What with all the horses**t about "currency wars" floating around over the past few months, the occasional reader might be tricked into thinking that protectionist sentiments are at a new high. After all, with a weak global economy, one would expect enthusiasm about trade to be about as vibrant as the Doha round -- i.e., deader than a doornail. As someone with a betting interest in the United States enacting an ambitious foreign economic policy agenda, you'd think I'd be pretty depressed right about now.
Ha -- wrong!! In actuality, public sentiment on trade is pretty robust. And as Bruce Stokes notes, public sentiment for a transatlantic trade deal is pretty positive:
[C]ontrary to the widespread assumption that protectionist sentiments are rising in the wake of the Great Recession, 58 percent of Americans say they support increased trade with the EU. The same feeling exists across the Atlantic. Three-quarters of the Italians, nearly two-thirds of the British (65 percent) and more than half of the French (58 percent) and Germans (57 percent) believe in deepening trade and investment ties between the European Union and the United States; 63 percent of Americans agree, according to a 2007 German Marshall Fund survey.
There is also strong support for one of the thorniest challenges that lie ahead: harmonization or mutual recognition of national regulations on goods and services, everything from food standards to insurance. Overwhelmingly Italians (87 percent), British (84 percent), French (82 percent), Americans (76 percent) and Germans (71 percent) support such efforts, according to the Marshall Fund survey.
That's just trade between two developed economies, however. Surely, in a slack economy, Americans are more wary of trade in general, right?
Wrong again!! Gallup has the surprising polling results here:
Americans' views on foreign trade have become much more positive this year, departing from their more skeptical position of the last several years. Americans are now about as positive toward foreign trade as they were during the better economic times of the 1990s and early 2000s.
That means the Obama administration is likely operating in an environment more supportive of U.S. trade deals with other countries than has been the case in the recent past. The Obama administration is currently exploring an ambitious free-trade deal between the United States and the European Union, and continues to work toward a trade agreement with Australia and other Pacific nations.
Here's the key graph:
Now, first of all, astute readers might argue that this disproves my oft-repeated claim that the American people are stone cold mercantilists. To which I say, look at the question that's being asked -- exports good, imports bad. The mercantilism is baked into the polling question!! Essentially, what this poll reveals is enthusiasm for exports, not trade more generally.
That said, a closer look at the poll also suggests something even more promising. It would appear that public enthusiasm about trade exports is a leading indicator for rational expectations of U.S. economic growth. The only other positive jump like this came just as the 1990s economic boom really kicked into gear. Even more intriguingly, Americans got much more pessimistic about trade prior to the 2008 finanmcial crisis. And, indeed, even Gallup points out that U.S. economic confidence is at a post-crisis high right now, sequester or no sequester.
We're now in the realm of pure speculation, but another source of American optimism on trade comes from some of the underlying positive trends I talked about a year ago. U.S. consumers are almost done with their necessary deleveraging; the U.S. manufacturing sector continues its small boomlet; and projections about U.S. energy production have become even more optimistic.
These are all intrinsically good trends, but the spillover effect on American attitudes towards trade is particularly promising. The spike in public enthusiasm from last yeear is politically significant. At a minimum, it suggests that president Obama won't face gale-force headwinds in trying to negotitae trade deals. Which means I could win my bet with Shadow Government's Phil Levy. Which is the only thing that matters.