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Free Minds & Free Markets

The Economic Case for Free Trade Is Stronger Than Ever

But working-class identity politics threaten to ruin everything.

"This is a cultural issue as much as an economic issue," explained Chris Matthews on MSNBC's Morning Joe in March.

Matthews and I had been invited to discuss Donald Trump's punishing new tariffs on imported steel and aluminum, a policy Matthews was convinced would resonate with "the retired person in Pennsylvania." After Joe Scarborough teasingly introduced me as a "sophisticate from Boston," one of those guys who has "never done work with their hands," I argued that this was "dumbass economics"—Trump's tariffs will be terrible for Americans, low-skilled workers very much included. Asked to respond, commentator Mike Barnicle acknowledged that I had all the facts on my side but concluded that "loss is the key, and loss triumphs over facts…loss is emotion, loss is nostalgia, and loss sends people to the polls."

And that is where we are. The case for protectionism is weaker than at any moment in this century. Neither the Trump administration nor its supporters have any valid economic or national security reason for these tariffs, and even tariff supporters admit it. Still, actual trade policy will get worse in the short run. The current schism on the issue has little to do with economics and everything to do with identity, and the metamorphosis of this debate spells trouble for defenders of the open global economy.

The economic arguments in favor of freer trade are pretty darn strong. Free trade permits each economy to focus on its comparative advantage, thereby increasing the productivity of all countries. Expanding the size of the market incentivizes greater economies of scale and technological innovation. Globalization also widens the variety of goods that are available to the ordinary consumer. The Peterson Institute for International Economics estimates that the U.S. economy benefits to the tune of $2.1 trillion every year from trade expansion. (The political arguments—you know, how greater interdependence tends to tamp down the likelihood of war—ain't beanbag either.)

That Peterson Institute analysis also notes, however, that "expanded trade results in losers as well as winners, and losers are seldom compensated." And this leads us to an uncomfortable fact: The economic case for free trade in America has taken some serious intellectual hits over the past decade.

Paper after paper has been written about the "China shock"—the effect of China's integration into the global economy on the developed world. Before China, when developing countries such as Mexico or South Korea joined the global trading system, there was minimal disruption. None of those countries were all that big. China is, and its membership in the World Trade Organization (WTO) had big effects.

Consistent with longstanding economic theory, China's liberalization benefitted capital and hurt labor in the developed world, as Chinese workers suddenly became available as substitutes for union workers in, say, Scranton. Labor economist David Autor and others have found that local labor markets more exposed to Chinese imports experienced "increased unemployment, decreased labor-force participation, and increased use of disability and other transfer benefits, as well as lower wages."

To be clear, the China shock was not a net loss for the U.S. economy, as anyone who's shopped at a Walmart or Target can tell you. Lots of Americans benefited from cheaper consumer goods and greater opportunities for exporting products to China's 1.3 billion customers. Indeed, Economics 101 says that trade liberalization can be a "Pareto-improving" move: It can make some people better off without making anyone worse off.

That argument glosses over a key point, however: For trade to be Pareto-improving, the winners have to compensate the losers out of their windfalls. This did not happen during the China shock. American corporations gained access to a new market and less expensive labor and materials, even as regular citizens were seeing factories shut down and jobs dry up. So you can understand why Rust Belt steelworkers have been pissed off for more than a decade. Economist Dani Rodrik has mused that for every dollar of extra output that trade liberalization produces, it redistributes $4–$5 from the losers of globalization to the winners. That is a surefire recipe for contentious politics.

In the past, the arguments against free trade have been littered with bad logic and dubious data, gussied up with references to Alexander Hamilton and Friedrich List. In this century, though, free trade critics have amassed some intellectual heft and political punch. Little wonder that all of the leading presidential candidates advocated withdrawal from the Trans-Pacific Partnership (TPP) during the 2016 campaign. "We must protect our borders from the ravages of other countries making our products, stealing our companies, and destroying our jobs," Trump declared in his inaugural address. "Protection will lead to great prosperity and strength." It was one of the few parts of the speech that earned bipartisan applause.

The arguments in favor of freer trade are pretty darn strong. The Peterson Institute for International Economics estimates that the U.S. economy benefits to the tune of $2.1 trillion every year from trade expansion.

Trump is now fulfilling his campaign promises on trade. He withdrew the United States from the TPP, started renegotiating the North American Free Trade Agreement, threatened to withdraw from a trade deal with South Korea, bashed the WTO, slapped tariffs on washing machines and solar cells, and announced those steel and aluminum import duties. More tariffs directed at China are likely coming.

Yet in his own blinkered, unintentional way, Donald Trump is making free trade great again. By employing the crudest, dumbest forms of protectionism imaginable, he has managed to alienate his erstwhile political and intellectual allies.

How will the steel and aluminum tariffs not lead to great prosperity and strength? Let me count the ways.

First, we have seen this story before and know how it ends. Sixteen years ago, George W. Bush levied up to 30 percent tariffs on steel. These were in place for nine months before the administration complied with a WTO ruling to remove them. Reputable economic analyses, including from the U.S. International Trade Commission, concluded that the result was a net loss in output and jobs. The tariffs succeeded in raising the domestic price of steel, since American producers were able to jack up their prices without fear of competition from cheaper imports. This in turn hurt the competitiveness of America's steel-using industries, which employ roughly 40 times as many workers as domestic steelmakers. Approximately 200,000 jobs were destroyed, a figure that exceeded the total number of steelworkers in the entire country.

Photo illustration: Joanna Andreasson. Photo: Eerik/iStockPhoto illustration: Joanna Andreasson. Photo: Eerik/iStock

Fast-forward to today, and the numbers tell the same story. The Trade Partnership, an economic consulting firm, estimates that the Trump tariffs will create about 33,000 jobs in the steel sector—and will destroy roughly 180,000 other jobs, including more than 36,000 in manufacturing. The Council on Foreign Relations estimates that 40,000 automaking jobs will disappear because of higher input prices. In some industries, the layoffs have already started (see "Protectionism vs. Cheap Beer" on page 26). The University of Chicago asked its expert panel of 43 economists whether the tariffs would improve America's welfare. Not a single one agreed—including David Autor.

Indeed, what is striking about Trump's tariffs is the degree to which even free trade skeptics have rejected the policy move. Rodrik called Trump's tariffs "a gimmick, not a serious agenda for trade reform." The liberal New York Times columnist Paul Krugman—who has been sympathetic to the idea that freer trade can widen economic inequality—nonetheless concluded that "there's no way to bring back all those steel plants and steel jobs, even if we stopped all imports.…The Commerce Department came up with an obviously bogus national security rationale for tariffs Trump wanted to impose for other reasons."

Those alleged national security arguments are particularly absurd. Administration officials have relied on a section of U.S. trade law that permits import restrictions on such grounds. But the case here is shaky to nonexistent. The Defense Department noted in a memo that the Pentagon only requires 3 percent of indigenous steel production for its operations, and expressed concern about tariffs' "negative impact on our key allies."

Those concerns are justified. China is the primary source of overcapacity in the global steel market; over the past decade, its subsidized producers have expanded output while every other country's production has held steady. But since the United States gets just 3 percent of its steel from China, the proposed tariffs would have hit Japan, South Korea, and the European Union (E.U.) much harder than Beijing. Rather than foster cooperation with trading partners who have also been adversely affected by China's rise, Trump sabotaged the chance for a united front.

In his rhetoric, the president appears to be targeting America's friends abroad. (One tweet from March referred to "the European Union, wonderful countries who treat the U.S. very badly on trade.") I teach international relations for a living, and I can tell you that sanctioning allies does not improve our national security.

In contrast to every president since FDR (including both Obama and Bush, despite what their respective critics may have said), Donald Trump does not believe in the benefits of trade. Previous presidents have at times taken protectionist actions, but everyone understood they were committed to greater liberalization in the future. No one thinks this about Trump, and that makes his protectionism even more dangerous to the global trading system.

The administration eventually responded to outcry against the tariffs by exempting some key allies and renegotiating the Korea-U.S. free trade agreement to allow for voluntary export restraints in steel. This has taken the immediate sting out of Trump's protectionism, but moves like these also create wounds that are certain to fester. Allies can tolerate the occasional hypocrisy—the short-term safeguard for a domestic industry—but not the wholesale evisceration of the rules of the game by its leading player.

Over the past year, countries around the world have responded to Trump's bluster mostly by plowing ahead with their own free trade deals: between the E.U. and Japan, the E.U. and Canada, and the remaining TPP members. All of these steps disadvantage American producers trying to gain greater access to markets in these places. And all of it comes just as the developing world is starting to desire U.S. wares. As The New York Times recently noted, Trump's protectionism risks damaging the ability of the U.S. "to sell advanced goods and services to the rapidly expanding global middle class."

Even many free trade skeptics have rejected the move. "The Commerce Department came up with an obviously bogus national security rationale for tariffs Trump wanted to impose for other reasons," concluded New York Times columnist Paul Krugman.

Now is the point in the story when free trade boosters normally lament that the siren song of protectionism resonates louder with the public than do experts' arguments for freer trade. But here, things get very screwy. The polling on this is quite clear: Free trade has gotten way more popular in the United States during the Age of Trump. The Chicago Council on Global Affairs, which surveys Americans annually, found 72 percent saying international trade was good for America's economy in 2017, up from 59 percent in 2016. Gallup, too, has found positive attitudes on trade skyrocketing—from 58 percent thinking foreign trade presents an "opportunity for growth" in 2016 to 70 percent feeling that way in 2018.

The polling on Trump's recent announcement has yielded similar results. Both Quinnipiac and Marist surveyed Americans on the steel and aluminum tariffs in the past month. In both cases, pluralities opposed the move and majorities disagreed with Trump's claim that "trade wars are good, and easy to win." Even in the Rust Belt, reporters are finding anxiety about the president sparking a larger trade war and fear about the effect of higher steel prices on factory workers' jobs. Note well that the steel tariffs did little to help Republicans in Pennsylvania's 18th congressional district, where Democrat Conor Lamb won the House seat previously held by a Republican in a special election in March. For all the talk about economic populism, Trump's protectionism does not seem to be popular at all.

This does not mean that protectionists are losing. Rather, they are scorching the earth. The current debate is not really about economics or national security; it's about identity. Trump has distilled his case for the tariffs into a simple phrase: "If you don't have steel, you don't have a country!" As usual, the implication is factually incorrect—the United States already produces about 70 percent of the steel it consumes. But that does not really matter. The president is evoking a bygone era when steel was a major employer in the Rust Belt. Never mind that new industries are arising all the time; at present, the University of Pittsburgh Medical Center employs nine times as many people as U.S. Steel. Trump is appealing to nostalgia for a world in which factory workers have children who then go on to work in the same factory.

In taking this approach, Trump has alienated an awful lot of the country, which explains the public shift in attitudes. Americans are more enthusiastic about free trade because Democrats are reacting negatively to the president—and to his tariffs.

Much of the country views trade policy through the lens of race and identity. Temple University political scientist Alexandra Guisinger has demonstrated that support for protectionism correlates with who is being protected. Simply put, tariffs are more popular with Americans when they are thought to benefit white workers.

It is difficult if not impossible to change anyone's mind when people's positions on an issue are grounded in political identity. Trade policy is threatening to turn into the same quagmire as immigration policy. The aggrieved voices of the few will outweigh the preferences of the many, and most of us will be poorer as a result.

In response to Trump's tariffs, European Union President Jean-Claude Juncker summed up the state of transatlantic trade relations: "So now we will also impose import tariffs. This is basically a stupid process, the fact that we have to do this. But we have to do it.…We also have to be this stupid."

What we are witnessing is the triumph of politics that privilege the emotional well-being of a subset of Americans over sound economic policy for everyone. It will cost an untold number of jobs. It compromises our national security. And it threatens to poison the political debate about this issue for the next generation.

Photo Credit: Photo illustration: Joanna Andreasson. Photo: traveler1116/iStock

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  • Dick Puller, Attorney at Law||

    So, let me understand this. We're more free because we can buy cheap stuff from China than we would be if we were sufficiently self-sufficient that we could tell China to fuck off?

    It's a strange sort of freedom that values dependency over self-sufficiency.

  • sarcasmic||

    Comparative advantage. Look it up.

    Also, there is another word for self-sufficiency: poverty. North Korea is self sufficient. Look it up.

  • gormadoc||

    Even NK, guided by Juche, had to stop trying to be completely self-sufficient. If they, who don't give a shit about their people, had to give up what hope do we have?

  • sarcasmic||

    There is nothing to be gained by being self-sufficient. It's not something to hope for.

    Just reduce it, logically. If self-sufficiency is good for a country, why not for a state? Why not for a county? Why not for a city? Why not for a household? What's the point of having a car if you can't build it yourself? Not just build the car, but smelt the metal, make the parts....

  • Old Mexican - Mostly Harmless||

    You two guys are making the exact same point.

  • gaoxiaen||

    Try building your own toaster.

    https://www.youtube.com/watch?v=5ODzO7Lz_pw

  • Mark22||

    Just reduce it, logically. If self-sufficiency is good for a country, why not for a state? Why not for a county? Why not for a city? Why not for a household?

    It is good at all those levels; that is, as a household, you are better off if you have the security of knowing that you can produce your own food on your land, if you're a city, you're better off if you have crucial resources available locally. Not all households or cities have that option, but it's a good option to have if you can make it happen without paying too high a price.

    There is nothing to be gained by being self-sufficient. It's not something to hope for.

    You're posing a false dichotomy. Trump isn't trying to make the US self-sufficient, Trump merely wants a functioning US steel industry so that we can meet our military needs without being dependent on China. China tries to destroy the US steel industry because it wants to make the US dependent on Chinese imports.

  • mooo||

    Where progressives and Trump agree (TPP, NAFTA, etc.) and oppose nearly all the GOP and corporate Dems, like Obama and Clintons. (link to PBS "dispute over nafta clause unites white house some progressives")

    The TPP's not about "trade"; it's about corporate power (to use international panels of corporate lawyers to override any laws in the way of profit). -- Must-read article about the TPP by an economist (link to dollarsandsense.org / archives/2015/0715miller.html )

    Robert Reich summarizes the TPP in 2 mins, 16 secs. (link to youtube.com / watch?v=3O_Sbbeqfdw )

  • Mark22||

    The US isn't trying to be self-sufficient, it's imposing tariffs against a small number of products produced by massively government subsidized industry in a communist dictatorship, whose objective is to undermine US democracy and erode US power.

  • sarcasmic||

    tariffs against a small number of products produced by massively government subsidized industry

    So it's a bad thing when a foreign government makes products artificially cheap for us to buy.

    Um, OK. Sure.

  • Robert||

    Juche, huh? Funny, they don't look it.

  • Mark22||

    Comparative advantage. Look it up.

    You should look it up yourself. Comparative advantage exists between two private parties in a free market. None of those conditions hold in the US or China. They also maximize overall economic output, without taking into account the effect on individuals.

    Also, there is another word for self-sufficiency: poverty. North Korea is self sufficient. Look it up.

    North Korea is poor because it's a communist dictatorship. Self sufficiency doesn't translate into poverty for a country as big as the US. And when dealing with a world full of communists, socialists, and fascists, self-sufficiency may be necessary for self-preservation, because foreign regimes use trade to attack and destroy.

  • sarcasmic||

    Ever bought something from China? I have. I didn't buy it from the country. I didn't buy it from the government. I bought it from the fellow who sold it. There is no US or China with regards to trade. Only me, you, and the guy who is selling us stuff. That's it. All tariffs do is add a tax for us to pay when we buy stuff from that guy with a funny language.

  • gormadoc||

    Good luck having electronics if the US were self-sufficient. We don't have enough lead or silver for that.

    It's never worked out for anyone else to be an autarky but why not try it out? Just like socialism it's just never been done right.

  • sarcasmic||

    We don't have enough lead or silver for that.

    Sure we do. Mine landfills.

  • gormadoc||

    Reliable technology for solder extraction from trash won't be here soon and certainly not if we stop making electronics in the meantime. I don't think there's any way to get enough reliable silver for military applications.

    The amazing thing about solder is that it safely isolates lead from the environment, more so than if it were unmined. As soon as we start smelting trash for lead folks are going to start dying from exposure.

  • sarcasmic||

    I didn't say it would be effecient. ;-)

  • Mark22||

    It's never worked out for anyone else to be an autarky but why not try it out?

    Where the hell do you get the idea that Trump wants the US to be an autarky?

    A functioning steel industry is important for our defense. The communist Chinese government is spending tons of money to try to drive our steel industry out of business so that we lose the capability of making an essential component of our military defense. Trump is imposing tariffs to compensate for Chinese tariffs.

    We're talking about preserving manufacturing capacity for two strategically important materials, not the ridiculous strawman you are putting up.

  • gormadoc||

    It's a strange sort of freedom that values dependency over self-sufficiency.

    We were all responding to the OP who had stated the above. l2r

  • geo||

    Yet in 2017 the total lead consumption in the US was only 68% of US lead production. We export lead. As for silver, at present the US has recoverable reserves of about 25,000 tonnes. Keep in mind that the definition of recoverable reserves is price dependent. If the price of silver increases, the reserves go up. The US has more silver reserves than Bolivia, and produces over 1020 tonnes per year. There are 8,667 tons of silver held in storage in the US by government and stock markets. US consumption of silver is about 5,770 tonnes per year, but most of that is not actually consumed but instead is stockpiled by people like me. The US has enough lead and silver to supply itself easily.

  • Old Mexican - Mostly Harmless||

    Re: Economically-illiterate numbskull,

    It's a strange sort of freedom that values dependency over self-sufficiency.


    Hey, romantic fool, when you make your own shirts with your own gawd-damned hands, come back and talk to me.

  • MatthewSlyfield||

    That wouldn't be enough, he'd have to raise/grow the wool/cotton and weave the cloth himself too.

  • gaoxiaen||

    And make the thread and needles. Forget about a sewing machine.

  • gaoxiaen||

    I guess that one could do without scissors and use a knife, and measure with a stick and charcoal. Better off using animal hides.

  • Old Mexican - Mostly Harmless||

    Re: Economically-illiterate fool,

    if we were sufficiently self-sufficient [...] we could tell China to fuck off?


    You see how incredibly ignorant you are? You turned an economic argument into a political argument, unwittingly, in the same paragraph.

    People trade even with people they don't like, because trade is rational. That means, what you're not. The American government allowed aerospace companies to trade with the Soviet Union for necessary things like titanium.

    Trade is civilizing. That means, what you're not. As ideas are exchanged, the bad ideas get replaced quickly with good ideas. That's why tyrannies stiffle trade.

  • MatthewSlyfield||

    "You turned an economic argument into a political argument, unwittingly, in the same paragraph."

    What makes you imagine that there was anything at all unwitting about it. I rather think it was quite deliberate.

  • gaoxiaen||

  • Mark22||

    You see how incredibly ignorant you are? You turned an economic argument into a political argument, unwittingly, in the same paragraph.

    You see how incredibly ignorant you are? The steel tariffs are all about politics: China is a communist dictatorship that's subsidizing a strategically important industry for a political advantage. And Trump is responding to this political attack with a political response: targeted tariffs.

  • James Taggart||

    Protectionist countries are not self-sufficient but their citizens do end up paying more for crap products.

    And, that's the real goal of protectionism - to protect crappy domestic manufacturers.

  • ||

    Who is freer, someone who lives in the woods and grows and hunts all his own food freer, or someone who lives in a city, works for wages, and uses the wages to buy food? It depends on how you'd define freedom, but I'd argue it's the city-dweller. He has a much greater variety of food available and has a much greater freedom in choosing his occupation. In some sense, the city-dweller is "dependent" on civilization, but civilization isn't going to go away, and the woodsman is dependent on things in nature too.

  • vek||

    Here's the thing... It's all about balance.

    I know of nobody who is against all trade or people specializing. BUT being completely dependent on an aggressive foreign nation for absolutely necessary goods... There's a point at which it becomes sketchy strategically.

    We're still at the point where we could bend China over if we wanted to, and frankly we should. We should force them to open up their domestic market to the world, which would then make it REAL free trade. But that situation won't last forever. Soon even the USA will not have the buying power where China can't afford to lose us. When they're the largest economy on earth and dominate half the worlds major industries, that's going to put the USA at a great disadvantage.

    So balance is what is required. Even if it were cheaper to import every pound of steel from China I think we would be insane to do that as nation. What if they did decide to cut us off in 2028 over saaay Taiwan and them wanting to annex them fully again? That might be something we want to stand up for as a nation, but if they have us over a barrel... That's why being able to stand on your own is important too. So balance is key.

  • Chipper Jones||

    Dick Puller, 1970's Latin American dictator.

  • James Taggart||

    Where you gonna buy bananas? Where is Caterpillar going to sell all it's bulldozers?

  • ||

    The Chinese overcapacity argument is a perfect example of protectionism being identity politics. As a purely economic matter, Chinese overcapacity and lower steel prices benefit the United States because we are a net importer of steel, just like recent global oil overcapacity and resulting lower oil prices benefitted the United States even though some frackers were harmed. As a general rule, you want things you buy to be cheap and things you sell to be expensive. We just have this weird nostalgia for steelmaking that we don't have for fracking (and probably some anti-Chinese racism too) which is getting in the way of economically rational policies.

  • DJF||

    """""and probably some anti-Chinese racism too"""

    Yeah, it has nothing to do with policies which support a Communist Dictatorship.

    When did Free Trade equal supporting Communism?

  • sarcasmic||

    The best way to topple a communist regime is to trade with them. Give the people enough capitalism and they'll reject communism.

  • DJF||

    There is a huge amount of trade with Communist China and the Communists are more powerful then ever.

    Communist China has more goods, more technology, more money then ever.

    Go as President For Life and General Secretary of the Central Committee of the Communist Party of China Xi Jinping.

  • Old Mexican - Mostly Harmless||

    Re: DFJ,

    There is a huge amount of trade with Communist China and the Communists are more powerful then ever.


    More powerful than the Communist party under Mao?

    Give me a break. The Communist party had to open up its markets to capital investment because it had to, not because it wanted to. The party has much less power now than before; it only retains some police power that people more or less agrees with, but that's all. The power that Mao wielded is no longer there.

    Besides that demonstration of your total lack of awareness, are you now presenting a MORAL case against trade with Chinese manufacturers? Do you fancy yourself the world's mommy?

  • DJF||

    Its hard to tell because its a Communist Police State but at least 1/3 of the economy is owned by the Communist Party and that includes the largest parts such as the largest steel company, coal company, ship building company etc. Another 1/3 is owned by members or family members of the Communist Party. The last third can do nothing without permission of the Communist Party.

    The Communist Party still controls the Peoples Liberation Army, the Ministry of State Security and no one is allowed to object or they get put in prison or executed.

    Sounds pretty powerful to me. Or do you think that because some Chinese can buy a censored I phone that it makes them free?

  • Rhywun||

    The party has much less power now than before; it only retains some police power that people more or less agrees with, but that's all.

    You should test this theory out by trying to start another political party there.

  • Rhywun||

    The party has much less power now than before; it only retains some police power that people more or less agrees with, but that's all.

    You should test this theory out by trying to start another political party there.

  • Rhywun||

    It doesn't seem to be working that way with China. I'd venture that they're farther away from "not Communism" than they were 30 years ago.

  • Rhywun||

    It doesn't seem to be working that way with China. I'd venture that they're farther away from "not Communism" than they were 30 years ago.

  • sarcasmic||

    I disagree.

  • Mark22||

    As a purely economic matter, Chinese overcapacity and lower steel prices benefit the United States because we are a net importer of steel, just like recent global oil overcapacity and resulting lower oil prices benefitted the United States even though some frackers were harmed.

    Economically, "the US benefits" when the Clinton foundation gets a $1 billion bribe from the Saudis. Economically, "the US benefits" when the Chinese drive real estate prices in San Francisco through the roof. But economic benefits to "the US" don't necessarily translate into benefits to US voters as a whole.

    which is getting in the way of economically rational policies

    We live in a rent seeking, crony capitalist country with massive redistribution. What is "economically rational" for the US overall is not necessary "economically rational" for most voters.

    We can have free trade when we have free markets in the US.

  • Rhywun||

    Gotta love a civil discussion on a Monday morning.

  • Old Mexican - Mostly Harmless||

    It's difficult to have a civil discussion with people who seriously advocate for American-style Juche, all in the name of saving the American White Worker© from the vicissitudes of market competition.

  • Rhywun||

    The baseless accusations of racism are a nice touch.

  • Mark22||

    You know, we may not know the reason why Mexico is such a shithole, but we're pretty sure that if we don't want the US to turn into the same kind of shithole, it's prudent to set some boundaries.

  • Old Mexican - Mostly Harmless||

    What we are witnessing is the triumph of politics that privilege the emotional well-being of a subset of Americans over sound economic policy for everyone.


    No! Ya think? Where do you think the "Build That Wall" mentality comes from?

  • I can't even||

    Somebody alert me when "the Trump tariffs" become actual tariffs.

  • gormadoc||

    You mean besides the tariffs on washing machines, solar panels, steel and aluminum? Those have all been enacted.

  • MichaeI Hihn||

    That's the thing about creative destruction. Without creation, it's just destructive. America needs jobs. It's jolly good for the University of Pittsburgh Medical Center that they employ many. If the market isn't making new jobs to replace those destroyed, it's a long-term loss down the board. Federal, state, and local regulation have handed healthcare a monopolized industry, with the attendant requirement that they hire swarms of people to handle the paperwork without providing a moment of care to patients. Their salaries still get added to the patients' bills though. Was this creative? Did the value added from the warm security of knowing someone signed proper forms in triplicate exceed the value of lost jobs? If it didn't, then we all lost that one.

    This isn't a Trump problem. It's been incubating for at least a generation or three, and other problems have been stewing even longer. We need free trade HERE, we need jobs, and industries which aren't wholly captive to the state. A regulatory body or Top Men announcing an industry must hire new people to perform X task the government likes is just another socialist make-work program - not a responsive, sustainable market.

    It might make us feel awesome to point and laugh at the losers, except "me today; you tomorrow" promises we're all the losers. We can't win this game.

    Free the markets. It's way cheaper than the alternatives.

  • Middleman||

    He has a word over 50 characters long. How did he get to post?????? ????????? ????????????? ??????????? ?????? ?????????????? ????????????????????? ???????? ??????? ???????? ???????? ????????? ???????? ????????

  • Mark22||

    The economic arguments in favor of freer trade are pretty darn strong. Free trade permits each economy to focus on its comparative advantage, thereby increasing the productivity of all countries.

    The Chinese comparative advantage is communist exploitation of workers and work camps. The European comparative advantage is a stifling welfare state and proto-fascist political structure. And that's also what they are really trying to export.

  • sarcasmic||

    A welfare state is an advantage? There is no free lunch. A welfare state requires money taken to pay for it.

    As far as China goes, when workers are given a choice between being self-sufficient on a farm or working in a factory, they choose the factory.

    No coercion.

    It isn't what we would choose, but we went through this process a hundred years ago.

    Let them go through it.

  • Middleman||

    So! You like the $2 Trillion trade debt with China and want to do the same thing with the TPP?
    You think NAFTA helped the US and we need more of the same?

    US Trade Deficit with Mexico
    2001 - 2011 total = -$585,602,000,000.
    Between 2012 - 2016 - -$359,000,000,000

    That's almost 1 TRILLION DOLLARS
    CENSUS
    It also displaced an estimated 682,900 U.S. jobs. Nearly all of the losses were in manufacturing.
    CENSUS

    Take economics 101! Than attempt to write a informative article!

    What things has Paul Krugman been very wrong about? - Quora
    quora - What things has Paul Krugman been very wrong about
    Sep 27, 2014 - 1) The survival of the Euro: Krugman was unable to fathom how the peripheral countries of Europe could possibly stay on in the Eurozone.

  • scJazz||

    The problem with all of these Free Trade articles here at Reason and other locations is that they all ignore the fact that there is no Free Trade. Chinese laws, restrictions, and demands tilt the playing field in their favor. Korean washing machine manufacturers were evading sanctions that the WTO repeatedly levied against them by moving their manufacturing plants to different Asian companies. The EU has a tariff of 10% on USA automobiles but we only have a 2% tariff on their autos. The list goes on and on. The deals are lopsided against USA. All Trump is doing is shaking everyone up. His policy is not protectionist so much as a demand for new deals that do not handicap USA. He literally wants Free Trade not the Unfair, biased, protectionist trade that everyone uses against the USA. I wish I could find a well reasoned Reason article on Trade Practices that pointed this fact out instead of the incessant Trump bashing. It makes Reason articles seem... unreasonable.

  • James Taggart||

    Would be nice if other countries didn't put tariffs on US exports but imposing tariffs on imports is like punching yourself in the face while your opponent punches himself in the face and thinking whoever quits last wins.

  • scJazz||

    I'm not suggesting tariffs are a good thing in general. I'm just pointing out that the status quo behaviors were not working. I believe Trump's use of tariffs and signaling a willingness to engage in a Trade War is shaking things up for the better Long Term. Short Term pain is acceptable IMHO. The Chinese have taken the very long view. Getting freaked out because next quarter profits/share price will be down is foolish.

  • scJazz||

    I'm not suggesting tariffs are a good thing in general. I'm just pointing out that the status quo behaviors were not working. I believe Trump's use of tariffs and signaling a willingness to engage in a Trade War is shaking things up for the better Long Term. Short Term pain is acceptable IMHO. The Chinese have taken the very long view. Getting freaked out because next quarter profits/share price will be down is foolish.

  • vek||

    Yup. This is exactly it. It's a question of short term pain for long term gain.

    To say that we shouldn't ever retaliate against foreign nations screwing us is ridiculous. The fact is we are the biggest consumer market on earth for most things. We are irreplaceable, whereas we can import from a lot of places for most goods. So they need us, we don't need any particular trading partner. This gives us the upper hand. If he really wanted to get hardcore we could get every nation on earth to cave to opening up 0% tariffs across the board both ways by threatening 100% tariffs on imports to the USA if they didn't nix them all. Then we'd have a level playing field for all, which is what libertarians SHOULD want.

    To say we shouldn't retaliate is basically like saying you should allow a bully to steal your lunch money every day, because that one day when you say "Fuck you" and punch them in the face you're going to get punched back, which is more painful than just giving him your lunch money... Maybe for that one day it will be tough, but in the long haul a bloody nose beats having your lunch money stolen every day forever.

  • geo||

    So Free Trade is good because its okay to produce products in areas with no environmental standards for production, as opposed to areas that enforce strict standards on both the production of the raw materials, the production of the products, and the disposal of the waste materials? And Free Trade is fine because it allows places with no safety standards whatsoever, where workers are routinely killed on the job by unsafe practices to compete with those where government safety inspectors enforce laws such as OSHA and many more that are designed to protect workers? And it is okay to allow Free Trade from places that have no health standards and frequently (but accidentally) produce products that result in the death of the consumers who buy them? Yeah, I get it. Fuck off slavers.

  • Barnstormer||

    Reason is publishing Daniel Drezner? Is this a race to the bottom?

    In the run-up to the 2016 election, he flatly proved himself to be an imbecile.

    If you need further proof, in this very essay he quotes Paul Krugman.

  • buybuydandavis||

    "But working-class identity politics threaten to ruin everything."

    Damn those serfs, looking after their own interests!

    That's why we need Open Borders. We can import serfs who aren't as uppity.

  • vek||

    Right? I'm a relatively high income white collar worker... But to pretend that the working class and middle of the middle class are CRAZY for trying to protect their own interests is INSANE. Why is it that billionaires to upper middle class white collar workers interests are more important than those of the lower 3/4 of the population? They're not more important. The top happens to benefit from cheap foreign labor more, which makes them like it, but that doesn't mean their well being is all that matters. "The mob" always has to be kept relatively happy or you will have a revolution on your hands, even if that requires hurting the interests of the elite. The Romans understood this. You should please them in the best way possible (here and now lower regulations, lower taxes, and improving trade deals would help), but you gotta do what you gotta do.

    By the time you account for all the welfare redistribution caused by the loss of jobs I'm pretty sure many imported products are more expensive than making them here. THOSE figures never seem to get worked into the cost of a widget though, even though those same white collar workers have had to have their taxes jacked up to make up for the money those blue collar folks are no longer paying to sustain schools, roads, etc.

  • buybuydandavis||

    "That argument glosses over a key point, however: For trade to be Pareto-improving, the winners have to compensate the losers out of their windfalls. This did not happen during the China shock. American corporations gained access to a new market and less expensive labor and materials, even as regular citizens were seeing factories shut down and jobs dry up. So you can understand why Rust Belt steelworkers have been pissed off for more than a decade. Economist Dani Rodrik has mused that for every dollar of extra output that trade liberalization produces, it redistributes $4–$5 from the losers of globalization to the winners. That is a surefire recipe for contentious politics."

    He grants the argument that our so called free trade is primarily a transfer program from those who work to those who own and hire.

    Did I miss his proposal to make trade Pareto-improving, with the winners of the trade deal compensating the losers?
    Or is it "Screw Pareto-improving, screw the serfs, and screw their little dogs too!"?

    I find it genuinely odd for him to put this in there, granting the fundamental criticism of his position, and then never come up with any response to that criticism.

  • swampwiz||

    The way I see it, we can have a system of orderly redistribution - e.g., Guaranteed Income, or income-rationing (i.e., the ability to earn income without paying it at a confiscatory high rate, etc. - or we can have the 21st Century version of Luddism.

  • ||

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  • ||

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  • para_dimz||

    Theorists. Waste of time in a world that has not embraced the theory.

  • the_strickler||

    Free Trade is an unattainable theoretical concept that does not and cannot exist in international trade.

    By definition of being between nations, the trade is not free from artificial disparity and disparate burdens placed on the individuals who participate in the trade.

    There's different labor and environmental laws and regulations.

    There's Fiat currency. Different tax law. Subsidies.

    There's a multitude of government handouts on both sides.

    In the end, to have free trade, both parties need to operate in the same legal environment.

    Moreover, you need not only a free flow of goods and money, but also labor. How many workers are flowing from the US to China to balance the flow of goods coming to the US?

    All this globalization is doing is making corporations with true access to foreign labor markets and domestic consumer markets richer while impoverishing labor in the consumer market.

  • Enemy of the State||

    Free trade requires governments to not interfere in peaceful, voluntary exchange across political borders. Everything you cite as a problem is a creature of government, not economics...

  • Enemy of the State||

    "So now we will also impose import tariffs. This is basically a stupid process, the fact that we have to do this. But we have to do it.…We also have to be this stupid."

    Not from an economic POV. From a political POV, perhaps, but Econ 101 teaches us that unilaterally being free trade is beneficial to the country that employs that stance. It raises the general prosperity of the citizenry and requires NO action on the part of trading partners to succeed, no matter how "protective" they make access to their own markets...

  • Enemy of the State||

    "So now we will also impose import tariffs. This is basically a stupid process, the fact that we have to do this. But we have to do it.…We also have to be this stupid."

    Not from an economic POV. From a political POV, perhaps, but Econ 101 teaches us that unilaterally being free trade is beneficial to the country that employs that stance. It raises the general prosperity of the citizenry and requires NO action on the part of trading partners to succeed, no matter how "protective" they make access to their own markets...

  • vek||

    Unless those people who lose their jobs don't find new ones, or find new ones at substantially lower wages... And then they no longer pay in taxes to cover all the socialized costs we have... And they in fact start collecting welfare too.

    In many cases this is exactly what happens. You take a widget from $1.19 down to $.99 and think you won! Except you end up with a $.10 per widget drop in taxes paid, and $.50 in welfare spending for that now unemployed person. Which makes the widget far more expensive than the $1.19 widget.

    Free trade theory NEVER accounts for the idea of unemployment. Which is a reality in the modern world. It never accounts for welfare either. Also a reality. When the theory was created there basically wasn't unemployment. If you lost a better job, you could go back to subsistence farming, and you sure weren't getting any welfare. But now that those possibilities both exist one is a fool to not try to account for them in the overall math.

  • Tom Beebe||

    In case you have missed the platform of one sane group:

    3.4 Free Trade and Migration
    We support the removal of governmental impediments to free trade. Political freedom and escape from tyranny demand that individuals not be unreasonably constrained by government in the crossing of political boundaries. Economic freedom demands the unrestricted movement of human as well as financial capital across national borders. However, we support control over the entry into our country of foreign nationals who pose a credible threat to security, health or property.

  • Ima Carrot||

    We did not have "free trade" under these agreements. Foreign countries impose tariffs while we did not. You ar a liar.

    The Rust Belt voted to have jobs & self determine. That does not fit your Communist objectives so you lie. Go fuck yourself. You may have my address is you take "offense".

    Oh yeah .. and Conor Lamb won runnign as a Republican. Unless the new DNC platform is #2A, Pro-Life & fuck Pelosi.