3 Things Reagan Said About Trade That Apply Today

By Published on July 30, 2016

Ronald Reagan was an advocate of free trade throughout his presidency. But just like today, many Americans in the 1980s opposed free trade and pushed for measures that would keep the nation out of the global economy.

Fortunately, Reagan argued persuasively in support of trade, and his success led to rapid growth in the U.S. economy.

He knew that protectionist policies might benefit some industries, but they hurt others.

When the government gets involved in trade, special interests get a chance to game the system. These groups excel at making it hard to tell how their policies harm Americans.

In his 1987 economic report, Reagan explained how protectionism hurts consumers:

Whatever the motive, protection in any form redistributes income and wealth. And because the redistributive effects are usually not readily apparent, special interest groups sometimes favor and governments often choose these methods over other more visible and much less costly forms of subsidy. Protection raises the price of imports and domestically produced import-competing products.

Reagan realized that history provides many examples of the damage unfree trade policies can do.

Speaking to the nation in the summer of 1983, he reminded Americans that the United States has gone down the road of protectionism before — with disastrous results. He said:

One economic lesson of the 1930s is protectionism increases international tensions. We bought less from our trading partners, but then they bought less from us. Economic growth dried up. World trade contracted by over 60 percent, and we had the Great Depression. Young Americans soon followed the American flag into World War II.

Free trade has the opposite effect, which Reagan knew well. Speaking at a reception in Tokyo on Nov. 10, 1983, he succinctly summarized his philosophy on trade, stating:

The message I want to leave with everyone here tonight is simple. It’s a lesson history has taught us again and again. Protectionism hurts everyone, but free trade benefits all.

Ronald Reagan was right about trade, and the exceptional economic growth during his presidency provides proof.

Research conducted by The Heritage Foundation shows a clear correlation between low trade barriers and economic prosperity. Today, we must remember that free trade leads to more prosperity for all, while protectionism hurts American consumers and producers.

 

Copyright 2016 The Daily Signal

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