Why All Americans Should Support the Trans-Pacific Partnership
Rich countries open their borders to trade (and poor countries don't).
Quick question: could you manufacture all by yourself the computer on which you're reading this opinion piece? Could you source and create the thousands of inputs that go into what on its face is fairly simple? If so, you're in possession of superhuman mechanical skills.
At the same time, the act of literally constructing a computer from scratch with no parts "imported" from across the street or around the world would be a tragic waste of your time. It would be because it would likely require all of your years on this earth to build what would be an unattractive, slow and poorly performing version of the sleek, fast, and endlessly capable machine in front of you.
What your use of a computer should tell you about yourself is that whether you know it or not, you're an ardent free trader. Your life without open trade would be horribly bleak. But thanks to the globalized division of labor that defines free trade, you have the world's abundance before you at prices that continue to fall.
Not more than 5 or 10 years ago the computer on which you're reading this piece would have qualified as a supercomputer (this describes your smartphone too), with a multi-million dollar price tag reflecting its super status. Thanks to open trade and the global cooperation among specialized producers, odds are what's "super" cost you as little as $200 brand new.
Whether produced one city over, or on the other side of the world, imports are the sole purpose of our production. They're also the surest sign of our wealth. We trade products for products, so the more one produces the more one imports. Donald Trump acts as though imports are a sign of Americans "losing" to the Chinese, Japanese, and Mexicans, but since we can't consume (import) without producing (exporting) first, the abundant inflow of goods from around the world is the surest sign of enormous economic strength in the United States. Imports are the clearest indicator that we're "winning." It's only in impoverished locales that imports are light to non-existent.
With trade, the focus is often understandably on the raise we all get for being open to the production of others. In the U.S. alone this means that we have the most talented producers in all of the United States competing to serve our needs at lower and lower prices. Looked at globally, the unrelenting beauty of the U.S.'s largely open borders to the world's plenty is that we have the most talented people on earth competing to give us bargains too.
But even the wide range of worldly goods that expand our paychecks doesn't truly speak to the incomparable wonders of free trade. What makes it unquestionably brilliant is that it maximizes the possibility that we as individual actors in what is called an "economy" will get to pursue the kind of work that most animates our individual talents. Let's face it, when we can import what we're not good at doing from others, we're then free to focus our energies in areas where we thrive.
What this should remind us is that open borders to trade don't impoverish us as much they're the easily one of the quickest paths to much greater wealth. The U.S. is a rich country not despite its openness to foreign production; rather the openness to foreign production is an essential source of staggering American wealth. Because our tariff barriers are generally very low, Americans are increasingly able to pursue the kind of work that most amplifies their talents.
All of which brings us to the economic importance of the Trans-Pacific Partnership (TPP), not just to the U.S., but to the rest of the world. Without getting into the weeds, the TPP intends to reduce barriers to trade among twelve different countries including the U.S., Canada, Australia, Peru, Japan, and Vietnam. American voters should hope the pact passes.
They should simply because the abundantly wealthy U.S. economy is already almost totally open to foreign production. The latter is once again a certain feature of the U.S. economy, not a bug. Across all foreign goods the average U.S. tariff placed on them is 1.4 percent. What this should tell those who mistakenly abhor more open trade is that the agreements signed by U.S. trade negotiators are generally about reducing tariffs placed on American exports.
To provide but one example, Vietnam presently slaps a 70 percent tariff on U.S. made cars, and a 50 percent tariff on American machinery. Important for the purposes of this piece is that Vietnam is extraordinarily poor relative to the U.S., and one reason is because its markets aren't as open to imports. Reduced tariffs will not only expand global markets for U.S. producers to sell to, they'll also enrich the Vietnamese by virtue of open trading lanes maximizing the possibility that its people will get to do as Americans have long done: migrate toward the work that most magnifies their talents.
A major reason the U.S. is rich is because it's open to the production of others regardless of country. Conversely, countries like Vietnam are quite a bit less prosperous thanks to barriers to trade pushing its people into the kind of work that is less commensurate with their talents. Imports are the gift that keeps on giving for them freeing us from the work we despise. Imagine once again being forced to construct the computer on which you're reading this piece. The act of doing so would impoverish you.
So while in a perfect world global trade would be wholly untouched by politicians, the TPP is advantageous to American producers for it reducing taxes on their exports. It's then hugely advantageous to the other countries involved simply because imports by their very name speed the path to economic specialization.
An economy is just individuals, and the individual is best off economically when able to import as cheaply as possible thanks to production that is as specialized as possible. That's what open trade is all about. While not close to perfect, the TPP brings the world closer to the kind of free exchange that is the certain source of rapidly expanding wealth.