One of the taking points repeatedly heard this election cycle is foreign trade and both populists, Bernie Sanders and Donald Trump, are wrong on the issue. Free trade is good. International trade is beneficial. Focusing on “they’re outsourcing our jobs” is not only short-sighted but factually wrong. Let’s outline why.
- Stuff is cheaper. Cars, food, clothes, gas, phones. Free trade opens markets for competition, both for complete products and raw materials. It lowers the cost of goods.
- The contested argument that it raises income. This one is sticky, and has a lot of good arguments on both sides so I’m not going to get into the wage part of the argument. But the “stealing our jobs” canard? Total hogwash for two reasons.
- The jobs that get exported are low-tech, menial labor and the U.S. has been moving toward a knowledge based economy since the 1970s.
- We don’t want those jobs, and the proof is in the high unemployment of 2009. Americans weren’t taking menial labor jobs; we left those to migrants.
- It stops wars. Lt. Gen. Barton Yount said, “Countries that trade seldom have wars.” The threads that tie our economies together also keep us from killing each other. Look at how vastly we disagree with China on a variety of topics, but trade that benefits both nations keeps us diplomatic and we work out our issues like civilized adults. For crying out loud, who even knew that communism and capitalism could coexist? Free trade forces us to wait and reserve judgment until we understand the situation better, like the fact that systems of government and economic models are not intrinsically linked. Conversely, it’s why Russia is dangerous; we’re not trading.
Bernie Sanders and Donald Trump are polar opposites in many ways, but one this one topic they both appeal to populists. The problem is that most populists don’t actually know what they’re talking about concerning macro economics or finance. It’s the Dunning-Kruger effect all over again.