Sound policy can't be built on principle of appeasing unions

June 9, 2011 

Because government is inherently dangerous and often mischievous, the Constitution's framers provided, and congressional rules have multiplied, mechanisms for blocking government action. These mechanisms can, however, also be used to force action. One is being so used in a dispute that has two remarkable facets.

President Barack Obama is sacrificing economic growth and job creation in order to placate organized labor. And as the crisis of the welfare state deepens, he is trying to enlarge the entitlement system and exacerbate the entitlement mentality.

Forty-four Republican senators, three more than necessary to stop Senate action, have vowed to block confirmation of John Bryson, the president's nominee to be commerce secretary, until the president submits for congressional approval the already negotiated free-trade agreements with South Korea, Panama and Colombia. The 44 are responding to this:

On May 4, the administration announced that, at last, it was ready to proceed with congressional ratification of the agreements. On May 16, however, it announced it would not send them until Congress expands an entitlement program favored by unions.

Since 1974, Trade Adjustment Assistance has provided 104, and then 156 weeks of myriad financial aid, partly concurrent with the 99 weeks of unemployment compensation, to people, including farmers, government workers, and firms, even whole communities, who can more or less plausibly claim to have lost their jobs or been otherwise injured because of foreign competition. Even if the injury is just the loss of unfair advantages conferred, at the expense of other Americans, by government protectionism. And even if the injury results not from imports but from outsourcing jobs. TAA benefited 50,000 people at a cost of $500 million in 2002. In 2010, it cost $975 million for 234,000 people. Its purpose is to purchase support for free-trade policies that allow Americans to benefit from foreign goods and services and from domestic goods and services with lower prices because of competition from imports.

The basic TAA still exists. But the administration's stimulus included TAA in its policy of increasing spending almost everywhere in the hope that stimulus-level spending could be made permanent. Which is what Democrats who do organized labor's bidding are trying to do: Forty-one Democratic senators are supporting Obama's demand that the stimulus-level TAA spending, which expired in February, be resumed before the trade agreements will be submitted.

A government borrowing $58,000 a second cannot afford Obama's policy of Stimulus Forever, and there is this problem with TAA at any level: It is unjust to treat some workers as more entitled than others to protection from the vicissitudes of economic dynamism.

Consider a hypothetical Ralph, who operated Ralph's Diner until Applebee's and Olive Garden opened competitors in the neighborhood. With economies of scale and national advertising budgets, those two franchises could offer more choices at better prices, so Ralph's Diner went out of business. Should he and his employees be entitled to extra taxpayer subventions because they are casualties of competition?

Why should someone be entitled to such welfare just because he or she is affected negatively by competition that comes from abroad rather than down the street? Because national trade policy permits foreign competition? But national economic policy permits -- indeed encourages, even enforces -- domestic competition.

In 2001, when approximately 80,000 people worked in 7,500 music stores, the iPod was invented. Largely because of that and other technological changes, today only about 20,000 people work in 2,500 music stores. Should those 60,000 people be entitled to extra welfare because they are "victims" of technology? Does it matter if the 60,000 have found work in new jobs -- perhaps making or selling electronic devices?

In 2008, Americans bought 1.4 billion books made of paper and 200 million e-books. Soon they will buy more e-books than paper books, and half the nation's bookstores will be gone. Should the stores' former employees be entitled to special assistance beyond unemployment compensation?

Reactionary liberalism holds that existing jobs must be protected with policies that reduce the economic dynamism that would mean a net increase in American jobs. So the dreary probability is that even if the TAA entitlement were re-enriched to stimulus levels, Democrats would again move the goal posts, concocting new objections to the trade agreements.

Most Democrats oppose such agreements but lack the courage to express their controlling conviction, which is: Organized labor, which represents just 7.1 percent of the private-sector work force, must be appeased, even if doing so injures other American workers, or Americans who would be workers if policies such as TAA did not impede economic dynamism.

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