CHICAGO SCHOOL - Back Peddling
by Jacob T. Levy
Jacob T. Levy is Assistant Professor of Political Science and the College at the University of Chicago, and the author of The Multiculturalism of Fear (Oxford 2000). He writes regularly at volokh.com.
Only at TNR Online
Post date: 12.26.03
It is a foul political season for those of us with sympathies for the New Democratic agenda. Joe Lieberman's campaign is showing a few signs of life, but they are far too little, far too late. Clintonistas have mostly gravitated toward Wesley Clark, still a blank slate on domestic policy, or John Edwards, in many ways an Old Democrat who happens to have youthful good looks and enough of a drawl to remind them of the good ole days. And presumptive nominee Howard Dean is calling for a rollback of deregulation and explicitly distancing himself from Bill Clinton's Democratic Party. On the other side we face a GOP that is determined to buy its way to electoral dominance, abandoning its free-market and small-government principles in all but rhetoric. Among other things, the administration seems convinced it can impose protectionist measures while still triumphantly concluding a hemispheric free trade agreement, several smaller trade deals, and the Doha round of WTO negotiations. Unsurprisingly, it hasn't worked; the protectionist measures have torpedoed most of the trade talks.
In retrospect, it appears that the New Democratic moment was a fragile one, and its highlights more than a bit accidental. Welfare reform, NAFTA, and the WTO were all essentially products of the interaction between Clinton, a small minority of moderate Democrats, and a majority (but not an overwhelming majority) of congressional Republicans. The budget surplus was the result of a bitter standoff between Clinton and Newt Gingrich's GOP over fiscal policy; for a brief moment, both sides decided they would rather let accumulating revenues just sit there than let the other side use them.
But the good news is that, accidental or not, some of the most important New Democratic policy triumphs of the '90s are more or less locked into place. And that may contribute to changing the political climate a few years down the road.
The recent WTO decision striking down American steel tariffs is a case in point. Now that the United States has joined the Organization, the vagaries of its domestic politics don't matter quite as much as they used to for trade policy. By making a commitment, when the times allowed, that the United States would observe trade rules, Clinton set some constraints on what the country could do when the political atmosphere turned sour. It was those constraints that forced the Bush administration to back down in the face of international pressure over steel.
Of course, joining the WTO has hardly finished the work of keeping protectionism in political check. Agricultural protectionism--a particularly nasty sort because of the destruction it wreaks on the economies of the poorest countries--remains almost untrammeled by trade agreements. And the Bush administration's massive increase in agricultural subsidies has contributed to keeping it that way, by blocking progress in the Doha round of WTO talks. (The United States hasn't been the only, or even the worst, villain here. But without an American counterweight to French and Japanese conservatism, no progress seems likely.) It's hard to imagine either a second Bush administration or a first-term Howard Dean reversing course and committing the United States to a rollback of its destructive farm programs; Dean has been backpedaling from his earlier support of NAFTA, and thinks that the problem with Bush's farm policy is that it doesn't have enough subsidies. Similarly, the textile industry remains coddled and politically powerful, blocking concessions that might be made for security reasons (e.g. Pakistan) or for development reasons (Africa), and able to demand ever greater protection (China). (Industries and unions that would otherwise gradually lose political power as they dwindled instead gain it when they're protected, as resources and workers flow toward them and away from industries hurt by the protectionism--e.g. the auto industry when steel is protected.)
And yet ... Clinton also committed the United States to an agreement to (roughly) let textile protections lapse in 2005. At the time, that ten-year-long delay dismayed free-traders. But in 1995 it would probably have been politically impossible to take on the industry. Now, despite a clear lobbying gear-up to prevent the upcoming changes, American textile interests face a president who can credibly say his hands are tied. There remain real grounds for concern--it's always possible that a particularly protectionist administration (say, one led by Dick Gephardt) could tear the WTO down rather than let the textile agreement go into effect. But, knock on wood, it seems more likely than not that textiles will be brought under normal trade rules in a couple of years--which will gradually weaken one of the strongest lobbies for protectionism in general.
Even on agriculture, a little bit of long-delayed progress is about to be made. Next week the so-called "peace clause" in the WTO's Agreement on Agriculture expires. The peace clause mostly immunized agricultural subsidies and protection from being challenged at all before the WTO. Once the clause expires, huge swaths of agricultural policy may be challenged very quickly. Judgments will take a long time; and much will remain legal that shouldn't be. But agribusiness's political power may have reached its zenith; its ability to make extortionate demands may be gradually rolled back.
Welfare reform also reinforces itself over the long term, transforming politics by transforming policy. Of course, welfare reform is far from untouchable; its renewal last year was something of a close call. But it does tend to entrench itself over time. On the one hand, it has decisively defused middle-class hostility to helping the poor. On the other, it has accelerated a movement into employment and (partial) economic independence, decreasing the pool of voters who see themselves as recipients of assistance rather than workers and taxpayers--a change that in the long term weakens Old Democrats. In both cases, it tends to diminish the gap between black and white perceptions of fiscal policy, to the disadvantage of racial demagogues on both the right and the left. Not surprisingly, in the 2000 and, so far, the 2004 presidential elections, welfare as such was a non-issue for the first time in more than a generation.
Tendencies are not destiny, to be sure. But, thanks to decisions made in the '90s, the tendencies are good ones. The New Democratic agenda may currently be crushed between union-backed, left-wing Democrats like Gephardt and Dean, and a pro-business but anti-market Republican administration. But perhaps this election will be something of a last gasp for those interest groups on both sides. The foul season may pass.
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