Paul Krugman wrote on Saturday about the Trans Pacific Partnership and the Decline and Fall of the Davos Democrats (it's a reference to an annual gathering of global financial and political elites in Davos, Switzerland that's come to serve as a stand-in for a certain brand of centrist, business-friendly internationalism).
It struck me as perhaps premature at the time, but then on Sunday Larry Summers — Treasury Secretary to one President and National Economic Council chief to another and truly the ultimate Davos Democrat — dropped an op-ed on TPP that says basically whatever happens with this deal the global trade agenda needs to head in a different direction. "Perhaps success can be achieved," he writes "if the TPP’s advocates can acknowledge that rather than being a model for future trade agreements, this debate should lead to careful reflection on the role of trade agreements in America’s international economic strategy."
But it's the next graf that's absolutely the killer (emphasis added):
First, the era of agreements that achieve freer trade in the classic sense is essentially over. The world’s remaining tariff and quota barriers are small and, where present, less reflections of the triumph of protectionist interests and more a result of deep cultural values such as the Japanese attachment to rice farming. What we call trade agreements are in fact agreements on the protection of investments and the achievement of regulatory harmonization and establishment of standards in areas such as intellectual property. There may well be substantial gains to be had from such agreements, but this needs to be considered on the merits area by area. A reflexive presumption in favor of free trade should not be used to justify further agreements. Concerns that trade agreements may be a means to circumvent traditional procedures for taking up issues ranging from immigration to financial regulation must be taken seriously.
This is precisely what opponents of the past ten years' worth of trade negotiations have been trying to say, and Summers' piece shows that the message is breaking through. Why is this so important? Well, it's because among a certain set of slightly-economics-literate people "free trade" is a crucially important totem. Being for it stands for being enlightened and serious. Being against it stands for being ignorant, crassly political, or worse.
Check out Tom Friedman's tongue-in-cheek but not actually satirical remarks to Tim Russert about why he favored the DR-CAFTA compact in 2006 to see how important this reflexive presumption is:
"We got this free market and, I admit it, I was speaking out in Minnesota — my hometown, in fact, and a guy stood up in the audience, said 'Mr. Friedman, is there any free trade agreement you'd oppose?' I said, 'No, absolutely not.' I said, 'You know what, sir? I wrote a column supporting the CAFTA, the Caribbean Free Trade initiative. I didn't even know what was in it. I just knew two words: free trade."
That was always a pretty silly approach, but everyone uses heuristics — shortcuts — in life to make sense of the world. What Summers is saying is that whatever happens with TPP, that heuristic is now dead. And that makes all the difference in the world.