2016 Democratic Convention

Protectionism Runs Rampant at DNC. And, Sadly, at RNC.

Sen. Bob Casey's empty gotcha on Donald Trump's business practices betray a lack of thought on trade issues.

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So here's Sen. Bob Casey (D-Pa.) tweet after speaking at the Democratic National Convention in Philadelphia. It sums up a lot of what's wrong with the way politicians think about jobs and economic growth:

Grant Casey a bit of gotcha here. Trump has talked constantly about how he will shut down trade with countries that don't buy more from us than we do from them, how he will renegotiate trade deals to screw over countries that he says are screwing us now, how he will refuse to militarily defend countries with whom we have a trade deficit, how he will slap tariffs on Chinese goods, and more. So good on him for slamming The Donald for hypocrisy.

All of Trump's positions violate the basics of free trade and, more importantly, free-er trade. We'll never have truly free trade among nations for all sorts of reasons. The question is always one of direction—are we heading toward more, less cumbersome trade or not? NAFTA wasn't perfect, but it was better than what it replaced. That's likely true of the Trans-Pacific Partnership too, though the details are still not fully clear. Trade with foreign countries—or more precisely, with sellers and customers in foreign countries—is a good thing that grows the economy here and abroad. Contrary to what Trump (and Hillary Clinton) say, NAFTA has been good for American workers and our economy, creating 25 million jobs on net through 2008.

But we already know that Trump and Clinton, whose trade positions are indistinguishable from his, are all wrong on trade.

What I'm more interested in here is Casey's general complaint during his remarks that Trump chose to locate his production facilities overseas rather than in various cities in Pennsylvania. Apart from the politics of the current moment, we're right to ask a couple of questions. First, why should anybody not source stuff where it's cheapest, assuming that the quality is high enough for whatever they and their customers want? And second, what are you, Mr. or Ms. Politician, going to do about it? That's the real question lingering over the current mood of protectionism.

Bob Casey, Google +

On the first question, of course producers are going to move to where stuff goods and services can be made more cheaply and efficiently. They move around the United States and sometimes they leave the country together. Do any of us force ourselves to buy more-expensive, lower-quality stuff simply because it's local? Maybe, for a time, out a sense of patriotism or whatever, but that always gives way to economic reality and it should. Pennsylvania, like a lot of states in the broadly defined Northeast or industrial Midwest, has taken it on the chin when it comes to old-style manufacturing jobs because it has a cost structure that is relatively high for whatever is being produced. It's not up to purchasers of labor and things to pay more for something they can get more cheaply elsewhere. It's up to the people whose jobs are on the line to figure out how to add more value to whatever they're doing so they still have jobs. This happens all the time, by the way, and there's any number of production jobs and services that have been brought back to the United States from overseas because American workers do a better job than cheaper producers elsewhere. But Casey's general idea that somehow it's an affront to American workers that they wouldn't automatically be chosen over cheaper alternatives is exactly the problem with residents and pols in places like Rust Belt Pennsylvania and elsewhere.

Which leads to the second question: What are politicians planning to do about companies that outsource jobs? Well, we know what and on this score, Clinton and Trump sing the same song. They'll come up with various penalties and taxes to make it even more difficult to do business and turn a profit. Instead of, say, changing U.S. tax laws so that they make the country a place where all sorts of businesses want to set up shop, they will continue to try and screw companies who act in away they disapprove. They will certainly not reduce government spending and regulations in a way that allows the economy to grow, but they will instead punish those that don't get out quick enough. This isn't smart economic policy, it's the worst sort of zero-sum thinking.

Related: Here's a vid from 2009 about why "buy American" campaigns are bogus. It features another speaker from tonight's DNC, Richard Trumka of the AFL-CIO, who also bragged on how Hillary Clinton would be even more protectionist than Trump (like that's a good thing).