The apocalyptic election

Holding Fast: A case study in trade policy: Maine paper mills reveal complexities of free trade

In an election year where almost nothing has gone as expected, one of the biggest surprises may be the critique of free trade that has arisen from the populist wings of both parties. Both Donald Trump and Bernie Sanders railed against the detrimental effects of globalization in their respective primaries, and both performed far above the expectations of the party leaders who largely support the globalist agenda of free trade and open borders. Even Hillary Clinton, who in the not-too-distant past pined for a “hemispheric common market,” has hopped aboard the trade skeptic bandwagon.
While I regard these challenges to free trade orthodoxy as a largely positive development, the rhetoric surrounding the issue has unfortunately not risen above the generally depressing tenor of this election cycle. Where Trump could make good points about the uneven distribution of the costs and benefits of free trade, he instead blames Clinton for her part in every bad trade deal of the past two decades and the resulting demise of America’s once-prosperous manufacturing sector.
This gives the misleading impression that Clinton and her free trade deals are responsible for the struggles of every community that has suffered from a loss in manufacturing jobs. While trade is undeniably an important factor in explaining the decline of the American economy’s manufacturing sector, the reality is far more complicated.
A good case study in the mixed costs and benefits of free trade is the Maine pulp and paper industry. For the first half of the 20th century, Maine led the nation in paper production. Today, there are only six mills with operating paper machines, and those that still make paper are doing so at a fraction of their former capacity. At first glance, this looks like the perfect example of an industry destroyed by international competition enabled by bad trade deals. But a closer look reveals a more complex picture than this “Trumpian” narrative might suggest.
On the one hand, international competition has certainly taken its toll on Maine paper mills. Earlier this year, a mill partially owned by the New York Times in Madison announced that it would be shutting down. This closure was at least somewhat due to competition coming from a mill in Nova Scotia that produces a similar paper and receives subsidies from the Canadian government. Despite the imposition of a 20 percent tariff on the mill’s exports, the depreciation of the Canadian dollar has kept the imported product cheaper than what the Madison mill could produce domestically.
But to blame the industry’s recent struggles on free trade would be to ignore other economic strains that have put pressure on Maine’s mills. One major factor is the decrease in demand for paper products prompted by the increase in the availability of e-books and digital news sources. This trend is evidently not going to reverse itself in the future, so mills that fail to adapt in some way to the shrinking market for paper products will lose out to competition from mills both foreign and domestic.
An example of a Maine mill that has effectively planned for the future is Woodland Pulp in Baileyville, which is in the process of commissioning two new paper machines. These machines will produce products such as toilet paper and paper towels, which are not quite as vulnerable to changes in demand prompted by technological improvements. And for Woodland Pulp, international markets have been a key to its survival, as the Hong Kong firm that owns it is responsible for investing millions of dollars in capital improvements at the mill.
On its surface, the Maine pulp and paper industry appears to be the perfect example of a once-prosperous American industry brought to its knees by the increased international competition brought on by free trade. But there are many factors that complicate this narrative. Technological advances and energy costs have been more decisive factors in the most recent mill closures, and while competition in international markets has certainly pushed some mills to the brink, others have stayed afloat only because of foreign investment.
The complexity of the issue unfortunately means that both sides of the debate are prone to oversimplification. The lesson we should take from the example of the Maine paper industry is that neither protectionism nor unrestricted free trade will solve the problems faced by U.S. manufacturers. The populist anger directed against free trade has its source in legitimate grievances, but real solutions require a more careful attention to the economic realities facing each industry that has been adversely affected by trade. Perhaps it is too much to ask for such attention to policy details from the candidates in this year’s election, but hope springs eternal.

Holding Fast

This piece represents the opinion of the author:

September 23, 2016

The 2016 election season has a lot of people fearing that the end is nigh. People on both sides of the aisle share this feeling of impending doom, although there is intense disagreement over which candidate is actually going to usher in the end of days. On the left, the general conclusion is that if Trump is elected, his policies will be so disastrous that he will precipitate all sorts of catastrophic events. Slate even has a “Trump Apocalypse Watch” to update readers of the chances of a Trump victory in November, which they say would trigger “an apocalypse in which we all die” (presumably opposed to less-fatal versions of the apocalypse).

On the right, there is a similar sense that a Clinton presidency would be a complete disaster. An anonymously written article entitled “The Flight 93 Election” has set the conservative media abuzz by comparing this election to the situation facing the passengers on United Flight 93, who stormed the cockpit to wrest control of the plane from the hijackers and crashed it into a field in Pennsylvania. The author’s provocative thesis is that “…a Hillary Clinton presidency is Russian Roulette with a semi-auto. With Trump, at least you can spin the revolver and take your chances.” The choices are grim, but the consequences of not acting (voting Trump) are certainly catastrophic.

Now, I do not think that the state of the election is nearly as bleak as this, but I do agree that this election is apocalyptic, in a sense. But rather than thinking of apocalypse as a fiery end-times scenario, I am thinking more along the lines of the Greek word apocalypsis, which originally meant an “unveiling or revealing.” That is, I think this election is apocalyptic in the sense that we are seeing problems which have been around for a while but that have not shown themselves in such a dramatic way until this election.

The problem I am especially concerned with here is illuminated well by Clinton’s recent remarks at a New York fundraiser, in which she stated that about half of Trump’s supporters could be placed in what she called the “basket of deplorables.” This sort of sentiment is nothing new for Clinton. She has always held that her opponent is a dangerous demagogue who whips up racial resentment among his supporters. What is different here is that she classes as much as a fifth of the American population as “irredeemable” bigots—those who are too far gone to be even considered by the Clinton campaign.

Clinton’s point was to contrast these people with another basket that is deserving of our empathy and is comprised of those who feel let down by both parties and are only looking for someone to change things. The problem with this distinction is that people cannot be so easily sorted into opposing “baskets.” There are doubtless many Trump supporters who are in dire economic straits and deserving of our empathy, yet who Clinton would label “deplorable” for their support of Trump’s immigration policy. What Clinton is doing is projecting her idea of the “virtuous” working-class voter onto the real people who support Trump. She is imagining that the only Trump voters deserving of her empathy are those who basically agree with her, yet feel so disenfranchised that they are duped into voting for Trump.

Such sentiments come across as obnoxiously elitist coming from a fundraiser where the most expensive seats cost $250,000. This kind of out-of-touch statement at an expensive fundraiser has become almost expected in the past few election cycles (see Obama’s “bitter clingers” and Romney’s “47 percent”). What is different this time is that the people denigrated in Clinton’s remarks have found a voice in the unrefined and unapologetically brash rhetoric of Donald Trump. And rather than empathizing with their concerns, Clinton makes it clear that those who are suffering from feelings of alienation must first prove that they hold the correct views on immigration, race and contemporary gender ideology, or else they belong to their own class of people deserving to be labeled “deplorable.”

The real “apocalypse” of this election is the unveiling of the resentment of downtrodden Americans toward the global elites who claim that the solution to all of their problems lies in free trade, unrestricted immigration and the entrepreneurial spirit. Even Clinton was forced to acknowledge this opposition to liberal orthodoxy (cheers, Bernie), but it has apparently not changed her attitude towards the Americans who hold beliefs that she finds repugnant. As with Trump, there is a class of people that she cannot make room for in her vision of America. And in this apocalyptic election, that is bad news for all of us.

Ryan Ward is a member of the Class of 2017.

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