Trade policy is at a historical crossroads — a jump ball, as it were. As we enjoy the second half of the NCAA Tournament, let’s look at four similarities between trade and college basketball.
1. It’s about getting the metrics right.
Getting invited to the Big Dance is the highest measurement of basketball greatness, recognizing the success of a school’s basketball program and also paying dividends for a school’s overall image.
Until recently, the NCAA selection committee relied on a 37-year-old ratings performance index (RPI) to take vastly different teams with different schedules and attempt to rank them on the same scale. Although tweaked over time, the RPI faced frequent criticism for being overly simplistic and ignoring more sophisticated analyses. This year, the NCAA is experimenting with a new way to rank teams using the NCAA Evaluation Tool (NET) that takes into account game results, strength of schedule, game location, scoring margin, net offensive and defensive efficiency, and the quality of wins and losses.
Trade policy faces a similar conundrum. Focusing solely on the trade deficit overemphasizes exports while ignoring key fundamentals such as the reasons why a deficit exists. More sophisticated tools now use value-added analytical methods to recalculate deficits and paint a clearer picture of trade flows, showing how imports benefit an economy as well.
For example, an imported garment provides affordable fashion and good U.S. jobs since approximately 70 percent of the retail value of that article is created in the United States by American designers, retailers and logistics providers.
Getting these trade statistics right is vital to tell an accurate story to a skeptical public about the real benefits that trade provides them.
2. It’s not just for the big players.
The NCAA Tournament is dominated by a few big teams and states, but lots of schools play.
Teams from California, North Carolina and Kentucky have taken more than half the NCAA Championships thus far. In the women’s championships, two teams own 19 of the 36 titles. But the tournaments always feature newcomers and upstarts, who often make the most exciting headlines with upsets of traditional schools.
George Mason University’s improbable path to the men’s Final Four in 2006 is just one example. Even the big traditional schools take turns sitting on the bench. The most winningest school in the men’s tournament’s history — UCLA — hasn’t won since 1995, the year after NAFTA took effect. And last year’s champion Villanova University, is already eliminated.
Trade is clearly dominated by big players. One hundred U.S. exporters account for about 40 percent of all U.S. exports. China, Mexico, and Canada account for about 47 percent of all U.S. imports. But smaller participants are critical, too. In the United States, small businesses make up 97 percent of all importers and exporters, spreading the employment gains widely across the country.
Two of our fastest-growing export markets from last year — Vietnam and Nicaragua — barely registered in the trade statistics when UCLA was last winning NCAA championships.
3. It’s about the pace of play.
The ball is continually in motion — either being dribbled or passed — as individual teammates work together to get it in the other team’s basket. The constant back-and-forth does halt for fouls or when the ball goes out of bounds, but officials quickly make rulings so the play can resume as fast as possible.
Penalties — such as free throws — are no guarantee of a score, and are structured to overcome another team’s fouls or act as a disincentive to unfair play. As in all sports, home court advantage is desirable, but in basketball this may be especially the case, with indoor courts that magnify a crowd’s enthusiasm for a home team.
Cargo is constantly in transit as it makes its way from factory or farm to the store and consumer. Shipments are passed through a highly choreographed team of brokers, carriers and forwarders.
Dispute settlement is key to make sure all players abide by the rules, although it works much slower, and not nearly as efficiently, as in basketball. Even trade negotiations borrow from the game’s lingo, with completed deals being described as “slam dunks,” sometimes been completed in a “buzzer beater” style at the last possible moment. The effort to get such deals through Congress, of course, often involve a “full court press.”
4. It affects everybody.
March Madness touches us all, even when we don’t normally follow basketball. As the event has grown since 1939, the impact on the country has grown too; bracketology grips the nation as experts and novices alike make predictions using various methods, including complicated data-driven algorithms or guesses based on favorite mascots or coolest uniforms.
The American Gaming Association estimates that 40 million Americans — more than the population of California — fill out about 70 million brackets every year. Billions will be wagered. Many millions of Americans will watch the games, or hear about them the following day.
Trade also touches us all — literally — since about 98 percent of all clothes and shoes are imported. Trade’s contribution to the U.S. gross domestic product (GDP) has grown steadily, rising from nine percent in 1960 (the only year when Ohio State University won the NCAA championship) to 28 percent in 2015 (when Duke University picked up its fifth title).
American consumers depend on affordable imports to buy many goods and services, while millions of American workers owe their jobs to both exports and imports. Farmers view trade as critical since the output of one of every three American farm acres is exported. Manufacturers get in on the act, relying upon foreign markets for sales or foreign suppliers for imported inputs. Without cross border trade, the U.S. service industry would be dead.
By any measure, March Madness is huge. But the NCAA Tournaments will soon end with a single men’s and women’s champion. As we look over the wreckage of our brackets, and as the sound of the sneakers squeaking on the courts fades from our memory, we can console ourselves with the knowledge that trade benefits will be with all of us all year long.
Trade madness is huge, too.
The original version of this article appeared in The Hill