Free-Traders Having Second Thoughts

billclinton notfeat Free Traders Having Second ThoughtsPoisoned pet-food ingredients are coming in from China. Are the Communists out to kill our pets, or is the mood in America beginning to shift?

A more substantial sign that something is afoot is the announcement by the free-trade-daffy administration in Washington that it is putting a tariff on glossy, high-quality paper imported from China, because the Chinese paper industry is able to undersell American paper thanks to an alleged government subsidy. The allegation is probably true, but it has also probably been true for years—so why is the United States tacking on duties now?

Sentiment against free trade and the globalization and outsourcing it brings with it is hardening, and it is growing among the non-rich majority. For an increasing number of people, a few even highly placed, the fruits of free trade dangled in front of the populace by the Clinton and Bush administrations have developed black spots and wilted.

Hence the clamor grows to protect our borders against what is entering in the form of immigration and importation, and what is leaving in the form of jobs, technology and investment. The line for protection forms at the right, and at the head of it you’ll soon see the American steel, plastics, textile and furniture industries. Others may be expected to follow and add to the clamor for the same kind of help given to glossy paper.

Reading the administration on this one is tricky. It could be that the paper impost is intended to crowbar the Chinese into letting their currency float up to market value, which would make their goods more expensive here, and what we have to sell cheaper there. The belief persists in the Treasury Department that a little manipulation of the yuan by the Chinese will take care of a large chunk of foreign-trade problems. Dream on, fellas.

Regardless, it is beginning to occur to some members of our double-domed professoriate that universal free trade comes with some large drawbacks, not to mention failures. In the 13 years since NAFTA, Mexicans—save for the billionaires—have grown poorer, and as a result, the Mexican countryside has been depopulated. Elsewhere, free trade in practice is not what it was cracked up to be in the selling thereof.

Here in the United States, the free-trade binge has been, at best, a qualified success, as we have seen much of the middle class begin to sink slowly into distress, debt and/or a diminishing standard of living. Nonetheless, our most prestigious and best economists have been close to unanimous in their insistence that the road to riches for all is the path of free trade. Without question, it’s been great for the top 2 percent—but the remaining 98 are not doing so well.

The free-traders’ premise is that every country has a kind of natural, comparative economic advantage over every other country in what they offer for sale, so that, if all barriers are done away with, every trading society will come out well. A win-win winner, as they say.

These ideas on international trade date from the late 18th century and may have held up in practice two centuries ago, when one place might have iron ore and another the perfect climate for growing corn, etc. In the 21st century, when cheap transportation and communication nullifies one nation’s natural advantages over another, the difference in profitable trading increasingly boils down to which place has the most diligent, best-trained and cheapest workers. That is turning out to be a lose-lose loser, as they seldom say.