SINCE 1970, American imports have gone from just over five percent of GDP to roughly 17 percent today, and the number of American industrial jobs has plummeted. One compelling argument against a protectionist  industrial policy is that it would further empower intrusive and ever-expanding bureaucratic government.

In his book Free Trade Doesn’t Work, Ian Fletcher addresses this issue. He proposes a flat, across-the-board tariff that would be simple to administer and involve no intricate political engineering. He writes:

[O]ne of the great puzzles of American economic history is how the U.S. once succeeded so well under tariff regimes that were not particularly sophisticated. This is where the idea of  so-called “natural strategic tariff” comes in. Read More »

A GENERAL MOTORS plant that closed two years ago in Tennessee is expected to reopen under a new contract agreement that will allow G.M. to hire union workers for about half the standard wages. An article in today’s New York Times is an interesting look at how jobs that were headed to Mexico were recovered. Here is an excerpt: Read More »

I HIGHLY recommend Kristor’s most recent comments on trade policy, which offer a coherent, traditionalist approach to foreign competition. To call Kristor’s views “libertarian” is grossly inaccurate. He recognizes the integrity of the community and its duty to protect members from economic harm.

Since it is difficult to read his points in the current format, I have chosen a few excerpts to highlight here:

Freedom does not mean lack of constraint; it depends upon proper constraint of what would otherwise be mere chaos. Only in the context of such constraints can behaviour be orderly (or therefore either good or bad). Determining the nature and bound of proper constraint is the basic matter of political discourse. Mercantilists get the constraints wrong at one extreme; doctrinaire libertarians at the other. Mere liberty does not suffice to order a society, because it does not suffice to order a life. But central planning overdetermines on the basis of inherently insufficient data, and thus leads to grotesque errors of resource allocation… Read More »

BOB writes:

The entire free trade discussion is wrong-headed. We are in a transition in manufacturing technology that will eventually eliminate almost all manufacturing jobs. Someday, working in a factory will be as common as working on a farm. The real economic question is, how do we distribute the wealth created by manufacturing if there are no workers in the factories? Read More »

THE DISCUSSION on free trade continues here, with comments from additional readers and a very lengthy response to his critics from Kristor, who concludes his argument with this:

From my point of view, protectionists are urging us to slap a big Ace bandage over an open gangrenous wound. The rot in our culture goes deep. In dealing with our fix, trade war should be the last weapon we use, not the first. The first thing we should do is eliminate the absurdities in our own system. Let the Chinese continue to fund the absurdities in theirs. Most likely, they’ll end up like the last unstoppable mercantilist Asian Tiger we used to be all worried about: Japan. Remember when Reagan and Thatcher were just rolling up their sleeves, and the common wisdom was that the Japanese were about to take over the world? Then Reagan and Thatcher tweaked a few things in a rational direction, and we took off – while Japan cratered.

Kristor’s comments appear below in full. Thank you to all of the readers who have taken the time to discuss this important subject so knowledgeably. Read More »

LAURENCE BUTLER, a reader of this site, is the author of the following essay, which was written for an essay contest held by the Libertarian ISI group in Virginia. The topic of the contest was, “Can Character and Community Survive in an Age of Globalization?” Mr. Butler’s response was, in so many words, “No, they can’t.”  The essay is relevant to the recent discussions here on free trade and, though it is quite lengthy, I think readers will enjoy it and so I am posting it in its entirety.

Read More »

THE DISCUSSION of free trade continues. Many readers passionately argue that economic ideologues have caused the catastrophic de-industrialization of America.

A reader in the latest thread writes:

I have a B.A. in economics, something I am profoundly ashamed of. I have most of a Masters in Econ and did some courses with Murray Rothbard who was a spellbinding lecturer and like Milton Friedman had a simple, clear, brilliant, wrong answer for every complex question. Economists have spectacularly failed to predict or forestall two massive economic bubbles, two recessions and worsening unemployment (that’s just in the last 10 years). My own view is that the discipline is corrupt. Read More »

GREG JINKERSON writes:

Kristor has made brilliant remarks about the drawbacks of protectionism, but all of his criticisms are leveled against state-planned protectionism, rather than answering the axiomatic truth that a businessman is just as bound up morally with his community as any other individual. I don’t know where Kristor stands on the issue of an entrepreneur’s free moral obligation to the community where he does business, but judging from Kristor’s allusion to his own theological writings, I get the impression that he is sensitive to the spiritual dimension of trade, and I am in no way presuming to inform him of something he is already well aware of. I am as alarmed as Kristor by the idea of granting bureaucrats in Washington D.C. the power to dictate how and with whom private businesses are permitted to do business. But central planning and pure free trade are not the only two options available, and in criticizing the latter, I need not embrace the former. Read More »

KRISTOR writes:

Free trade  would work great for us, and we would retain all those high tech industries, if we wanted to. But we don’t. How can I tell that we don’t? Because unlike the Chinese, we load all sorts of economic burdens on our producers: regulations, high corporate taxes, labor rules, etc. We prevent business. The Chinese try to remove those burdens, wherever they can. They bend over backwards to promote business. Read More »

IAN FLETCHER, author of Free Trade Doesn’t Work: What Should Replace it and Why, which has been discussed here before, debates Forbes columnist Tim Worstall at Huffington Post. Fletcher writes:

America right now is being inexorably stripped of its most valuable industries by its naïve embrace of one-sided free trade. Here’s the Harvard Business Review‘s list of industries we have already lost: Read More »

THE Coalition for a Prosperous America’s site has  a concise overview of our trade deficits, their effects on the economy and proposals for what to do about them in this fact sheet. According to the coalition:

We have trade deficits in virtually all sectors, from low tech to high tech to green tech. Agriculture has ceded domestic market share to imports also.

To the extent we create jobs, they are low wage, low benefit jobs. Our loss of manufacturing means that workers move from manufacturing to service jobs for an average 40% pay cut.

Read More »

THE LATEST DISCUSSION on free trade has been particularly interesting. One reader in that entry made the point that capital raised in offshore industry is reinvested in our economy and leads to further innovation and new industries at home. In response, the reader R.S. writes:

And that productive capital can in future be invested in places that are not the United States, for exactly the same reasons that productive capital has been invested in existing industries, in places that are not the United States, and exactly the same reasons that productive capital is being invested in new industries, in places that are not the United States.

He also writes:

[N]o serious thinker believes that a large nation can maintain itself, defend itself, and prosper as a “service economy.” Shills, hacks, CNBC screechers, Timothy Geithner, professors at George Mason, and Economist leader-writers, yes, but not serious people. Read More »

R.S. WRITES:

One commenter in the previous discussion mentioned Toyota, I would like to hold that company up to the claim made by another reader that protectionism always leads to shoddy union practices and inferior products. Interested readers might like to review the history of that superlative manufacturer when evaluating theoretical objections to protectionism. Read More »

IAN FLETCHER recently discussed his book Free Trade Doesn’t Work: What Should Replace it and Why on Thom Hartmann’s TV show “Conversations with Great Minds.” You can view the program here. Fletcher criticizes what he calls the “intellectual corruption” and the “ultra mathematicization” of academic economics.

Read More »

FROM IAN FLETCHER’S book, Free Trade Doesn’t Work: What Should Replace it and Why:

The idea that America’s economic tradition has been economic liberty, laissez faire, and wide-open cowboy capitalism – which would naturally include free trade – resonates well with our national mythology. It fits the image of this country held by both the Right (which celebrates this tradition) and the Left (which bemoans it). It is believed both here and abroad. But when it comes to trade at least, it is simply not real history. The reality is that all four presidents on Mount Rushmore were protectionists. (Even Jefferson came around after the War of 1812.) Protectionism is, in fact, the real American Way. (p. 131) Read More »