Fast Track and Iraq

The conventional wisdom on the defeat of Fast Track trade legislation is dead wrong. As the press would have it, the failure of Fast Track reflects the rise of grass-roots protectionism. The vote in Congress to deny Clinton the authority to negotiate trade deals is a response to constituent pressure.

Nonsense. If people resented foreign goods, they would stop purchasing Taiwanese sneakers, Chinese clothing, and Latin American flowers. But labor union campaigns to "Buy American" have been a notorious failure. International trade is booming because people put their money where their preferences are.

On the other hand, there has been a massive public reaction against all that Fast Track represents. It brought us Nafta – an insider deal to create a regional trade bloc that led to billions in new spending, the rise and fall of the peso, and the Mexican bailout, one of he great financial scandals of our epoch.

Fast Track was designed to give Clinton the authority to negotiate ever more Naftas. But at a time when all government power is regarded as suspect, and rightly so, even more resistance has emerged to giving additional power to the executive branch (host to the agencies that brought about Waco, Ruby Ridge, and tax collection).

The failure of Fast Track reflects union lobbying power, to be sure, but also public resistance to centralized political authority. That's why real free traders have every reason to cheer its defeat. If there are no more side agreements, no more bailouts of pumped up third-world economies, no more payoffs and bribes to U.S.-friendly foreign officials, and no more ten thousand pages of regulations imposed on business in the name of freedom, that's all to the good.

Consider this sickening irony. While Clinton was agitating for Fast Track power, he was engaging in a military standoff with Iraq. The ostensible reason was that Iraq wouldn't allow Americans to be part of the U.N. team inspecting for nuclear and other weapons. But the real reason was more fundamental.

After the Gulf War, the U.S. made a fateful decision. It decided that it would use its military power to end all international trade with Iraq. The result was that the Iraqi people were prevented from rebuilding their lives after the destruction. Bombed sewage plants were never repaired, the import of food and medicine stopped, and disease ran rampant, with the result that hundreds of thousands of innocent people suffered dysentery, starvation, and death.

We may not like Saddam's personality or his politics. But that is no reason to impose such unnecessary suffering on the people of Iraq. The Gulf War was supposedly fought, in part, to prevent Iraq from gaining an oil monopoly and choking off supplies. But the result has been to cut off all supplies of Iraqi oil to the world, thereby artificially propping up the price for present suppliers (who are all for continued sanctions).

It's hardly surprising that cruel embargos engendered hatred. How could this mess have been prevented? Free trade. It is a fount of peace among nations, and always has been. But while Clinton was piously singing sermons to free trade in order to acquire Fast Track power, he was driving a foreign country into ruin by not allowing any trade. If he would use his present power to rip off American consumers, why should he be trusted with ever more trade authority?

The politicization of trade policy is one of the great tragedies of the post-war world. Nowadays, if we like some country, it is blessed not only with trade but also with foreign aid stolen from the paychecks of Americans; if we don't like some country, it is driven to the ground with warlike sanctions, threats, and even bombs.

It's not only U.S. policy towards Iraq that is inconsistent and inhumane. Everywhere Clinton has had trade authority, it has been used to reward his friends and punish his enemies.

The Clinton administration has whipped up hysteria against Japan because its consumers don't like U.S. cars and do like Japanese film. It tells developing nations at what age teenagers should be allowed to work, the amount of forest land that can be used for logging, and how big a welfare state they should have.

What has this to do with free trade? Nothing. The old-fashioned word that best describes this behavior is imperialism. Such tactics have been decried by free traders from Cobden and Bright to Mises and Rothbard.

In the long-run interests of American prosperity, and that of the rest of the world, the failure of Fast Track is a boon. When the government loses power of any sort, it's always an occasion to celebrate.

FURTHER READING: The Nafta Reader (Auburn, Ala.:Mises Institute); Murray N. Rothbard, "'Free Trade' in Perspective," in Making Economic Sense (Auburn, Ala.:Mises Institute, 1995); Ludwig von Mises, "The Disintegration of the International Division of Labor," in Money, Method, and the Market Process (Norwell, Mass.: Kluwer, 1990).