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San Diego Union-Tribune, 11/14/06

There is a reason that economists of almost all ideological stripes champion free trade: Protectionism doesn't work and the free market does. Obviously, the free market's “creative destruction� – its relentless weeding out of inefficient businesses and industries – causes economic and social dislocation.

Nevertheless, American politicians' general acceptance of the basic logic and wealth-creating power of free-market policies has helped create a nation of enormous affluence.

Perhaps more than any other state, California benefits from this approach.

Unfortunately, this vast prosperity is now at risk. When the Democrats take over Congress in January, prospects for new or extended trade pacts appear to be dead, and demands for rollbacks or cancellations of past deals seem likely.

It's no longer just lawmakers in struggling Rust Belt states who rail against globalization and outsourcing and depict free-market economics as a ruse for the rich to take from the poor and middle class.

Instead, many Democrats (and more than a few Republicans) see votes to be harvested by linking economic anxieties to an attack on the trade status quo.

Given that unemployment is low and the national standard of living at least as high as ever, a case can be made that these anxieties are overblown. But this unease is real, and – as Fed Chairman Ben Bernanke has said – defenders of free trade ignore it at their peril.

The sole good news here is the likelihood that the more Americans ponder the Democrats' remedies for all that supposedly ails the US economy – likely a mix of European “social democracy� policies that protect jobs in favored industries, increase worker protections in general and expand government health care – the more they are likely to reject them.

Why? Because the public is not stupid. And the more that the trade debate is in the news, the more it will be understood what “social democracy� and protectionism have yielded in much of Europe: economic stagnation and a steadily accelerating decline in the standard of living.

Americans are accustomed to stories about the glories of the European safety net.

Here is what they don't hear about, according to Heritage Foundation research:

• Average living standards in European Union countries are on a par with Arkansas and only slightly better than West Virginia and Mississippi, our poorest states.

• In August 2006, EU unemployment was 8% versus 4.7% in the United States. Not only that, about 43% of the EU's unemployed had been jobless for more than a year versus 13% of the US unemployed.

• Only 4 million new jobs have been created in all of Europe since the 1970s, compared with 57 million in the United States.

This is the case that defenders of free trade in both parties must make to the public over and over: Don't wreck the economy simply because it may be more volatile and anxiety-inducing than it used to be. Don't ignore the US economy's many great strengths.

But most of all, realize the harm that “fair trade� and hostility to free markets have done to other nations.

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