Sunday, April 3, 2016

Why Are The Merits Of Free Trade So Hard To Grasp?

I do not identify as a Conservative even though I am conservative in a lot of respects and I vote conservative and I trust conservative people further than the Grubers and Sunsteins and Reichs. But I do believe that most large C Conservatives are either hypocrites are just plain stupid.

 The Conservative impulse to toss free trade overboard scares me and puzzles me. Do they really believe in the premise of economic freedom? Largely, they do not. The new Economic Nationalists are frightening. They not only see the glass as half empty, they are not above dumping the contents to win the audience.

 Sarah Palin said in effect that the net result of outsourcing manufacturing is that we save a penny at Walmart. Recently radio host Jim Bohannon said to his guest, Club of Growth president David McIntosh, that the net result of of offshoring is that we save eleven cents on brooms. Boston's WRKO replaced Rush Limbaugh with an idiot named Jeff Kuhner (which is another story for another time) who makes ridiculous statements about the evils of free trade in a latter day Pat Buchanan sort of way.

 OK Sarah, I still love you but cheap Asian labor saves us more than a penny per item. Go to the local Dollar Tree and tell me how much each item would cost if it was made in America. I will go out on a limb and say more than $1.01. Using Bohannon's more liberal estimate, the broom--and presumably everything else--would then cost $1.11.

 Both Jimbo and Sarah are guilty of hyperbole to the point of silliness. Tariff is the new mantra and it's not the Sanders mob doing the chanting. Then again, they are so abysmally stupid none of them can spell the word, much less define it. By killing NAFTA we can permanently eliminate the proposed Keystone Pipeline whereas Barack Obama only delayed it.

 Before we get too high off the tariff fumes let us remind ourselves of a few basic facts.

 1. Importers do not ultimately pay tariffs, consumers do.

 2. A key factor in America's economic development was an early Supreme Court decision striking down interstate tariffs. (I forget which decision that was but I learned that in high school history at a time when schools still did a little bit of teaching.) Had the Supremes not spoken so forcefully we might now have county and municipal tariffs as well.

 3. Domestic producers will often raise their own prices after foreign producers have their products artificially inflated. The consumer loses once more. Oh, and by the way, China did not take ALL of our jobs. That word seems to enter the conversation almost as frequently as the PENNY savings.

 Yes, there are trade-offs and unforeseen consequences and some sectors are hit harder by change than are others. But let us not throw out the baby with the bathwater. International free trade is for the most part, mutually beneficial. Do Americans want to endure an overnight hike in the Consumer Price Index of say, 400 per cent? I don't think they do.

 Maybe in 2016 conscious Conservatism is no match for visceral populism. Maybe conscious Conservatism was just a fad. More likely, the Cons only paid lip service to free trade because that was the way the wind was blowing. But if Walmart jeans are set to go from $10 to $40 and even knock-off Droids rise in price by a couple hundred dollars, then Hillary might  not be the worst of all worlds.

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