Nationalism Proves Crazy Responde to Trade Woes

Article excerpt

LOS ANGELES _ Call the trading doctor. Too much buy-American, invest-American and hire-American fare is leading to a bad case of economic heartburn. Maybe it's all those hot dogs and apple pies.

Don't scoff _ oversold nationalism can be an unhealthy thing, and unless we're careful it might make our current problems seem positively nickel and dime-ish.

Ross Perot's opposition to the North American Free Trade Agreement has brought on a lot of this patriotic hoo-hah, as he once again offers simple solutions to complicated problems. How dare those Mexicans take American jobs from American workers just because it's cheaper to make widgets in that country. Who do they think they are?

On its own, the NAFTA debate is really the least of it. This may be a flawed deal, but it's a fairly innocuous one for the U.S. economy. What makes NAFTA's possible defeat so worrisome, however, is that it could lead to other simple trade solutions _ too simple solutions.

You can hear the protectionist chants now _ tariffs, sanctions, trade barriers of one sort or another. It's cropped up before (consider the Japan-bashing of a few years ago), but now the numbers look especially compelling: an unexpected surge in second quarter imports _ and steady drop in exports _ amounts to the widest trade deficit in five and a half years. The shortfall held down overall growth for the March-June period, and there's no relief in sight.

It's the tabloid-style argument: Americans play by the rules and foreigners cheat.

"The world is slipping into a web of protectionism and interventionism," warned Phillip Oppenheim, a member of the British parliament and trade expert who adds that despite all their grousing, Americans themselves place burdensome restrictions on everything from oranges to automobiles.

Giles Keating, an economist with Credit Suisse First Boston Ltd., figures the protectionist slants will not only abort economic growth, but perhaps create a depression.

A scary prospect, but hardly without precedent. We need only go back to 1929.

Times, of course, were terrible and Herbert Hoover had been elected president on a platform of bringing back America from its economic nightmare. He proposed what came naturally to Republicans in those days _ higher agricultural tariffs.

Economists at the time said it was a dumb idea, but it got much dumber. Once Congress began considering the Hawley-Smoot Tariff Act, it tacked on amendments _ what's now dubbed "Christmas-treeing" _ that boosted tariffs for many other industries, besides farming. …