Rubin, Summers Push Free Trade

Two Harvard heavyweights and former treasury secretaries told Congress’s Joint Economic Committee yesterday that the new Democratic majority must take a stand in favor of free trade.

Former University President Lawrence H. Summers and current Harvard Corporation Fellow Robert E. Rubin ’60, both Democrats who served in President Clinton’s cabinet, spoke to the committee at its first meeting under the new Congress. They delved into a range of economic issues, including income inequality and middle class discontent.

Though both are members of the same party as the committee’s majority, their testimony underscored a divide on trade policy among Congressional Democrats.

Acknowledging that globalization has had negative effects on segments of the American workforce, Summers and Rubin backed free trade to increase economic prosperity—as did the other two panelists testifying, professors at Ohio and Princeton Universities.

“There is an understandable temptation to erect trade barriers,” Rubin told the committee. “However, I believe that that would be deeply harmful.”

Summers echoed Rubin’s message, saying that it was vital to “go with the grain rather than against the grain of the market system that has produced all this potential.”

Both said it was essential to address inequality to combat an increasing shift towards protectionism.

However, some of the committee members such as Sen. James Webb (D-Va.), who once wrote that globalization and illegal immigration are leading to “a different life and a troubling future” for middle-class Americans, were less enthusiastic about free trade’s effect on the United States.

Robert Z. Lawrence, the Williams Professor of International Trade and Investment at the Kennedy School of Government, said in an interview that Summers and Rubin were “not denying that there are serious issues in the U.S. labor market with respect to inequality but that trade is the wrong instrument to deal with it.”

“We need other measures, we need other policies, but [curbing free trade] is not the right solution,” he said, characterizing the secretaries’ views.

In Washington, Rubin shot back at critics of free trade.

“Unless the American people believe that trade liberalization and market-based economics more generally are going to benefit them, support for those policies which I think are central to a strong economy will continue to diminish,” Rubin said.

Lawrence cast the hearing as one that amplified the Democrats’ free-trade wing. “Clearly, the purpose here, I think, is to try to mobilize the Democrats to sustain some support for free trade.”

But despite their internal differences, the Democrats still found cause for enthusiasm in the committee’s first meeting under their rule.

“I think I heard someone say yesterday that this is not going to be your daddy’s Joint Economic Committee anymore,” said Sen. Amy Klobuchar (D-Minn.). “We’re going to really focus on these middle class issues and what matters.”

—Staff writer Clifford M. Marks can be reached at cmarks@fas.harvard.edu.