It always happens. Once the election is over, the media start to inform you what the real issues will be in the coming Congressional session, and they are not necessarily subjects that were emphasized in the campaign. Suddenly getting attention is the likelihood that the new Democratic majority will put a halt to free trade initiatives. The esteemed economist John Rutledge has just returned from China—where he probably is even better known--with valuable insights about how the new US political reality is seen from there. Will there be some debate on this before the new Congress meets? Will there also be some comparable analysis of what is going to happen to our trading relationship with Latin America, a part of the world the media and the parties have neglected in recent years?
Overall, the US and the the developing world have benefited greatly by the movement to free trade. The WTO critics have not made their case. But the unions and the environmentalists (to generalize) see a chance to force poison pills down any new trade act. It will be hard therefore to make any progress. Meanwhile, you can expect mercantilists in the European Union to try to regulate trade to the advantage of highly taxed, subsidized and regulated—and stagnant--France, Belgium and Germany, and to make European standards prevail worldwide. You either go along or they sue you into conformance—or cut you out of their markets. The Democrats are just not alert to the danger, and the Republicans aren’t in a mood to raise any alarms.
One can see some opportunities for the two US political parties to collaborate in other areas, however. An energy program, for example, could include both conservation measures and new sources of oil and gas. Should the now-dominant Democrats ignore the need for oil and gas production and opt to over-emphasize wind and solar they could be blamed if gas prices go up and the long term goal of renewable sources is not met. Having legislative responsibility means you can’t just point the finger at the Administration any more. So compromise would seem to be the best political policy as well as the national interest. There are hints that the parties may agree.
A compromise on immigration reform is another possibility. The Republicans made a mistake by not working out a bill this year, but an opportunity still exists for a solution that seriously toughens border controls and allows a path for legalization—but is not “amnesty”. Looking ahead, it will be interesting to see whether increased legal immigration quotas for high skilled workers will be allowed by the new majority. Ask yourself whether the high tech industry or the unions will have more influence on the new Congressional majority. Both interests backed the Democrats this year. As Rutledge notes, American tech companies are determined to compensate for an under-educated American workforce. If Congress lets the tech industry down on work visas it will start outsourcing the country’s leadership in R & D.
On another subject, Dr. Rutledge also seems to be correct when he declares telecom reform legislation dead as a result of the elections. But it probably was dead anyhow. (The Republicans did have their chance, didn’t they?) The pressure therefore will be on the Federal Communications Commission to take action under authority it already has. The trouble may come in persuading the pro-deregulation majority on the FCC to take action while action is still politically possible. Here is a case where the Bush Administration, by gentle prodding, could help the economy of the next two years without any legislative action at all. But timing is fickle, delay deadly. It is just as John Rutledge implies: the US will exert its leadership in technology by massive broadband deployment, or it will lose its prospects there, too.
These are the kinds of issues that are not very sexy, but enormously consequential. Discovery has been writing about such topics, but it is frustrating to see how disconnected the media and the campaigners have been—and, hence, how unaware the voters.