Sebastian Awatramani

The Politicians and the Economists

The 2016 Presidential nominations process is distinct in modern American history. The United States is a country which, by and large, has embraced free trade both as a practical matter and, increasingly since World War II with the establishment of the IMF, World Bank, as well as the Marshall Plan, as an ideological one. What makes the 2016 nominations process distinct is that for the first time in many years come cries from both the Republican and Democratic coalitions—constituents and candidates—against free trade, and especially international free trade as instituted by trade agreements like the North American Free Trade Agreement.

The primary carriers of this conversation are Donald Trump running as a Republican, and Senator Bernard Sanders running as a Democrat. But though both have made strong remarks on trade, there are subtle differences between them, in both manner, and with regard to specific policy prescriptions.

With regard to prescription, the differences are perhaps most obvious. Sanders’ solutions in general have been much more vague than specific, stating that if he were elected he would “rewrite” trade agreements such as NAFTA, CAFTA (Central America Free Trade Agreement), as well as revise permanent normalized trade relations with China,[1] and that he would reject the proposed Trans Pacific Partnership. Trump’s solutions, meanwhile, have been much more specific. He argued during the 2016 GOP debate in Miami, for example, for the institution of tariffs on foreign goods, at one point specifying that they could be as high as 45% (though he said in the same statement that they might not be that high) [2]. Similarly to Sanders, he argued that trade pacts are “no good for us and no good for our workers,”[3] and that the TPP is a “horrible deal.” [4]

Where Trump and Sanders find further similarity is in their criticisms of the effect of free trade. For both, international free trade is seen as destroying American jobs, forcing United States Workers to compete with low wage earners in third world nations, resulting in a “race to the bottom.” Both perspectives are at odds with those of Treasury Secretary Jacob Lew and former Treasury Secretary Lawrence Summers.

Contrasting the perspectives of the politicians against the economists, we find that there are salient, fundamental differences on their respective views not only on policy prescription, but in the very nature of the “economy” itself. Sanders and Trump’s conception of “free trade” appears to refer quite literally to the exchange of goods and services (including e.g. manufacturing labor), and the economy is merely the aggregate of these exchanges. In contrast, the economists see the economy not merely as exchange, but as a global system of rules and regulations—a framework—upon which the politician’s version of trade is built. This fundamental focal difference then leads to differing interpretations of ideal policy.

If it is the case, for example, that the economy is merely the aggregate of exchanges, as described above, then it seems less than audacious to disrupt the machinery in order to strengthen the position of the disenfranchised workers in America as Sanders and Trump want to do [5]. If, however, the economy is a globally interconnected framework, such that disruptions reverberate and can have wide ranging deleterious consequences, then much more caution is prudent. Lew argues, for example, that rather than economic isolation, the US should be continuing and solidifying its position as the world’s financial leader by strengthening cooperative international organizations such as the International Monetary fund. Doing so, he claims, will ultimately benefit all people, regardless of class.

What is remarkable about Lew’s article in Foreign Affairs however is the miniscule space dedicated to solving the real problems caused by the free trade he advocates—the exact problems which have supported Sander’s and Trump’s disruptive campaigns. Like many advocates of free trade, Lew is quick to ascribe to capitalism the benefits, noting increased life expectancy, educational access, per capita GDP, etc., but in only a sentence is the plight of the dislocated worker mentioned, and even then only justified because tending to that problem would contribute to the stability of capitalism. [6]

To Summer’s credit, he focuses much of his space in arguing for the benefits to be reaped from deals like the Trans Pacific Partnership for the middle class, arguing pragmatically that “trade integration in Asia is happening, with or without the US. Its merit will depend on US negotiating priorities.” [7] But missing from both his and Lew’s work is a necessary discussion on the workers displaced by trade.

And this fundamentally illustrates that for these two camps—the politicians and the economists—it is not merely a different world view but a fundamental difference in the primary entity of analysis. For the economists, it is the economy. For Trump [8] and Sanders, it is the people.


[2] 2016 GOP primary debate in Miami , Mar 10, 2016

[3] 2016 CBS Republican primary debate in South Carolina , Feb 13, 2016

[4] Fox Business/WSJ First Tier debate , Nov 10, 2015

[5] It is worth noting that while Sander’s prescriptions are vague and therefore difficult to dissect, Trump’s are unambiguously nonsensical. 45% tariffs, for example, would merely lead to trade wars and higher prices.

[6] Lew, Jacob J. “America and the Global Economy.” Foreign Affairs. 11 April 2016.

[7] Summers, Larry. “A trade deal must work for America’s middle class.” The Washington Post. 8 March, 2015

[8] For Trump it is Trump, but that is a different topic for a different paper.