What will President Obama’s trade policy be? A Washington Post story about Ron Kirk, his nominee for U.S. Trade Representative, laid it out. It summarized Obama’s campaign rhetoric as “he generally supports free-trade policies, but also signaled a tougher approach,” and quoted Ron Kirk that “I believe in trade and will work to expand it, but I also know that not all Americans are winning from it.” That is, both favor a “for free trade, but” policy.
This leads to the question: Why do politicians endorse free trade, yet devise “but this, that, and the other” excuses for protectionism? They talk of commitment to free trade, but create restrictions instead because most people’s commitment to narrow self-interest exceeds their commitment to principle. There is always something, whether it is environmental concerns, the trade deficit, unemployment in particular industries, self-sufficiency, national defense, or a desire to pressure other countries to change their policies, which can provide political cover for self-serving actions.
This “I’m for free trade, but” approach ignores America’s history. Much of our early economic success was because the Constitution abolished states’ attempts to take advantage of each other through restrictions on interstate commerce, creating the world’s largest free trade zone. Everyone benefited, as no government could impose extra burdens on mutually beneficial trades just because shipments crossed a border.
Since then, despite the overwhelming empirical and logical evidence for free trade, it has been demoted from a central organizing principle of our society to one primarily commanding lip service. Free trade still wins all the rhetorical battles, because it is at heart just the self-evident proposition that people who voluntarily trade expect to benefit, regardless of their trading partner’s citizenship. However, even moves touted as toward freer trade bristle with restrictions.
Free trade is sacrificed to special interests, as politicians claim to favor it, but oppose it in each particular case for some other reason, transforming free trade into “fair,” “balanced” or “responsible” trade.
Much of our opposition to others’ restrictions springs not from commitment to free trade’s demonstrated social benefits, but because easing their restrictions will line our pockets, and “free trade” sounds better than “gimme money.” But when free trade threatens protected interest groups, they push for “fair trade” restrictions, because that also sounds better than “gimme money.”
What we all actually support are fewer restrictions on our ability to advance our own welfare. So we want free trade rather than restrictions when selling our own output, because that creates more profitable sales. We want freedom for those who sell to us and in deciding how to produce, because both mean lower costs. However, we want restrictions imposed on competitors, because that also benefits us. The difference is that all voluntary participants gain from freer trade, but the beneficiaries of restrictions gain at an even greater cost to others, who the government forces to make do with inferior alternatives.
Free trade creates wealth. We should favor opening others’ markets, because that benefits both their consumers and more efficient American producers, by breaking the political strangle-hold of their protected producers. But free trade is beneficial for Americans just as it is for others, and helping uncompetitive American companies harm our citizens by restricting their access to foreign products they prefer is precisely the same abuse we criticize others for.
The trade restrictions America maintains, and which President Obama intends to increase, make almost every citizen worse off (those most wrapped in government’s protective cocoon, such as labor unions, granted monopolistic power through labor laws, will face stiffer competition, but calling reductions in unwarranted restrictions “unfair” strains the meaning of the word). And even though his administration is “carefully avoiding words and deeds that directly smack of protectionism,” its proposals are merely camouflaged protectionism. That doesn’t change the fact that its purpose is to harm some Americans to benefit those politically favored, which is a far cry from advancing our general welfare.