FREEDOM TO BUY AND SELL IS A BASIC HUMAN RIGHT, DAMN IT
Trade Policy?
Just leave me alone, Donald
By Edward H. Crane
If I were a (tenured) professor of political science, what would I do? Glad you asked. I would devote the entire semester to listening to the 3700 hours of conversations recorded in the Nixon White House between 1971 and 1973. Forget all the Kennedy School lectures at Harvard by August Scholars of government and the executive branch. These tapes are the real deal: Mediocre minds revealing bigotry and profound ignorance of whatever subject they happen to be addressing. And when they came out to make their grand pronouncements, the international media hung on every word.
Gene Healy’s remarkable 2008 book, The Cult of the Presidency, lays out in detail the process through which Americans have come to “embrace a virtually limitless notion of presidential responsibility.” As Healy writes, “A man who trumpets his ability to protect Americans from economic dislocation, to shield them from physical harm and moral decay, and to lead them to national glory – such a man is bound to disappoint. Yet, having promised much, he’ll seek the power to deliver on his promises.”
Such a man, of course, currently occupies the White House. Not to disparage him, but Donald Trump is a truth-challenged, narcissistic ignoramus. What he doesn’t understand about economics could fill many libraries, and his specialty in economic ignorance is trade policy. For instance, he is incapable of comprehending that tariffs are taxes on American consumers. At the recent G7 summit in Quebec he said, “We as a nation lost $817 billion dollars on trade. That’s ridiculous and it’s unacceptable.”
Actually, that statement is ridiculous and unacceptable. The idea that a trade deficit represents a “loss” to America (or any country) is stunningly stupid. Looked at through Trump’s eyes, the couple hundred bucks I leave at the Safeway each week is accumulating into a pretty impressive loss… Except I bring food and beverages home from the Safeway, numbnuts. (Granted, when it comes to the bill from my wife’s hair salon, Trump may have a point.)
Nearly two and a half centuries ago, Adam Smith made the economic case for free trade in The Wealth of Nations. A lot of folks have tried to disprove his points about butchers, bakers, specialization, division of labor, comparative advantage, and all that common-sense stuff. All have failed. Of course, Smith can be a bit dry, so if you have a rogue Trump supporter in the extended family, suggest she read Henry Hazlett’s classic Economics in One Lesson. Even The Donald could understand it… if only he read.
Alas, recently canned Chief of Staff John Kelly is the latest to inform us he doesn’t. Gen. Kelly was keenly aware of another benefit of trade – namely, the old saw that if goods don’t cross borders, soldiers will. That very important insight is usually attributed to the great 19th century French political economist Frederic Bastiat. (No one can seem to cite where he allegedly said it, but it sure sounds like him.)
But if economic ignorance has prevented universal acceptance of the superiority of free trade – more goods and services, more employment, higher GDP, etc. – there is a more important reason to support it: liberty. Thomas Jefferson wrote the brilliant, inspiring Declaration of Independence, wherein he claimed the Founders had concluded that we have certain “unalienable” rights and that among them are the rights to life, liberty, and the pursuit of happiness. No mention of a strong economy. Turns out, of course, that freedom naturally produces prosperity. And it was the quest for freedom and independence that inspired the Revolution. Thankfully, Hamilton didn’t write the Declaration. Give me a 401(k) or give me death!
That passion for liberty was a common bond for most Americans up until the Great Depression. No time here to discuss the whys and wherefores of the Depression, but manipulation of credit by the newly minted Federal Reserve certainly had something to do with it. In any event, FDR and other advocates of an endlessly growing state were happy to blame capitalism. Laissez-faire capitalism, at that. Earlier recessions had righted themselves quickly because the government did not intervene.
The Great Depression lasted a decade because the brilliant planners in D.C. intervened everywhere – particularly in trade. Remember Smoot-Hawley? Because Donald Trump thinks he is much brighter than he is, and because trade manipulation is about the only position he has never changed, we are living with tariffs, import quotas, and even threats to end trade completely with allies. Tariffs, as Henry George once said, are doing to your own economy in times of peace what your enemies would do to you in times of war.
If liberty is the issue, I have a right to buy or sell to an individual or company in Timbuctoo, regardless of what Donald Trump thinks. However, the 1962 Trade Expansion Act, Sec. 232, allows the president to levy tariffs for national security reasons. So everything, including leather, becomes a national security issue. Trump, needless to say, is all over that bogus rationalization. And now, for the first time, he has found a Harvard PhD who provides him academic cover. Peter Navarro, widely regarded as one of the worst economists in the cosmos, is head of the White House National Trade Council. He backs up every bad economic instinct the president’s gut generates.
Given the rise of the so-called progressive movement, one would hope the GOP could at least try to hold up the banner of free trade. One would be wrong. The lame profile of Republicans these days is a direct result of it having given up on protecting liberty as its raison d’etre. When the supply-side revolution replaced liberty with economic growth as the GOP’s reason for existing, the energy in the party went south. And it will stay there as long as Americans are indifferent to the trade machinations of the unstable occupant in the White House.
Edward H. Crane is co-founder and president emeritus of the Cato Institute libertarian think tank. He serves on the boards of U.S. Term Limits and the Institute for Free Speech.
