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Donald Trump’s Zero Sum Trade Policy Affronts Classical Liberalism

If judicial nominations are the best reasons to support Donald Trump, one of the best reasons to oppose him is his trade policy. In a speech this week he made clear that he will block the Transpacific Partnership, unravel NAFTA, and try to raise tariffs generally, which he implied were a good substitute for other kinds of taxes. He would be the President most opposed to foreign trade at least since President Hoover signed the disastrous Smoot-Hawley Tariff Act.

There is a reason that freer trade has always been at the heart of the classical liberal vision—from the Manchester School in the nineteenth century to Reagan’s America.  It is not only that trade creates wealth through exchange. It is that trade is part of the engine that sustains civilization through human cooperation when we get rid of mind forged manacles, like mercantilism and distaste for foreigners. It is the enlargement of the sphere of cooperation domestically and globally that offers a long-run boost to security as well as prosperity.

Beyond the details of his policies, Trump’s position on trade shows him the opposite of a classical liberal—someone who thinks that political and economic life is zero-sum where the point of  a nation is win over other nations and the point of an individual is to win over others.  That is the recipe for endless political conflict and division—a medieval Game of Thrones played out in the twenty-first century.

I will not belabor the obvious point that trade is wealth creating. The Library of Economics and Liberty makes that point more eloquently than I can. Here is a bit:

Americans should appreciate the benefits of free trade more than most people, for we inhabit the greatest free-trade zone in the world. Michigan manufactures cars; New York provides banking; Texas pumps oil and gas. The fifty states trade freely with one another, and that helps them all enjoy great prosperity. Indeed, one reason why the United States did so much better economically than Europe for more than two centuries is that America had free movement of goods and services while the European countries “protected” themselves from their neighbors. To appreciate the magnitudes involved, try to imagine how much your personal standard of living would suffer if you were not allowed to buy any goods or services that originated outside your home state.

I would add only that another economic advantage of trade is that it expands the size of the market. And that enlargement provides greater incentives for innovation and the possibility of innovation is the greatest boon to the less well off. As I have noted before, innovations more rapidly go down the income scale than ever before.

To be sure, some people lose jobs because of trade, but many people gain jobs as well. And many people also lose jobs because of domestic competition in markets and all of the creative destruction of innovation. Yet we encourage domestic competition and innovation. More targeted policies to address these more general dislocations include better education and worker retraining. They can help not only with those displaced by trade but those displaced by technological change.

The geopolitical and cultural arguments for trade are as powerful as the economic ones. Trade is a force for knitting nations together. That is why the TPP can help free nations stand up to China just as GATT helped us wage the Cold War against the Soviet bloc. One geopolitical consideration should be of particular interest to Trump: by making other nations more prosperous we reduce pressures for immigration to the United States less likely.

Reader Discussion

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on June 30, 2016 at 09:59:13 am

Any trade bill that is over 1,000 pages in length is not a free trade agreement. The U.S. is probably the world's largest free trade zone. It took only one clause of the constitution to set it up. A single paragraph. And it's been great for America. NAFTA? Not so much.

Enough with your snake oil. The U.S. is the wealthiest market in the world. Everyone wants to be a part of it. We have massive leverage to get the best deals for our people. Yet, we're giving away the store to benefit the global corporations at the expense of the people. That's insane.

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boxty
on June 30, 2016 at 10:30:44 am

LIncoln was a protectionist, so I think you're oversimplifying when you say that "freer trade has always been at the heart of the classical liberal vision."

Also, one can reject Trump's stupid idea of embarking on a trade war (which he could not do without congressional action, anyway) without endorsing further poorly negotiated (by the US), sovereignty-infringing trade deals like TPP.

Free trade with other countries is mostly a good thing, but is not an end in itself. Moreover, we should recognize that "free trade" is now being used as a wedge to enforce the ruling class consensus on other matters, such as immigration and "climate change."

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djf
on June 30, 2016 at 11:43:17 am

dj:

Agreed!

As a general proposition, one can agree with McGinnis' commentary on the benefits of free trade. Oh, if it were onlu so that trade is *free.*

You rightly point out that far too many of these *deals* (gee, The Trumpster is going to make *Yuuuge* deals) have the effect of limiting trade or otherwise imposing restraints upon either the US or upon the competitors of those corporations fortunate enough to be able to *assist* with the drafting of the agreement.

I will repeat a comment I recently made here:

The petri dish of corruption is seeded with the nuance of deftly drafted regulations (trade agreements) - as is the ambition of the power seeking bureaucrat.

While The Trumpster, and many of his supporters may not articulate this sentiment, I suspect that there is a nascent understanding that it is so - and that they are on the short end of the stick.

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gabe
on June 30, 2016 at 14:38:03 pm

Also, I wonder what additional "trade" the US would get from TPP? I suspect that the deal is not intended to open new markets for US-made cars or other manufactured goods. Rather, the point is probably to allow big US law, accounting and consulting firms to open up more overseas branches. In other words, to help the already rich get even richer, while feeling good about themselves by stuffing more of their open-borders/climate-change baloney down our throats. If I'm wrong, please correct me.

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djf
on July 01, 2016 at 09:51:27 am

Hey, don't look to me for a correction!

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gabe
on July 01, 2016 at 14:29:01 pm

It was a general invitation. But I doubt that anyone will take it up, except maybe to add investment banks and financial advisors to the list of probable beneficiaries of TPP.

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djf

Law & Liberty welcomes civil and lively discussion of its articles. Abusive comments will not be tolerated. We reserve the right to delete comments - or ban users - without notification or explanation.

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