Labor and the Trade Bill

Brass Tacks

President Kennedy has done all but claim Divine inspiration for his Trade Liberalization Act. Indeed, at some moments it sounds like he has even gone beyond that; in his formal "Message on Trade" to Congress, for example, he said in part, "Several hundred times as many workers owe their jobs directly or indirectly to exports as are in the small group--estimated to be less than one-half than one per cent of all workers--who might be adversely affected by a sharp increase in imports." Several hundred times? Even in Heaven, 200 times one-half per cent is already one hundred per cent. As Oscar Gass said in the New Republic, commenting on Kennedy's statement, "Here we attain a limit of fantasy where all other competitors are left breathless."

In his enthusiasm for the Bill, the President is in the great tradition of the Anti-Corn Law League, granddaddy of all Free Trade movements; its members used to insist that there were passages in the Bible which forecast the advent of Free Trade. (This passage, from Exodus, was especially popular: "Behold, I have heard that there is corn in Egypt; get you down thither, and buy for us from them, that we may live and not die.")

But Kennedy's over-blown rhetoric, and all his efforts to make the fight for the Bill's passage into a new Free Trade crusade, are as out of place as Cobden's and Bright's were appropriate. They disguise a serious confusion in the Bill, between the traditional justifications of a no- or low- tariff policy, and the needs of America's economy today. This is especially true of his predictions about the Bill's probable impact on the American labor community.

Labor's Problems

The retarded rate of growth from which America is suffering, and the long-term results of the strong cyclical fluctuations of the economy since the War, have hurt labor more than any other segment of the economy. Indeed, the overwhelming problem of the economy is the residual unemployment these developments have caused. Very distressing is the fact that the crisis is most acute among the groups newly entering the labor market; the problem could be called Creeping Unemployment.

The President thinks greater power in negotiating tariffs, and the increased trade he anticipates, will help cure this most dangerous of all social diseases. It is hard to see how.

As a matter of fact, the classical argument in favor of Free Trade is that it helps conserve man-power resources. It is supposed to operate so that the country best suited to producing a given item spends its time producing it, not uselessly turning out items to which other countries are better suited. What is called an efficient allocation of resources results; waste of labor or whatever other resource you want to conserve will be minimized.

No Labor Shortage

The President knows that America is far from worrying about wasting labor; but his reliance on the Trade Bill to have the opposite effert, that of expanding job opportunities, is astonishing. Like his hope that reducing tariffs will improve our reserves of international credit, it pre-supposes only an increase in exports as the major result of the Bill. Not only is this far from the Free Trade spirit (which seeks to increase the total volume of trade, imports and exports); it is surprisingly naive, in the face of the Common Market's manifest protection-mindedness. Despite the speeches of European statesmen, there is little evidence of genuine Free Trad sentiment there either.

These theoretic limitations of the Bill aside, there is still much to object to in Kennedy's attempt to conjure with the ghost of Bright. The Free Trade philosophy is not an American growth, for the simple reason that America is not a trading country. Last year, America's trade amounted to only three per cent of her GNP; England's exceeded fifteen per cent of hers. (This helps explain why the unprincipled British will trade with Rel China; America can afford her high-minded refusal to do so.) Even if an expansion of exports were the only effect of the Bill, it probably wouldn't make much of a dent in America's economy, much less in the serious labor problem.

"Adjustment Assistance"

The Bill offers a mechanism for taking care of other immediate effects on labor its passage could have. Realizing that an increase in the volume of trade may cause "temporary displacements" (as they're called), Kennedy has provided, in 31 pages, what he calls "adjustment assistance," which would be given to workers who lose their jobs as a result of foreign competition. However, the method he outlines for determining if the job loss is in fact an instance of displacement by imports is incredibly complex and tenuous. Some economists have stated that it must be entirely reworked, if it is to be of any use.

Labor leaders are less than enthusiastic about this provision, too. Why, they wonder, should men put out of work by competition from imports receive special attention? Implicit in this objection is a strong dissent from the President's reliance on trade to solve the problem of Creeping Unemployment. Reuther's statement last week-end, that he would seek a national 35-hour week unless something serious was done about the problem, reflects this dissatisfaction.

But perhaps it is silly even to bother examining the Bill in rational economic terms. The President's claims for it are probably nothing more than rhetoric. He may have what, in another context, he called "psychological and political motives" for trying to fire up American public opinion on the Trade Bill; the diplomatic advantages the Bill would give the President are probably very important. But disguising them in the fiction that the Bill will do anything about unemployment is at least ill-considered. And it seems a shame that it is people without jobs who must be the victims of this fiction.