Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

Trade and Tribulation Here's a Demagoguery-Free Primer on Trade

Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

Trade and Tribulation Here's a Demagoguery-Free Primer on Trade

Article excerpt

Why did Bernie Sanders win a narrow victory in Michigan, when polls showed Hillary Clinton with a huge lead? Mr. Sanders may have gained traction by hammering on the evils of trade agreements. Meanwhile, Donald Trump has also been bashing the supposedly unfair trading practices of China and other nations.

So, has the protectionist moment finally arrived? Maybe. But there are other possible explanations for Michigan, and free-traders have repeatedly cried wolf about protectionist waves that never materialized. Still, if protectionism really is becoming an important political force, how should reasonable people respond?

There are three things you need to know.

The first is that we have gotten to where we are - a largely free-trade world - through a generations-long process of international diplomacy, going back to FDR. This process has been of quid pro quos - I'll open my markets if you open yours - with rules to prevent backsliding.

The second is that protectionists usually exaggerate the adverse effects of trade liberalization. Globalization is only one factor behind rising income inequality, and trade agreements are only one factor in globalization.

Trade deficits have been an important cause of the decline in U.S. manufacturing employment since 2000, but that decline began much earlier. And even our trade deficits are mainly a result of factors other than trade policy, like a strong dollar buoyed by global capital looking for a safe haven.

And yes, Mr. Sanders is demagoguing the issue, for example with a Twitter post linking the decline of Detroit, which began in the 1960s and has had very little to do with trade liberalization, to "Hillary Clinton's free-trade policies."

That said, not all free-trade advocates are paragons of intellectual honesty. In fact, the elite case for ever-freer trade, the one that the public hears, is largely a scam. That's true even if you exclude the most egregious nonsense, like Mitt Romney's claim that protectionism causes recessions. What you hear, all too often, are claims that trade is an engine of job creation, that trade agreements will have big payoffs in terms of economic growth and that they are good for everyone.

Yet what the models of international trade used by real experts say is that, in general, agreements that lead to more trade neither create nor destroy jobs; that they usually make countries more efficient and richer, but that the numbers aren't huge; and that they often produce losers as well as winners. …

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