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April 08, 2016

Free Trade as the Populist Bogeyman [krakatoa]

Jonah Goldberg offers some perspective on Free Trade.

I think the math on all this is wrong. Free trade is good for most American workers and all American consumers, not just the "1 percent." Indeed, it is largely thanks to trade that the average American worker is in the top 1 percent of earners in the world. The protectionists are also wrong philosophically. Countries don't trade with others countries; businesses and consumers transact with other businesses and consumers. Protectionism is corporate welfare by other means.

National Exceptionalism has its place in economics, but it should not in itself be a barrier to open trade. Populists tell us the trade deficit is a significant cause of all our economic woes. This is simply false. It is, in the main, an effect of our current (and seemingly interminable) moribund economy.

Our biggest economic problems are the budget deficit dominated by Government spending & debt, and the throttling of entrepreneurship and capital investment by the ever expanding and extra-legislative regulatory state.

No amount of protectionism can alleviate either of those.

I don't discount that "making a better deal" with our trading partners is possible. And I don't doubt that Donald Trump could make good deals. I happen to think that is essentially the only thing he might, on the whole, be good for as a president, but must admit that given his lack of consistent policy statements that it is hard to know what else he might be good for.

If our trade agreements (ed: corrected term for clarity) were our biggest problem, Trump might be the answer.

The trick to economic recovery is the same today as it was in the 80's: Rein in the government.

What I would want from any president that was representing me would be a dedication to things like:

  • Reducing existing regulations.
  • Requiring regulations that impact economic activity to have to pass legislative muster.
  • Simplifying the tax code, which includes removing tax haven loopholes while at the same time cutting tax rates.
  • Allowing corporations to repatriate tax-free their capital earned and taxed overseas.

We cannot at the same time enjoy our First World comforts, and demand First World pay rates for Third World productivity. It is simply economically impractical, if not entirely impossible.

We should be striving to enjoy the benefits of free markets and demand more access to them, rather than protection from them.

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posted by Open Blogger at 12:00 PM

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