Trump’s trade trash talk

UnknownIf America is murdered, it will be in the Rustbelt Room, with the trade club. Pounding away with that club is Trump’s only chance of winning.

He exulted in Britain’s Brexit vote as a win for his anti-globalist line. Brits themselves are less celebratory, many already seeing their vote as an own-goal. Americans should not copy their economic suicide.

The Brexit vote spotlights breakdown of the old left-right political divide; now the more salient one is inward-looking versus outward-looking, open versus closed. UnknownThat has great resonance in America too. The Trump phenomenon is divorced from the conventional liberal/conservative dichotomy. The Republican party, long seen as a bastion of right-wing ideologues, has thrown that all overboard in embracing Trump, with his most telling anti-globalist symbol: a wall.

Alas, no important voices are refuting Trump’s trade tirade. Democrats, for most of their history, correctly saw free trade as good for the masses, with protectionism a means for business interests to screw consumers. But then, bent by the special interests of organized labor, they lost the plot. However, they found the snake oil politically saleable.

Unknown-1They never expected to be outflanked on the issue by a GOP candidate. Hillary, having bought the snake oil from the Bernie-ites, to placate them, dare not tell voters it’s poison. She’s reduced to merely mocking Trump’s hypocrisy in having profited from using foreign labor.

But if neither Republicans nor Democrats will expose Trump’s big lie, then I must.

Those good old industrial jobs, where with barely a high school education you could support a middle class family, are history. The main reason is advancing technology. We actually manufacture more than ever, but do it with ever less labor. Today’s economy no longer needs that much low or middle skilled labor.

This – making more with less – creates wealth and is why global living standards have risen dramatically. In the past century, worldwide average real-dollar incomes increased more than five-fold, and billions rose out of poverty.

And the other key factor, leveraging that benefit, is GLOBALIZED FREER TRADE. Freeing up trade enables nations to export more. They get richer, enabling them to import more, which means other nations can export more. Everybody gets richer; a virtuous circle.

imagesThis is the golden egg-laying goose Trump would kill. He assails the NAFTA free trade pact as a terrible deal that cost us jobs. In fact, the alleged U.S. job loss is very debatable . But NAFTA did cause huge job gains in Mexico, which became much more prosperous. Isn’t that something to our benefit? A richer Mexico buys more goods from us, increasing our exports, which creates U.S. jobs.

Anti-trade demagogues don’t mention that. Nor the real elephant in the room: that free trade, and importing cheaper goods from China and other countries, while admittedly entailing some job losses in the short run, saves U.S. consumers literally trillions of dollars. And when we spend those added trillions, that demand for other goods and services requires U.S. businesses to hire more workers to supply it. So in the big picture free trade really adds jobs.

What we need is not more barriers to trade, commerce, and enterprise, but fewer. People losing jobs to globalization won’t be helped by walling off America, but rather if they had more job prospects in a more open, dynamic economy. Ours has become sclerotic. We need to dismantle protections of all kinds enjoyed by special interests, restrictive practices, and roadblocks to open competition.

Slobovian widget

Slobovian widget

Here’s what anti-free-trade protectionists like Trump are really saying: that if Slobovia wants to sell us widgets cheaper than we can make them ourselves, we should refuse. Will that benefit us? Or Slobovia? It will benefit U.S. widget-makers at the expense of everyone else.

So Trump wants to impose tariffs – that is, import taxes – on Chinese goods, to keep them out. He doesn’t tell you this means you’ll pay more for much of what you buy. It won’t be a tax on China. It will be a tax on you. To protect business profits.

This is what some call populism.

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