Free Trade is for Patriots

Free trade isn’t anti-American. It makes us a more competitive and fairer nation.

FILE - In this Friday, Feb. 17, 2017, file photo, an American flag hangs on the front of the New York Stock Exchange.

By Samuel Gregg Published on March 27, 2017

Over the past four years, Americans have turned against free trade. A majority now see free trade as bad for America. The biggest growth in anti-free trade feeling has occurred among Republicans and conservatives.

There are many reasons for this shift. For one thing, not all Americans immediately win from the opening of markets. Another problem is free trade’s politically-poisonous association with the Davos internationalista set.

It’s vital for those who believe in free trade to ground this belief in love of country.

That’s why it’s so vital for those who believe in free trade to ground this belief in love of country. American protectionists have always wrapped themselves in the Stars and Stripes. To support tariffs and subsidies, they say, means you’re a patriot. To favor free trade, the argument goes, implies that you care more about Japan than West Virginian coal miners. President John Quincy Adam’s Secretary of State, Henry Clay was an arch-protectionist. He portrayed free trade as a way for the British to re-colonize the United States!

But American protectionists haven’t played the patriotism card for petty reasons. They know that Americans don’t view love of country as crude and outdated. Americans are still patriotic compared to, say, most West Europeans. Over half of Americans own a flag.

That’s why free traders need to explain that free trade is the true patriotic choice.

Protectionism is all about Special Interests

It’s ironic that so many people link protectionism with patriotism. After all, tariffs and subsidies aren’t designed to help America as a whole. Instead they favor key industries — even certain firms.

Take a look at what’s called the Harmonized Tariff Schedule of the United States. This consists of 22 Sections, 99 Chapters, and several annexes. Talk about “byzantine.” Several different tariffs may apply to the same product in different forms. Even a product as simple as mineral water gets snared in its net. There’s no logic to this. It likely reflects the fact that producers of one type of mineral water had better lobbyists than another.

Protectionism bolsters certain groups at Americans’ expense.

How does this help America? It doesn’t. It just means that consumers pay more for some types of mineral water than others — for no good reason.

The steel industry also shows how the protectionist racket helps the few rather than the many. For 40 years, such policies have sheltered American steel producers from foreign rivals. To what effect? They have pushed up steel prices in the US.

And who pays for these inflated prices? American users of steel. The building industry and car manufacturers end up paying the bill. They in turn pass their extra costs onto their American customers.

That’s why slogans such as “Buy American!” may just mean, “Buy products and services at a higher cost because American companies want you to pay for their protection from competition!”

Such a policy looks more like a racket designed to bolster certain groups at everyone else’s expense. Is that what love of country means?

Free Trade Benefits All Americans

The protectionist racket never seems to help American consumers — all 325,816,150 of them as of March 2017.

Even die-hard protectionists concede that free trade reduces prices. As Adam Smith observed long ago, open markets boost competition and help nations discover what they do well compared to everyone else. This lowers the prices of goods and services for every American, regardless of race, sex, religion, or economic status.

Consider, for instance, the millions of clothes products in American stores thatsay, “Made in China.” Why are they made there? It’s more cost-effective for China to make many types of clothing than it would be for Americans to do so. That means lower-priced clothes for all Americans. This also allows American firms to focus on what they do better than anyone else. Today this includes drugs, petroleum products, medical technology and airplanes, to name just a few.

How is it patriotic to favor groups with political connections at the expense of weaker Americans?

But there’s another aspect of free trade that helps America overall. Free trade boosts competition. Competition helps Americans find their own weaknesses and strengths. It inspires us to innovate and create. It keeps U.S. firms on their toes. And it encourages them to focus on what customers need and want. That’s good for all Americans.

Protectionism, however, gives American businesses an incentive to do the opposite: to grow sluggish and spend money on lobbyists. Rather than focus on customers, they focus on politics. Politicians always notice noisy interest groups, especially if they get something in return.

And who are the biggest losers from these deals? Again, it’s the 325 million American consumers who, unlike businesses, are spread out around the country and don’t have lobbyists.

American patriots should be concerned for the well-being of all Americans. How is it patriotic to favor groups with political connections at the expense of weaker Americans? This means more privileges for the few, and less liberty and justice for all.

And that, to say the least, is hardly American.

 

Samuel Gregg is Research Director at the Acton Institute and author of For God and Profit: How Banking and Finance Can Serve the Common Good (2016).

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