Americans Souring on Free Trade Amid Optimism About Economy

Bloomberg: Americans Souring on Free Trade Amid Optimism About Economy

More Americans are expressing doubts about the economic payoff from free trade even as optimism about the economy hits a five-year high.

By a margin of 68 percent to 31 percent, respondents in a new Bloomberg/Los Angeles Times poll said the economy is doing well — the highest percentage since 2001. At the same time, 41 percent agreed that free trade has hurt the economy, versus 28 percent who said it's helped.

“People see trade as good for companies and high-income earners, even for consumers, but generally not good for workers like them,'' said Ken Scheve, professor of political science at Yale University in New Haven, Connecticut, and co-author of “Globalization and the Perceptions of American Workers.'' He said anxiety about stagnant incomes and job outsourcing is driving down support for trade liberalization. …

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Public sentiment on trade has reversed from 10 years ago, when almost 4 in 10 Americans said it helped the economy and 3 in 10 said it hurt. Since then, the economy grew at an average rate of 3.2 percent a year and added 15 million jobs, yet weekly wages adjusted for inflation grew just 0.7 percent a year through 2005, according to Labor Department statistics.

As is often the case, the public seems behind the curve on processing economic trends. Ten years ago, we were at an economic high, followed in 2000 by a recession and then the (9/11) impact. Notice that the report chose the cutoff of 2005. In 2006, the projected growth rate was 3.2% in real income. For the past year, real wage growth has been back.

Souring on free trade does not bode well for the prospects of the world's poor.