Trade is good

One of the most frustrating things watching last week’s convention and in influence of Bernie Sanders, is the the reflexive anti-trade views.  Can we do free trade better?  Sure.  But we damn sure need to be doing free trade.  Virtually every serious person without a strong ideological agenda is in accord on the issue.  Sure, I expect the post-policy right to ignore things like science and expertise, but it is frustrating to see on the left.  Bill Ayers with one of the better explanations on international trade that I have seen:

Donald Trump has broken that consensus by convincing a group of voters that their troubles (real, perceived, or some of both) are because leaders in Washington have been signing “bad deals” in international trade. “Free Trade”, which used to stand beside mom and apple pie as inherently good things, is now used as an epithet. In short, trade has become a real political issue.

This is unfortunate, because both sides are at least partly wrong on this issue – although one is more wrong than the other.

Trump’s position on trade is almost completely wrong. He frames international trade deals as zero-sum exercises in which one side always wins and the other side always loses. Apparently he slept through the classes at Wharton in which he would have learned that every economist going back to Ricardo and Adam Smith agrees that international trade increases wealth for both sides. Indeed, economic exchange – whether across or within borders – is how the human race has managed to create as much wealth as we have, which is a pretty impressive amount. If all economics were as Mr. Trump describes, we’d still be bartering with rocks and hunting our dinner daily with sharp sticks.  [emphases mine]

What is true is that the benefits of that wealth can be unevenly spread – and this is where the “establishment” (Democrats plus what used to be the internationalist Republican party) drops the ball. All changes create differential effects – in Mr. Trump’s terms, winners and losers. NAFTA may create more jobs net in the United States (most evidence says this is true), but that doesn’t mean that some people in the US won’t lose their jobs to competition in the neighboring countries – just as some Ohio jobs may get destroyed because we have “free trade” with Indiana and Alabama…

The consensus approach, the one championed by Bill Clinton when he pushed for a NAFTA negotiated by his Republican predecessor, was that government would step in and help those displaced by change. Put more bluntly, government’s role would be to redistribute some of the wealth created by trade to make sure that those hurt by shifts in the economy could recover and get back to where they where, maybe even be better off…

Over the last 20 years, freer trade has created vast amounts of wealth in the United States. Unfortunately, at the macro level that wealth has been concentrated in the hands of the few – largely, New York financiers, most of them well-known to Mr. Trump. As someone who claims to “understand the system,” Mr. Trump should understand all of this. His rhetoric to date suggests that he doesn’t.

Short version: Yes, free trade!  Yes, policies that mitigate the very uneven effects.

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About Steve Greene
Professor of Political Science at NC State http://faculty.chass.ncsu.edu/shgreene

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