Sunday, March 20, 2016

Maybe Finally a Debate on Trade

3/20/2016—Maybe now, finally, America will have its debate on free trade. Since Bernie and Donald sound very similar on the issue, and since so much of the working class anger seems to focus on free trade, and since the trade issue has seriously hurt Hillary, the debate now seems inescapable.

Readers of this blog know that I have been writing about the dodges of the free traders for awhile. My favorite foil is Paul Krugman, who, as an economist knows the value of trade, but as a columnist cannot bring himself to challenge the progressive wing of his Party.

It is a fair question and now has to be answered. Would America be better off economically if we avoided trade? The answer seems to me so obviously no that I have a hard time treating it as a real question. The problem with the debate is to estimate fairly the alternatives. Those alternatives have to be pretty open trade versus pretty closed trade. You don’t get to choose only the favorable aspects of trade because your trading partners would then be doing the same thing.

So, if you don’t send some manufacturing jobs abroad, you have to ban a lot of imported products. To keep manufacturing air conditioners, you have to ban the import of foreign air conditioners. But then you have to live with expensive air conditioners in all businesses. Eventually, everybody is worse off, including the workers in those more expensive industries.

Plus, a lot of lost manufacturing jobs are being lost to innovation, not trade. Robots are costing a lot of jobs and are doing the same thing that trade is blamed for-—helping the better educated, better off workers at the expense of workers at the lower end of manufacturing. This exacerbates inequality. But I have not heard any candidate criticizing robots.

It is an important debate and the anger of workers, especially the white working class, shows how democracy has failed to promote actual discussion. We can thank Bernie and Donald for making our elites talk about the reality of trade. But Bernie and Donald are still wrong.

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