The Power Grid

Marital Discord

This new political context helps explain why Hillary is charting a course on trade so different from her husband’s. And Washington is only part of the story—and for her, the less important part. In crucial Democratic primary states, the anti-globalization fever is running even higher. “She’s lurching left on economics, and it’s all about Iowa,” says one Democratic insider with no affiliation to any presidential campaign. “They know she is badly positioned on Iraq, especially out there, where the antiwar feeling is strong. So she has to compensate somehow, and this is her way of doing it.”

Another unaligned Democratic operative, who believes that Clinton has been on a roll of late, suggests that another factor besides Iraq is at work in shaping her views on trade. “There really are three overlapping issues, all of which reflect on the face America shows the world: trade, immigration, and Iraq,” says this operative, who worked in the Clinton White House. “It’s hard to be on the unpopular side of all three of those issues. So if Hillary is going to be liberal on immigration, she has to be where she is on trade.” (This calculus, he adds in passing, is why John McCain is so completely hosed.)

To be fair, politics may not be the only thing behind Hillary’s skepticism about the unalloyed virtues of liberalizing trade. In the years since NAFTA was signed into law, even some of its most prominent boosters have come to acknowledge that the promised benefits, especially for the Mexican economy, have been painfully slow to arrive—and to question the assumptions on which they based their advocacy. “I was a true believer in NAFTA,” Berkeley economist and former Clinton administration official Brad DeLong proclaimed last year. “Now my faith is not gone, but shaken.”

More broadly, the consensus among top-tier economists that underpinned the support for free trade has lately been rattled by a spate of revisionism. Alan Blinder of Princeton, a former vice-chair of the Federal Reserve and a staunch Democrat, has taken to arguing that the downsides of unfettered globalization may be far greater than standard doctrine has assumed—in particular, that offshoring and outsourcing may put as many as 40 million American jobs at risk in the next two decades. The Nobel laureate Paul Samuelson has joined the chorus, as has former Clinton Treasury secretary Larry Summers, who wrote recently that pledges to retrain workers displaced in the globalized economy are “pretty thin gruel” when it comes to allaying the fears of the middle class.

The rethinking going on among such economists is salutary, to be sure. There can hardly be any doubt any longer that globalization (fueled by rapid technological change) is, as Shapiro has written, “weakening the long-standing connection between increases in the productivity of workers and the wages they earn.” But what makes the responses to this new reality among the Blinders and Summerses of the world welcome is that their arguments tend to be complex, careful, and nuanced. What none of them is advocating is any form of protectionism—even though that is precisely what many of the politicians and union leaders now seizing on the rethinking have in mind. Instead, the economists favor grand-scale education reform, worker training, R&D spending, and changes in the tax code to promote the creation of high value-added U.S. based jobs, and, not least, universal health care reform to bring down costs for domestic businesses.

“The next administration has a responsibility to create a new bargain on trade,” says Shapiro. “The bargain is, we will continue to expand open trade and we will make the significant investments required to enable American workers to benefit from it.”

Given Shapiro’s roots, it’s not surprising that his new bargain embodies the spirit of Clintonism (Bill Clintonism, that is). What’s often forgotten about Clintonomics, in its original incarnation, is that its theme was “putting people first.” Yes, there was always a commitment to fiscal discipline. Yes, there was the embrace of internationalism. But there was also a promise to sink massive sums into the formation and enhancement of human capital. But Clinton’s human-capital agenda was sacrificed on the altar of budget balancing, a sacrifice that was arguably unnecessary had the president and his people been willing to take on corporate welfare, congressional pork, and entitlement spending.

Now comes a golden opportunity for a presidential candidate prepared to do just that. Ready, that is, to make good on Bill Clinton’s unfinished agenda. Without question, the candidate most suitable to taking up the task, for reasons of both temperament and historical-cum-marital continuity, would be Hillary Clinton. Doing so would require her, however, to drop the cheap posturing as a trade hawk and adopt instead a stance of, I dunno, a genuine third-way leader. Those of us who care about getting globalization right will be watching and egging her on. And so, one hopes, will be her husband, who happens to understand all of this as well as anyone alive.

E-mail: jheilemann@gmail.com.