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Why we should be wary of Edwards

INTERNATIONAL economies are so intertwined these days that people far way from an election or campaign event will watch the developments as if the action were in their own backyard. Indonesia is only halfway through the opportunity and ordeal of its first presidential election by popular vote (a runoff between the top two vote-getters will occur in September), but much of the world is buzzing over whether the predicted winner - a former general - will prove a good thing for struggling Indonesia.

The Philippines has just re-elected (by a hair) incumbent President Gloria Arroyo. Will this fine, but seemingly ephemeral lady finally prove equal to the daunting task of reducing the country's endemic corruption and reigniting its economy?

Malaysia just offered the world a smooth-as-silk power handover from one famously entrenched prime minister to another (the incumbent's chosen successor), with so far reassuring results. Singapore expects the world to feel at least as confident when a new prime minister (son of founding Prime Minister Lee Kuan Yew) takes the helm sometime this year. Giant India has a new government and a new prime minister, who is repeatedly described, reassuringly, as an economic technocrat. Proper political governance is crucial to economic success, despite the often ritualistic obeisance to the alleged overall magic of the free market. Markets are almost never entirely free, nor should they necessarily be so. Economic problems sometimes require astute intervention by government or central banks; superior governance often requires overriding well-established political constituencies only out to protect their own narrow interests.

That's why many outside observers all over the informed world hope that Japanese Prime Minister Junichiro Koizumi will survive this weekend's Upper House elections, so that at some point the blistering sore of Japanese protectionism can someday be addressed by a strong government with an adequate popular mandate. The last thing Japan needs is yet another shackled prime minister revolving through the circular door. And, looking at America, worries about an upsurge in protectionism also explain the widespread hope that Senator John Kerry's selection of North Carolina Senator John Edwards is no portent of a turn-back-the-clock Democratic platform that would propose to undo the economic globalisation policies of former two-term Democratic President Bill Clinton. The Kerry and Edwards records are sensible on the issue of global trade and similar enough to raise the hope that campaign rhetoric this fall will not be translated into protectionist policy in a putative Kerry-Edwards administration.

But the Democrats need to raise so much money to counter the incumbent Bush administration cash-machine that somewhere along the campaign trail promises will have to be made that may have to be kept. Edwards is already on record as having opposed the North America Free Trade Agreement, a sterling example of positive globalisation at work.

Watch Edwards carefully. With his populist flair, the millionaire one-term senator and former plaintiff trial lawyer will easily be able to exploit the anti-globalisation, outsourcing anger that simmers just beneath the surface of American life. The Bush administration will have no effective counter to Edwards because it's in the back pocket of the US corporate world, for one thing, and, for another, the Edwards argument is primarily demagogic hash.

The ethically correct and pragmatically effective answer to job loss via outsourcing is the retraining of workers at capable existing institutions, such as America's community colleges. America can put its head in the sand if it wants to; but the smarter course is to get with the globalisation programme and make American workers smarter and better than ever. Fortunately or otherwise, the main campaign issue this time around is likely to be lost troops in Iraq, not lost jobs in America. Still, the selection of Edwards is a development that every foreign nation that depends on relatively open trade relations with the United States needs to watch - very warily indeed.