Of all the things conservatives might find objectionable about Donald Trump, one towers above the rest, worse than all of the others put together, multiplied by ten times, and that is Trump’s embrace of protectionist trade policies. What is particularly tragic about watching Americans of all stripes start to walk down this road to perdition is the utter lack of recognition that the reason why we find ourselves in times of such economic insecurity in the first place is protectionism. Protectionism is not just a trade policy. Every policy that protects a special interest from competition is protectionist, and the domestic U.S. economy has become one giant protectionist racket. It is a testament to the ingenuity of American industry — and to free trade — that this economy has managed to eke out any growth at all in the Obama era. Tragically, precious little of that growth has made into the homes and onto the dinner tables of America’s working families, but that’s not because of free trade. It’s because of the opposite!
In this vein, Professor Richard Epstein has a piece up today at the Hoover Institution, “The Rise of American Protectionism,” that everyone should read. Here’s a taste:
There are of course major difference between the insidious Trump and buffoonish Sanders. The former, for example, favors low taxes and the latter confiscatory ones. Still, the real selling point of each boils down to one issue: In the indecorous language of the pollster, Pat Caddell, Americans feel “they have been screwed” by free trade. Caddell writes as if this virulent falsehood is an undisputed fact. What is undisputed, however, is that Adam Smith’s defense of free trade is in retreat as protectionism becomes the common thread across the both political parties. It is as though the economic unwisdom of the 1930Smoot-Hawley Tariff Act is back. The question is why protectionism is having a political moment.
One answer is that things have not gone well in the United States. Standards of living have been static at best, and people feel economically insecure. In this environment, it is easy to blame the obvious culprits, like the tide of imports and the systematic movement of American jobs overseas to locations where the regulatory environment is more favorable and where the cost of labor is cheaper.
But putting the story in this fashion conceals the key benefit of free trade. Free trade offers an uncompromising indictment of, and a powerful corrective for, America’s unsound economic policies. Private investors have been voting with their feet in response to such policies. Simply put, the reason that local businesses outsource from the United States is the same reason why foreign businesses are reluctant to expand operations here. Our regulatory and labor environment is hostile to economic growth and there are no signs of that abating anytime soon. The United States has slipped to eleventh place on the Heritage Organization’s 2016 Index of Economic Freedom. And it is not just because other nations have moved up. It is also because the steady decline in freedom and productivity inside the United States has continued apace. Ironically, the strong likelihood that the next American president will expand protectionist practices will only make matters worse: firms, both foreign and domestic, are more reluctant to invest in the United States, and the risk of a trade war by other countries such as Mexico is a live possibility, especially if Trump imposes high tariffs on automobiles made there for the American market.
The great advantage of a free trade policy is that it both reduces these political risks and makes it impossible to conceal these glaring structural defects from the world. And once they are recognized at home, free trade gives the federal government and the individual states strong incentives to clean up their act so that they can once again be attractive to foreign investment.
Watching Americans succumb to protectionism is to watch an epic tragedy unfolding before one’s very eyes. There’s still time to avoid the tragic fall. But Americans have to snap out of this enfeebling torpor and realize that after eight years of Obama, protectionism is the worst possible course we could take. It would be national suicide, pushing us irretrievably down the very road to perdition that progressives have been trying to pull us down for decades.
America has never known what it’s like not to be great, not really. But if it keeps going the way it’s headed in this election, it’s going to find out.