor backing next year.

Democracy for America has sent out a large mailing urging Oregon Congressman Peter DeFazio to challenge Wyden. DeFazio said he has no interest in running against Wyden. 

Related Link: In free-trade fight, Ron Wyden emerges as key negotiating figure in Congress

GOP Studying Wehby Campaign for Clues

The U.S. Senate race in Oregon may really be about putting Oregon and other blue states into play for the 2016 presidential election.

According to a story published in the Washington Post, Monica Wehby's attempt to unseat Democratic Senator Jeff Merkley is a field trial for a different kind of Republican candidate — female, a medical doctor and less strident on flash-point social issues.

National GOP operatives are branding Wehby as an "independent conservative," perhaps as a contrast to the more rough-hewn "maverick" persona projected by former GOP vice presidential candidate Sarah Palin. Wehby may have trouble with messy break-ups, but you wouldn't catch her shooting moose from a helicopter.

Wehby campaign officials will insist, as they should, their candidate is in the race to win. Her victory in Oregon, they would say, would help to ensure Republicans retake the U.S. Senate and control Congress during the final two years of the Obama presidency.

She is seeking to project an image with a TV ad showing her saving a newborn with spinal problems. Her catch phrase is, "Keep your doctor, change your senator."

However, the race in Oregon is more likely to come down to a battle over Republican and Democratic views on economic policies and social issues. Merkley's campaign will do its best to turn the race into a referendum of national policies. Therein lies the interest in the race at a national level. Can an attractive candidate who can utter comprehensible sentences and hasn't listed to the far-right of the GOP base overcome the built-in constituencies of issues such as pay equity and carbon reduction.