Jagdish Bhagwati really doesn’t like John Kerry

Over the past month, international economist Jagdish Bhagwati has started taking some serious pot shots at John Kerry’s rhetoric on trade and outsourcing — despite Bhagwati’s self-proclaimed status as a Democrat. This past Monday he penned a Wall Street Journal op-ed (subscription required) that contained the following:

How does one forgive him his pronouncements on outsourcing, and his strange silences on the Doha Round of multilateral trade negotiations? Indeed, Sen. Kerry, whose views and voting record were almost impeccable on trade, has allowed himself to be forced into such muddled and maddening positions on trade policy that, if one were an honest intellectual as against a party hack, one could only describe them as the voodoo economics of our time. There seem to be three arguments by Sen. Kerry’s advisers that have prompted this sorry situation for the Democrats: First, that the Bush trade policy is no better; second, that electoral strategy requires that Sen. Kerry act like a protectionist, while indicating subtly (to those that matter) a likelihood of freer trade in the White House; and third, at odds with the previous argument, that the U.S. does indeed have to turn trade policy around toward some sort of protectionism (and restraints on direct investment abroad) if it is going to assist workers and reward the unions. Each argument is flawed…. In the end, Sen. Kerry cannot totally jilt his constituencies. He will have to claw his way to freer trade, making him a greater hero in a war more bloody than Vietnam. The unions, in particular, are going to insist on their reward. This is forgotten by the many pro-trade policy advisers and op-ed columnists who argue privately that we should not worry — because Sen. Kerry is a free trader who has merely mounted the protectionist Trojan Horse to get into the White House. The irony of this last position is that it is, in fact, too simplistic. Besides, it suggests that when President Bush does the same thing, he’s lying, but that when Sen. Kerry does it, it’s strategic behavior! Is it not better, instead, for us to tell Sen. Kerry that his trade policy positions are the pits — before he digs himself deeper into a pit from which there is no dignified exit?

Juan Non-Volokh points out that in this op-ed, “Bhagwati is harshly critical of Kerry, but he does not celebrate President Bush’s trade credentials.” True enough. However, last month, Bhagwati did say much nicer things about Bush (and much harsher things about Kerry) as part of an interview he gave to Der Spiegel:

Bhagwati: The Democratic party is moving towards a kind of anti-globalization attitude, an anti-free trade attitude in particular. I think this is dangerous. Since I finished my book, there has been this debate about outsourcing. Kerry and Edwards are clearly trying to use scare tactics here. At the convention, they got lots of applause whenever they spoke about American jobs being shipped overseas. SPIEGEL ONLINE: If those arguments resonate at the convention, they might convince voters, too. Bhagwati: But Kerry and Edwards don’t know what they’re talking about. If we look at the offshoring of online services like call centers or basic accounting, we’re talking about a maximum loss of 100.000 jobs a year to countries like India. That is nothing for an economy this size. The US is a major hyperpower, and yet every time it gets into competition with Mexico, China and India, we work ourselves into a panic. It’s like a rottweiler getting scared because a French poodle is coming down the road. SPIEGEL ONLINE: Kerry and Edwards are not just speaking about call centers. Especially in industrial swing states like Ohio, they promise to stop the loss of manufacturing jobs to lower-wage countries like China or Malaysia. Bhagwati: Here we’re not talking about outsourcing but good old foreign investment. There is a huge amount of academic work that shows that this is beneficial to the US. On average, low-value jobs are going out and high-value investment is coming in. In North Carolina, where Mr. Edwards comes from, we have the I95. Along the way, there used be textile firms that have gone out since they can’t produce efficiently there. Now the workers are employed by Siemens and several other German companies, with far better salaries. That section of I95, in fact, is now known as the autobahn. SPIEGEL ONLINE: Rhetoric is one thing – but do you think Kerry will actually implement detrimental economic policies if he’s elected? For instance, he proposes to give tax credits to companies that create jobs in the US instead of abroad. That can’t do any harm, can it? Bhagwati: It boils down to subsidizing companies when they stay and penalizing them when they go out. If we start doing that, other countries can follow. Everybody will be worse off. Our firms lose comparative advantage if they’re stopped from saving costs. A dead firm can only employ dead souls. So we may save 10 jobs by not outsourcing but we will lose the entire 100. Keep in mind, too, that investment from multinationals helps countries like India and Mexico fight poverty. Some sections of Africa sorely need foreign investment. If we Democrats crack down on this, it’s not compatible with our notion that Bush and his friends are the nasty guys. SPIEGEL ONLINE: Bush himself is hardly a model free-trader. He imposed highly protectionist tariffs on steel imports right at the beginning of his term. Bhagwati: He tried to win over voters in crucial industrial states. But he later punched holes into the safeguards, exempting all kinds of products and countries. Once the WTO declared them illegal, he quickly lifted the tariffs. Bush really believes in the capacity of American firms to compete successfully. During the campaign, he keeps stressing that free trade is good for us. He even got a member of his cabinet to say there’s nothing wrong with outsourcing. I’m afraid Bush looks very presidential on trade, unlike my own party. (emphasis added)

Question to Kerry suppporters who also support free trade — if Kerry were to actually get elected, would he prove to be a prisoner of his own protectionist rhetoric, or be able to tack back towards a more trade-friendly position because he burnished his protectionist bona-fides with his campaign rhetoric? Full disclosure — Bhagwati is not my biggest fan. UPDATE: It’s all Bhagwati, all the time here at danieldrezner.com!! Click here for the transcript of a “debate” between Lou Dobbs and Jagdish Bhagwati on PAula Zahn Now earlier this week.