{"id":382784,"date":"2010-03-02T17:23:15","date_gmt":"2010-03-02T22:23:15","guid":{"rendered":"http:\/\/worldtradelaw.typepad.com\/ielpblog\/2010\/03\/the-great-trade-debate-ian-fletcher-reply-to-dan-griswold-on-free-trade.html"},"modified":"2010-03-02T17:23:15","modified_gmt":"2010-03-02T22:23:15","slug":"the-great-trade-debate-ian-fletcher-reply-to-dan-griswold-on-free-trade","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/382784","title":{"rendered":"The Great Trade Debate: Ian Fletcher – Reply to Dan Griswold on Free Trade"},"content":{"rendered":"

<\/p>\n

By Ian Fletcher<\/em><\/p>\n

Dan\u2019s cheery (if somewhat bubble-inflated) statistics on the recent general prosperity of the U.S. are a mere distraction here, as nothing about these figures indicates whether free trade worsened or improved them<\/em>.  So I will not address them.<\/p>\n

Some of Dan\u2019s analytically-relevant assertions, however, are demonstrably false, like his claim that \u201ctrade has created better jobs for millions of Americans.\u201d The reality is that the U.S. economy has ceased generating net new jobs in internationally-traded sectors. All our job growth is now in non-tradable sectors like waitresses and security guards.<\/p>\n

Dan repeatedly confuses the benefits of trade with the benefits of free trade.  Nobody on the protectionist side is proposing abolishing all trade, but we don\u2019t need a trading system without reasonable limits in order to gain from a bit of foreign competition. We rejected pure laissez faire in our domestic economy a very long time ago; there\u2019s no good reason to suppose it makes any more sense internationally.<\/p>\n

It is no accident that the U.S. was historically a protectionist economy. The Founding Fathers understood the value of protectionism, so they explicitly granted Congress the power \u201cto regulate commerce with foreign nations\u201d in Article I, Section 8 of the Constitution. If protectionism is such a bad idea, why did the U.S. go from being an agricultural backwater to the world\u2019s industrial superpower under this policy?  Why did Japan go from bombed-out rubble to the second-richest nation in the world this way?  Why is China growing nearly ten percent a year this way?<\/p>\n

Dan\u2019s claim that global poverty has declined due to free trade is bizarre given that, according to the World Bank, the entire net reduction in global poverty since 1981 has been in protectionist China.<\/p>\n

Similarly implausible is Dan\u2019s assertion that free trade \u201cpromotes\u2026 the spread of democracy, human rights, and peace\u201d given that free trade (on America\u2019s part, not theirs) is today massively enriching governments like that of China, enabling them to buy the bullets they need to oppress their own peoples and menace their neighbors.  And human rights?  Under the WTO\u2019s free-trade rules, the sanctions imposed on South Africa in 1986 would now be illegal.  And free trade has been the origin of shooting wars for a long time: that\u2019s how Hong Kong became British.<\/p>\n

Dan writes that \u201cU.S. companies and their workers cannot prosper in the long run without tapping into global markets.\u201d  This is unlikely in light of the fact that corporate America and American workers were the world\u2019s most successful in the 1950s and 1960s, when American exports were tiny in comparison to today.<\/p>\n

Dan denies that our trade deficit is a sign of trouble on the grounds that it \u201creflects inflows of foreign capital.\u201d  This sounds good, but elides the fact that \u201cinflows of foreign capital\u201d means either a) Americans accumulating debt to foreigners, or b) Existing American assets being sold off to foreigners. Therefore it makes us a poorer nation by definition; this is a basic accounting identity.<\/p>\n

The rest of the hard economics of Dan\u2019s position appears to consist in counting up the (undenied) benefits of free trade, then assuming that these benefits \u201cmust\u201d surpass free trade\u2019s costs because of economic logic that is either:<\/p>\n

a) simply assumed  on the grounds of  libertarian ideology. <\/p>\n

or
 
b)   based on cartoonish oversimplifications of how real economies work, outdated theories of trade that haven\u2019t been updated since Ricardo\u2019s 1817 theory of comparative advantage, and a failure to acknowledge that free trade economics takes for granted certain factual premises that are observably not true today.
 
I shall address the details in the next round.<\/p>\n

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Ian Fletcher is an Adjunct Fellow at the U.S. Business & Industry Council, a Washington-based think tank founded in 1933, and author of the new book Free Trade Doesn\u2019t Work: What Should Replace it and Why, available onAmazon.com<\/font><\/a>. USBIC\u2019s web site is at <\/span>americaneconomicalert.org<\/font><\/a>; the website for Ian\u2019s book is atfreetradedoesntwork.com<\/font><\/a>; Ian\u2019s page at USBIC is at <\/span>usbic.net\/ianfletcher<\/font><\/a>; he may be contacted at<\/em>ian.fletcher@usbic.net<\/font><\/em><\/a>.<\/em><\/span><\/span><\/span><\/p>\n

(For the free trade view, see Dan Griswold's response here<\/font><\/a>) <\/span><\/span><\/span><\/span><\/span><\/p>\n

\n<\/img><\/a> <\/img><\/a> <\/img><\/a> <\/img><\/a> <\/img><\/a>\n<\/div>\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

By Ian Fletcher Dan\u2019s cheery (if somewhat bubble-inflated) statistics on the recent general prosperity of the U.S. are a mere distraction here, as nothing about these figures indicates whether free trade worsened or improved them.  So I will not address them. Some of Dan\u2019s analytically-relevant assertions, however, are demonstrably false, like his claim that \u201ctrade […]<\/p>\n","protected":false},"author":4125,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-382784","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/382784","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/4125"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=382784"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/382784\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=382784"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=382784"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=382784"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}