Tuesday, June 01, 2004

Electoral College Reform and Trade Policy 

For those of you who aren't closely following trade policy news, here's something you should know: last week President Bush signed a free trade agreement (called CAFTA) with 5 Central American nations. The agreement isn't as developed nor as dramatic as NAFTA, but economists generally agree that if the US Congress ratifies the agreement, it will have a significant effect on the economies of these developed nations.

US ratification of the treaty, which will presumably be voted on sometime next year, may or may not happen. Some Senators have opposed CAFTA because they are worried about a lack of labor provisions in the text. Oxfam has argued that the treaty doesn't go far enough, leaving protection in place for a number of staple crops and making a rise in drug prices likely in the Central American signatory nations.

And of course there are the purely protectionist arguments from the usual suspects. It's far from clear how strong the effects of the treaty will be on the US. But for at least one industry, sugar, the expected effects are frightening enough to have a real political impact this fall. Politicians in three sugar states (Louisiana, North Carolina and South Carolina) have gone on record opposing CAFTA, and the National Journal's Hotline suggests that this is likely to be a major campaign issue in these electorates.

So what does this have to do with presidential politics? Presumably, powerful, concentrated industries in potential "swing" states are more likely to have their voices heard by the White House than widely-dispersed industries or industries concentrated in reliably partisan states. Since under the current rules the President has the power to set the trade policy agenda, a re-election minded president is likely to pay attention to this electoral calculus. That being said, Bush's signing of CAFTA may indicate that he's writing Louisiana off (the Carolinas are expected to go for Bush overwhelmingly), which is kind of surprising.

Note, however, that if we got rid of the Electoral College, this phenomenon would disappear. Since presidential candidates would be trying to maximize nationwide votes instead of trying to win majorities in the states, they would be much less likely to pay attention to these same "swing state" industries. Furthermore, to the extent that candidates believed economists' consensus view that liberalizing trade policy increases the economic well-being of the country as a whole, we'd expect post-electoral-college-reform presidents to be more free-trade-oriented than they are under the current rules.

Just something to think about for those of you who are still angry about the 2000 presidential election.

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