Mr. Grisedale, in his piece “Free trade isn’t a principle, it’s a policy,” in the Sept. 6, 2018 edition of the Hillsdale Collegian, argues that protectionism is the pragmatic choice and free trade isn’t rooted in any sort of principle. I believe his analysis makes a number of errors, both economic and historical.
First, nations do not trade, individuals do. While we say “the United States” trades with “China,” this is shorthand for “individuals in the United States” trade with “individuals in China.”
Protectionism, in contrast to the populist conception of it that Grisedale has, only benefits a small, concentrated group (domestic producers of the protected industry) at the expense of consumers and other producers, who face increased costs and less availability.
Free trade is a principle which should manifest as a policy, rooted in an understanding of economic truth and liberty. Free trade is unabashedly good, though it does have costs. Those who cannot compete with overseas producers will go out of business, resulting in decreased domestic employment. These costs, while real, are enormously outweighed by the benefits of free trade to consumers, and all other producers, who have access to cheaper goods in greater quantity.
The assumption that, because China places tariffs on U.S. goods, the United States must also place tariffs on Chinese goods, is fallacious. For one, tariffs overwhelmingly harm domestic consumers and producers.
Grisedale’s prescription is akin to me shooting myself in the foot, on the premise that my neighbor is also shooting himself in his foot, in a misled scheme of false revenge. Trade deficits are not inherently bad. They simply show that individuals within the United States imported more goods than they exported, usually due to either lower costs or superior quality.
While free trade does allow individuals to purchase desired goods from overseas, I can’t find any reason to blame free trade for drug overdose deaths, as Grisedale does. This assertion is roughly equivalent to blaming free trade in automobiles for the approximately 40,100 people killed in vehicle deaths in the United States in 2017.
Grisedale blames the trade deficit for a “hollowing out” of a manufacturing base in the United States. Yet, manufacturing output in the United States is roughly as high as it has ever been. According to data from the St. Louis Federal Reserve, manufacturing output in Q2 2018 was just below its pre-Great Recession peak. The United States also remains the world’s largest economy and manufacturing wages continue to increase, contrary to Grisedale’s claims of falling wages.
In addition to missing the mark on economic grounds, Grisedale gets the historical facts wrong . While protectionism was a secondary goal for the Tariff of 1789, the primary purpose was to collect revenue for the newly formed federal government, which had few other means to fund itself at the time.
Grisedale is correct that Henry Clay, Abraham Lincoln, and William McKinley were all ardent defenders of protectionism, but they were equally flawed correct in their assessment of its merits.
In particular, McKinley’s claim that the United States is in danger of destruction by the removal of tariffs is mistaken. His flawed use of war-like language to describe trade is not new. As French political economist Frederic Bastiat wrote the over 150 years ago in Economic Sophisms, “What analogy is there between an exchange and an invasion? What possible similarity can there be between a warship that comes to vomit missiles, fire, and devastation on our cities, and a merchant vessel that comes to offer us a voluntary exchange of goods for goods?”
Grisedale is correct that the Republican Party has historically been a proponent of protectionism. As is the case with his other appeals to historical authority, the fact that Republican presidents supported protectionism does not make it a good idea.
The assertion that all the United States gains from freer international trade is “foreign trinkets” is laughable. The vast increase in wealth, standards of living, and employment as a result of free trade cannot be understated. Americans overwhelmingly benefit from free trade.
Proponents of protectionism, many of them dedicated supporters of Donald Trump, may find themselves surprised when the outbreak of another trade war at his behest ends in impoverishment and failure. I’ll close with another great piece in the Western canon, albeit later than Voltaire’s “Candide.” As Ronnie James Dio sings in Rainbow’s 1976 classic “Stargazer”:
All eyes see the figure of the wizard
As he climbs to the top of the world
No sound, as he falls instead of rising
Time standing still, then there’s blood on the sand
Oh I see his face!
Where was your star?
Was it far, was it far?
When did we leave?
We believed, we believed, we believed.
Tyler Groenendal is a ‘16 alumnus and is the Foundation Relations Coordinator at the Acton Institute.