The Tin Ear of Free Trade Advocates

As an unabashed supporter of Donald Trump and a conservative who has long been of the paleo-populist persuasion, I frequently find myself engaged in online debates with “regular” conservatives, and one of our most common and contentious topics is the virtues of free trade. One of my frequent foils on the matter recently directed me to this op-ed by radio talk show host and senior fellow at the Heartland Institute, Ross Kaminsky. It is tellingly entitled “Trashing Free Trade Isn’t Economics – It’s Pandering.”

Not surprisingly, I did not find the article to be the slam dunk logical defense of free trade that my intellectual sparring partner thought it was. I saw the article as an excellent illustration of why the purist case for free trade has trouble gaining traction outside the echo chamber of the already convinced, much to the chagrin of all the supposed experts and other purveyors of the conventional wisdom.

First of all, a word about terminology. The term “pandering” suggests insincerely telling voters what they want to hear. Accusing Hillary Clinton of pandering on trade is entirely justified. Hillary is a long time neoliberal who vocally supported NAFTA in the early 90’s and the pending Trans-Pacific Partnership (TPP) until she found herself in a difficult primary battle with anti-TPP Sen. Bernie Sanders. Then she suddenly discovered that she had reservations about the deal. Hillary’s mid-campaign change of heart was transparently politically motivated. Donald Trump, on the other hand, has been advocating the same economic nationalist message since he first became a public figure in the 80s. Trump was anti-NAFTA before it was cool to be anti-NAFTA on the right, while Hillary and her husband, President Bill Clinton, were pimping for NAFTA against the wishes of the Democrat’s labor base. You may believe Trump is wrong on the issue of trade, but you can’t fairly accuse him of pandering because there is no reason to doubt his sincerity on the issue. He has been very consistent about his displeasure with US trade policy for decades.

It’s not surprising that Kaminsky would see any objection to free trade as pandering, however, because he has the certitude about his position that only a good theory can impart. Any opposition must be either uninformed or insincere because “all the experts agree.” “It’s just so obvious.” I was previously familiar with Kaminsky through some interaction at the old American Spectator comments section. Kaminsky is an ideologue. His bio describes him as an Objectivist/libertarian. He knows the answers before the questions are asked. Free trade is a good because his tidy little theory tells him so, unemployed factory workers be damned. Few things are as potentially harmful as an ideologue armed with a good theory.

This is typical of the conventional tin ear case for free trade which usually goes something like this: “All the experts and important people agree that free trade is a good thing, because our theory says so, so you yahoos need to quit your griping and listen to your betters.” Unfortunately for free trade advocates, voters in Flyover Country aren’t policy wonks, and I highly suspect that most of them wouldn’t know David Ricardo from Ricky Ricardo, and neither do they take too kindly to experts and mouthpieces of the conventional wisdom telling them that a neat theory trumps what they see with their own eyes.

What Average Joe in Flyover Country sees when he drives through the countryside is dilapidated old mill towns where half the population that remains is on disability and hooked on OxyContin and the other half works at Walmart or McDonald’s serving the few professionals (doctors, lawyers, teachers, nurses, etc.) that remain in town and people that commute to the nearest big city who still have some disposable income. This kind of economy is not sustainable long term. Average Joe in Flyover Country remembers what it was like when the mill was in operation, and he sees what it's like now, but the experts remain dumbfounded why he is skeptical of their perfectly good theory. He just knows what he sees and can intuit from common sense. The mass movement of manufacturing overseas and south of the border is a bad thing for his community, his neighbors, his friends and his family. And his country.

Kaminsky comes armed with some numbers of course. Free trade advocates usually do, but you know what they say about statistics. Kaminsky writes, “Here in Colorado, we have an advanced, technological economy, a highly educated work force…” Yes, I’m sure Denver and Boulder and Vail are doing just fine, but what about rural Colorado? What about that member of the workforce who isn’t highly educated? “Ah,” the smug advocate of free trade will reply, “he needs to pull himself up by his bootstraps and get an education.” But what if his IQ, through no fault of his own, is 85? Is he going to train to be a thought worker in Kaminsky’s 21st Century economy? Or is he relegated to a life of flipping burgers and living in his parent’s basement, and that’s if he’s responsible enough not to knock up his girlfriend and the whole lot of them wind up on government assistance of one kind or another ultimately paid for by taxes on said thought workers and ever accumulating debt. 
I found this factoid in Kaminsky’s column rather telling. “Our top exports include beef, computers and other industrial machinery, and medical instruments.” Hmmm… what do all those things have in common? They’re all tangible things that somebody had to toil to make. “Our top imports from NAFTA members include vehicles, electric and industrial machinery, and plastics.” Hmmm… notice a pattern here? Does the irony of this not smack Kaminsky in the face? You can only have so many thought workers and the low skilled service workers who hover around the economy they create. What is the broad swath in the middle supposed to do? The whole middle economy can’t be radiology techs and car salesmen. Somewhere somebody has to be either growing something, digging something up or making something, or the whole enterprise will eventually collapse under its own weight.

The question is where are we going to make it? Here or in Bangladesh? We don’t have to make it all here, which is where rational trade policies would come in, but unless Kaminsky and company are willing to openly advocate for a two tiered economy with a vanishing middle class, a trend that is already well under way, we have to make something here. The problem with Kaminsky and other likeminded free trade ideologues is that they are economic reductionists who see human beings as simply freely interchangeable economic units. For them national borders are mere contrivances that hamper efficiency and the free movements of goods, services and labor, that enough multilateral free trade agreements will minimize to the point of insignificance leading to one big well-oiled global economic zone. The problem for this well laid plan is that people are not just freely interchangeable economic units and national borders are not just troublesome impediments to maximally efficient economic activity, and said people are not inclined to view them and theirs as such or their country as a mere contrivance. Darn that reality. It has such a nasty habit of messing up a perfectly good theory.

Thankfully, Average Joe is neither as Utopian nor as foolish as Mr. Kaminsky and company, and recognizes he is being sold a bill of goods. Average Joe in Flyover Country has long been trending Red, but the thought leaders of the Red Team, such as Mr. Kaminsky, have been giving ideological cover to trade policies that benefit the elite donor class (which have been trending Blue, by the way) at the expense of the inhabitants of Flyover Country who actually vote for the Red Team. And the thought leaders scratch their heads and wonder why the yokels won’t listen to their betters and stop their whining about manufacturing jobs going overseas and have responded in such large numbers to a “panderer” who rejects the received wisdom of the thinking class. Perhaps those thought leaders aren’t as smart as they think they are.

This article was originally published at OpEd News.



big donor ear

Billionaires and their businesses are dictating trade, on a global scale. Both parties, EVERYBODY wants something done about these horrific trade deals, offshore outsourcing, bringing in foreign guest workers, glorified legalized money laundering, tax havening, etc. agenda.

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Every expert?

I tire too of this dismissive attitude from free trade ideologues saying all experts agree. There are quite a few serious economists who do not agree.

They range the gamut from generally being in favor of trade but that our safety net is woefully inadequate to handle the displacement to full on its been a bad deal from the get go. Names like Blinder, Baker, Tonelson, Gomory, Fletcher, Stiglitz, Roubini, Black immediately come to mind as well as former free trade cheerleaders like Reich and even Krugman changing their tunes in recent times.

Even the Adam Smith and David Ricardo would not agree with trade as its practiced today and they are the economists whose theories are often perverted to justify free trade. I just can not imagine the father of comparative advantage agreeing that trading wealth, jobs and technology for debt and deficit is any kind of advantage or good deal.

Something I like to recap when I hear these free trade bozos spout their nonsense:

"Benefits" of free trade
Weakened national security - the pentagon has been sounding this alarm for some time
Lessened technological and innovative edge - manufacturing accounts for over 70% of R&D investment - most advances come not from earth shaking "disruptive" technologies, but from incremental improvement to products and processes - as well as repurposing existing technology.
Stagnant wages - former higher pay, better benefit mfg workers shift to lower pay, no benefit service jobs
Intellectual property theft
Poor quality/ unsafe products
Commoditization of labor
Increased debt/deficit - borrowing to buy foreign made products that we once made for ourselves
Supply chain interruption - dependence on materials and products from unstable and potentially hostile parts of the world
Increased energy demand - takes a lot of energy to ship things all over the world
Accelerated environmental degradation- shift of production to less regulatory environments and increased consumption of extracted finite resources
Human rights abuses

People here in flyover country are not the unskilled uneducated rubes the elites take us for. We do see for ourselves the devastation that "free" trade has wrought on our communities - boarded up main streets, closed factories and the resultant loss of tax revenue to keep up basic services. Towns all over the industrial Midwest have lost their productive capacities I can take you on a tour of my city and tell you where every plant went - Mexico, China, Pakistan, India if not outright run out of business by unfair foreign competition. The few that remain are ghosts of their former selves. And these were not "buggy whip" makers that declined due to changing technologies - these were all manufacturers of products in daily use today. Another infuriating claim by the free traders BTW - that obsolescence and automation took the jobs away.

Two world wars were won by the Arsenal of Democracy - our manufacturing capacity was able to easily convert from civilian purposes to war material in short notice - we'd be in big trouble today if it came to that again, Cripes, we cant even make boots and uniforms anymore.

Then I hear crap like that T-shirts are cheaper. We used to be able to afford T-shirts just fine when we made them for ourselves.

Here is how it works:

Walmart claims they save an average family $2600 a year with their imported junk
An average manufacturing worker earned $50k a year. Mfg worker's plant closes and he/she is forced to take a service job that pays 20% less or $10k. $10000 - 2600 = $7400 less money an average family has that is not spent on housing, education, goods, savings, paying down debt and so forth- all productive things for an economy - but hey we saved a couple bucks on a T-Shirt - yippee!

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Good points

You should turn this comment into a post of it's own.

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Dan E. Phillips, MD

here here

Dr. Phillips is right, this is the start of a very good op-ed or article and just email me if you want an author account. Good to see you again!

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Thanks for the kind words Dan

Thanks for the kind words Dan and Robert. I may wish to take you up on that offer Robert. If you wish to move my post to an article of its own I am OK with that. I found out about two more prominent free trader economists that have grown increasingly skeptical about the benefits of globalism - Martin Wolf and Larry Summers (yes, that Larry Summers!)

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lies from the rich

the rich have always wanted to screw the poor -- it is up to us to vote them out and take our country back

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Hillary on H-1B

Not saying that Trump won't pull a bait and switch, and I'll bet his hotels are loaded with workers on guest Visas...but...

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Article "Globalization Doesn't Make as Much Sense as It Used To"

"So, in theory, free trade was a win-win proposition, but only as long as a few key assumptions held true: There needed to be fixed exchange rates, full employment, an absence of international flows of labor or capital, an absence of economies of scale, and perfectly competitive markets."

It has been decades since all these assumptions have even been even close to true.

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