How Free Trade Can Fix The Global Economy

Both left-wingers and right-wingers are guilty of nationalism. President Donald Trump and Senator Bernie Sanders do not agree on much, but they do see eye-to-eye when it comes to restricting trade with foreign entities. Trump and Sanders are fully economically illiterate when it comes to the issue of trade, and defend their stances with cliché populist rhetoric about “saving manufacturing.” The truth is that protectionism helps nobody in the long run other than big businesses who are shielded from real international competition through tariffs. Protectionism is a regressive, authoritarian, and foolish policy that needs to be eradicated from politics.

The United States Argument for Globalization

Yes, it is generally accepted that protecting say the steel industry will help steelworkers in the short term. While manufacturing jobs have gone up during the Obama and Trump administrations, they are nowhere near what they were 20 years ago. While on the other hand, the amount of goods manufactured has been consistently going up.

Graph Showing United States Manufacturing Jobs
Graph Showing United States Manufacturing Sector’s Real Output

What does this mean? It means that the United States is creating more with less workers. And if it wasn’t for the artificially created growth in manufacturing jobs, many suspect that the number 12,281 would be substantially lower. The point is that manufacturing and other blue collar industries aren’t going to be around much longer in the highly developed world. It is necessary that the United States looks long term and starts preparing for the eventual movement away from blue collar. It is time that instead of playing trade games with other countries, we invest in our education. China understands this. They have made in their culture to become a software engineer as an adult. It is time we make a similar cultural and economic leap.

It is also relevant to note that is debatable on how much blue collar workers even benefit short term from these “protections.” As mentioned in the introductory paragraph, tariffs destroy international competition. That is essentially what tariffs are meant to do. These protections help big American companies like General Motors and Ford. The average price (in Pounds) of buying and running a car for one year in the United States is £24,662. Compare that to the United Kingdom’s £18,901 or Germany’s £16,432. The difference is clear. Generally when there are price disparities that large, it is due to the quality of the product. Yet no credible person is going to claim that American cars are significantly better than German ones, let alone 8,000 pounds better. Some of the answer to that is car insurance, but another part of it is tariffs. When American automakers are protected from foreign competitors, they can overcharge customers for worse products.

Assisting Developing Economies

“Global elites” are often slammed for supporting neoliberal free trade policies, that “exploit the second and third world.” Call this statement controversial, but it is the second and third world countries who are hurting themselves. These “global elites” are innocent. Here is what the vision for free trade was: free trade forces highly developed nations to modernize their economy. Manufacturing companies move plants to developing economies, and are still able to sell to Western consumers due to lack of tariffs. The new jobs in the second and third world help advance those economies, and send them through a period of rapid growth. Eventually those countries get to a point similar to where we are right now. Then why did it fail? Saying that free trade failed is not fair. It could be said that it is not working as intended, but there is still much hope, so it did not fail. The reason for it not succeeding as planned is domestic problem in these second and third world countries. These plans only work if the governments in the underdeveloped nations not only fully cooperate, but also increase minimum wages and labor rights.


And how do we get these governments to follow all of these provisions? I do not know. However, I can say that military aggression is not the answer.

“Manufacturing.” FRED, Federal Reserve Bank of St.Louis, fred.stlouisfed.org/
     series/MANEMP.

Goodman, Mike. “The Price of Driving.” The Telegraph, 10 Mar. 2016,
     www.telegraph.co.uk/expat/before-you-go/
     the-price-of-driving-car-ownership-costs-around-the-world/.

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