Despite being one of the most pressing policy choices facing America, and despite having been one of the biggest controversies in the last, oh, 400 years of economic history, free trade rarely gets a real debate in this country. For the most part, its superiority is just assumed, and the word “protectionist” is treated like, say, “fascist”: something just obviously, axiomatically bad and requiring no serious thought.
So it is gratifying to see economist Uwe Reinhardt of the New York Times and Princeton University attempt to engage in a real debate on the issue.
He is a free trader. Which is what makes it so interesting that a good look at what he has to say actually reveals a lot about what’s wrong with free trade. (I apologize in advance to Prof. Reinhardt if I have misunderstood anything he said.)
For example, he writes:
Technically, he is correct. Well over 80% of what America consumes is produced in America. Unfortunately… this metric is totally irrelevant to whether free trade is good for us or not. It doesn’t prove a thing either way. (Anyone who thinks it does is welcome to write me and explain why.)
What does have logical traction here? This: as I’ve argued in several articles of my own, the U.S. trade deficit shows an America that is consuming more than it produces. This is a problem because it means that over time, we must either sink into debt or sell off existing assets in order to keep running this giant bar tab with the rest of the world.
Therefore, because free trade–or America practicing it while our major trading partners practice mercantilism–arguably causes this trade deficit to happen, free trade is doing us harm. Over time, it leaves us poorer than we would be if we obtained reciprocity under some kind of managed-trade regime.
Bottom line: even if “Everything in made in China now!” is a myth, we’ve still got a big problem.
Next up, let’s try this assertion by the good professor:
Talk about a straw man! I don’t know of a single protectionist in the United States who literally proposes to abolish imports entirely. That strange philosophy is found only in places like North Korea, which does (at least pretend to) ban imports on grounds of its ideology of juch or self-reliance.
Bottom line: trade and free trade are not the same thing, and one can certainly oppose the latter without opposing the former.
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