‘Unfettered free trade’ is a false cliché.
It’s the uncontroverted remarks, the ones that barely elicit any comment, that tell you the intellectual fashions of the moment. Twenty years ago, few would have blinked to hear an official say that free trade was ushering in peace and democracy throughout the world.
The lightly examined nostrums of our day are different. Consider Secretary of State Marco Rubio’s recent, widely (and justly) praised speech in Munich. He claims that “we embraced a dogmatic vision of free and unfettered trade” while other countries took advantage of us.
Really? Here’s Scott Lincicome writing in 2016, during the supposed reign of free-trade dogmatism:
First, although the United States maintains a relatively low average import tariff of around 3 percent, it also applies high tariffs on a wide array of “politically-sensitive” (read: highly lobbied) products: 131.8% on peanuts; 35% on tuna; 20% on various dairy products; 25% on light trucks; 16% on wool sweaters, just to name a few. (Agriculture is particularly bad in this regard.) We also maintain a long list of restrictive quotas on products like sugar, cheese, canned tuna, brooms, cotton, and baby formula. . . .
Second, while America’s tariffs and other “formal” trade barriers have indeed been declining for decades, they are only a small part of the overall story. U.S. non-tariff barriers – export subsidies, discriminatory regulations, “buy local” rules, “fair trade” duties, etc. – have exploded in recent years. In fact, according to a recent analysis by Credit Suisse, when you add up all forms of trade barriers imposed between 1990 and 2013, the biggest protectionist in the world isn’t China or Mexico but none other than… the United States.
Sounds pretty fettered.
Rubio goes on to say, “Deindustrialization was not inevitable. It was a conscious policy choice, a decades-long economic undertaking that stripped our nations of their wealth, of their productive capacity, and of their independence.” It’s certainly true that different policy choices could have softened the decline in manufacturing employment and further increased manufacturing output. Environmental regulations, for example, have a negative effect on both. But much of the decline in manufacturing employment could have been prevented only if we had somehow banned technological progress.
As one study concluded five years ago,
The bottom line is that almost the entire decline [in U.S. manufacturing employment] from 32 percent of the labor force in 1955 to 8 percent in 2019 was not caused by imports but by higher productivity. This is a worldwide phenomenon, as even Germany and other countries with positive trade balances also had their shares of manufacturing employment suffer comparable declines.
President Trump’s tariffs, at least so far, do not appear to have increased manufacturing employment: The recent trend has been downward.
Eliot Cohen, one of several commentators who often write harshly about the Trump administration but had good things to say about Rubio’s speech, called it “far more constructive” than most of what he has seen from it. He writes, “The main themes that Rubio hit were the profoundly damaging consequences of unfettered free trade and mass migration. In this, he addressed the justifiable anger that has fueled populism in the United States and abroad, and that even now baffles an uncomprehending wealthier class that does not feel, understand, or even particularly care about what its fellow citizens are experiencing.”
Perhaps people at all levels of wealth would understand what their fellow citizens are experiencing a little better if we all agreed, for starters, to drop the false cliché about “unfettered free trade.”