CAMPAIGN '96: WHERE HE RINGS TRUE: FREE TRADE ISN'T ALWAYS FAIR

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ECONOMISTS AND CORPORATE EXECUTIVES ARE NOT USUALLY thought of as disciples of Dr. Victor Frankenstein. But they too have created a monster, and it has suddenly found a voice--not Boris Karloff's this time, but Pat Buchanan's. In his strident demands for trade protection can be heard the long-mute anger of workers who feel both injured and insulted by free traders in the academy, business and politics: injured by the loss of jobs and income to foreign competition; insulted because too many free traders have airily dismissed their pain as either illusory or inconsequential.

Which does not make Buchanan's arguments right. The wage stagnation and job insecurity he decries result much more from low growth in domestic R. and D. spending, productivity and investment than from trade. Moreover, his proposals to raise tariffs sharply and pull the U.S. out of international trade agreements would cause much more economic pain than they would ease. Liberal trade policies have created more--and better--jobs in export industries than they have wiped out in those businesses hurt by imports. Even the much despised movement of American factories to Mexico and other low-wage countries has been offset--in job creation, though not in hoopla-by the opening of foreign--owned plants in the U.S. It would take a string of Mexican maquiladoras to match the Honda plants in Ohio that employ 11,200 workers.

Buchanan and his admirers, however, focus on a dark underside of the picture that is often neglected. The number of jobs lost to foreign competition is hard to pin down; Buchanan's estimate of 300,000 wiped out as a result of the NAFTA treaty with Mexico and Canada seems plucked out of thin air. To the losers, though, it is a statistical abstraction to argue that the losses have been more than offset by job gains in export industries. Honda's success in Ohio does nothing to help Watsonville, California (pop. 33,798), where the unemployment rate has jumped to close to 20%. A number of vegetable-freezing plants there have shut down, and the owners of some have moved operations to Mexico.

Free trade has spurred some class resentment too-an effect foreseen by Karl Marx, who predicted in 1848 that it would intensify strains between bourgeoisie and proletariat and thus speed a revolution. In a TIME/CNN poll last week, 58% of those surveyed thought free-trade agreements were "mostly good" for U.S. corporations, but 51% thought the effects for workers were "mostly bad."

Not so, say most economists. C. Fred Bergsten, director of the Institute for International Economics, figures that export jobs pay about 15% to 20% more than nonexport jobs. He adds, "Whatever Buchanan saves for Roger Milliken [a major textile employer] in South Carolina, he loses for Boeing," which is heavily dependent on aircraft exports. "And Boeing jobs pay so much more than textile jobs that this would be a net loss for the U.S."

That, however, is a tough argument to sell to textile workers. The overall economic gains also come at the price of a modest but significant increase in wage inequality, since most of the competitive pressure is on pay for unskilled workers. George Borjas, an economist at Harvard's John F. Kennedy School of Government, figures foreign competition has accounted for one-fourth of the widening gap between the wages of high school dropouts and those paid to college graduates over the past 20 years.