One of the key contexts for the rise of outsider politics in recent years has been a loss of trust in political establishments of various stripes. There are many reasons for this loss of trust, but one has been a record of failed promises—on economics, foreign affairs, and more.
The neoliberal order has, broadly, been premised on making it easier for capital, labor, and goods to flow across national borders. While these efforts have brought some benefits (such as a radical reduction in global poverty), they have also caused disruption, and some of the promises used to promote this policy regime have not exactly been delivered on. Moreover, the disruption caused by the neoliberal policy paradigm might, if unchecked, undermine the broader architecture (such as stable democratic regimes) upon which neoliberalism itself depends.
Many Ross Perot obituaries portray him as a harbinger of the Trump presidency—a populist billionaire challenging the Washington consensus. Perot’s legacy is much more complicated than this, but his 1993 debate with Al Gore about the North American Free Trade Agreement (NAFTA) offers a window into one set of promises about globalization.
During the 1992 presidential campaign and the early part of the Clinton administration, NAFTA was a hot-button issue. Signed by George H.W. Bush, NAFTA was ratified by Congress in 1993. This treaty split both political parties, although Republicans favored it more than Democrats in Congress.
As part of the lead-up to the ratification vote, CNN hosted a debate between the sitting vice president and the man whose third-party run in 1992 shook up American politics. In this debate, Gore argued that NAFTA would likely lead to a large trade surplus with Mexico:
In 1987, before Mexico started lowering its taxes at the border, its tariffs, we had a $5.7 billion trade deficit with Mexico. After five years, the goods we make and sell into Mexico, the volume has been growing twice as fast as the goods they make and sell in the United States. So, last year we had a $5.4 billion trade surplus. Now, if that trend continued for another two years, and NAFTA will, by removing those barriers, greatly accelerate it, we will have a larger trade surplus with Mexico than with any country in the entire world.
According to the vice president, NAFTA would “accelerate” the trend of a growing trade surplus with Mexico. Gore’s history was correct, as government figures show: the U.S. did indeed have about a $5.4 billion trade surplus in goods with Mexico in 1992. However, his prediction about the future proved to be wildly off-base.
By 1996, the United States had a $17 billion trade deficit in goods with Mexico. By 2001, the trade deficit in goods was $30 billion. In 2018, it stood at $80 billion. (Factoring in services will decrease the trade deficit a bit, but there remains a substantial trade deficit with Mexico.)
In 1994, Mexico was rocked by a currency crisis, which likely affected both trade and migration patterns. And many economists and political actors argue that trade deficits shouldn’t be that much of a concern. Nevertheless, the gap between Gore’s projection and the trajectory of the U.S.-Mexico trading relationship is striking.
These failed projections about the effects of trading agreements are not confined to Gore and NAFTA. During the 2000 presidential campaign, George W. Bush predicted that allowing the People’s Republic of China to enter the World Trade Organization would “narrow our trade deficit with China, which in 1998 reached nearly $60 billion.”
He also argued that expanding trade with China would “export American values” to that regime. By the time President Bush won reelection in 2004, the U.S.-China trade deficit in goods had exploded to $160 billion. In 2018, it broke the $400 billion threshold.
More broadly, the American economy has entered a period of diminished growth since 2000, the year China received permanent normal trade relations. On both a per-capita and a national level, the gross domestic product has grown at about half the annual rate in the post-2000 period as it did in the second half of the 20th century.
This slowdown cannot be attributed only to the Great Recession. The 2001-2007 expansion was also weak by the standards of the 20th century.
As Nicholas Eberstadt chronicled in the February 2017 issue of Commentary, many indicators suggest increased struggles and disappointments among Americans in the 21st century. These frustrations are crucial for understanding the rise of populist politicians in the United States. Any political regime depends in part upon trust, and, when those in power do not live up to their commitments to the people, an appetite for change grows.
Renewing a functional political establishment, one that has public credit, in part involves confronting the facts of the past few decades. Confronting those facts is not the same thing as offering policies for the present.
After all, observing that George W. Bush made a faulty prediction about the effects of trade with China does not necessarily tell you how to reform trade with China in 2019. Still, observing the record of history might provide a context for contemporary debates about policy.
In a time of increased unrest, some might be tempted to burn everything down in a conflagration of bitter self-righteousness. Avoiding such bonfires involves adopting a politics of responsibility, where real disappointments are taken into account in order to develop a more responsive policy regime.