May 24, 2020
Don’t Expand the Trade War
If the media buzz is true, the Trump Administration will use the solemn occasion of Memorial Day weekend to further expand the disastrous trade war with China. This time, he will use the global pandemic as an excuse to restrict imports of medicine and medical devices. This is a bad policy that will raise healthcare costs on Americans while doing nothing to boost U.S. jobs. It is nothing more than a cynical ploy to divert attention from an erratic and unfocused response to this pandemic. Before explaining why this is such an imprudent turn of events, I must report some truths about China’s government that the Trump administration is unwilling to say out loud.
The People’s Republic of China is a deeply evil enterprise. Right now, they have more people in concentration camps than did Hitler at the height of his powers. Their government scoffs at the value of the individual, and they export a malicious presence across Asia and Africa. If we lived in a moderately just world, tens of thousands of Chinese government officials would face Nuremburg-type trials for crimes against humanity.
None of these should be new revelations to a sentient adult. The Chinese government has been the scourge of freedom since the 1950s. I know it firsthand, having faced and destroyed Chinese tanks in Iraq nearly 30 years ago. Defeating this criminal regime will require decades of robust international cooperation and bipartisan agreement on policy goals. That is how we beat the Soviet Union, an experience upon which the Trump administration displays a curious silence. Trade can be a weapon in conflict between nations, but our policies simply turn that weapon against ourselves. Here’s how.
A goal of national economic self-sufficiency is as wise and practical as a goal of family self-sufficiency. For both families and nations, trade allows us to buy things we cannot efficiently produce ourselves. Trade also boosts our productivity by allowing us to specialize in things we can produce efficiently. Trade enables more competition between firms, which reduces prices and increases productivity. This occurs whether the firms we trade with are in Ohio or Beijing.
It is important to acknowledge that competition, productivity growth and trade all displace jobs. Businesses that cannot effectively compete close, and their assets and workers are absorbed by other businesses. This surely disrupts families and communities, but it is an inevitable part of progress. If it were not, we’d all still be making our own clothes and churning our own butter.
Perhaps the best evidence of the benefit of trade is actually the “China Shock” period after 2001, when China was given Permanent Normalized Trade Relations. Since then, American factories lost as many as 1.5 million jobs to Chinese factories. Another 1.5 million jobs were reclassified from manufacturing to business services, as workers went from making things to servicing the machines that made things. Another 2 million or more factory jobs were eliminated due to productivity growth. But, even as factories lost 5 million jobs, the rest of the economy created 23 million jobs to replace them.
Trade among families, states and regions makes all of these places better off. This truth was well understood long before germ theory, but perhaps that is a poor example given the Trump Administration’s marathon intellectual struggles with germ theory.
Free trade is such a robust wealth creation machine that few nations will abandon it because of American temper tantrums. Most of the rest of the world has the same concerns over China that the United States had well before the 2016 elections. They steal intellectual property and prop up their own industries, while ignoring 19th century notions of civil rights. In fact, the rest of the world worked hard to help control China by creating something called the Trans-Pacific Partnership. That trade deal would’ve forced China to end its most obnoxious practices or face trade limits. The TPP did something else important, it acknowledged America’s international role as leader of free nations.
America’s retreat from global trade weakens us domestically by slowing economic growth. It weakens us internationally by deserting the post of international leadership won through the power of our ideals, the blood of our servicemen and the wisdom of our national leaders over the past century.
The expansion of this trade war damages American prospects in the 21st century. It makes us less able to confront China or secure a safer, more prosperous world. Wrapping a trade war in the flag is noxious and dishonors those whom we remember this Memorial Day. In the end, there’s no better way to say it than to simply note that those who argue that the ongoing trade war makes the United States more prosperous or safe are either stupid or think the people listening to them are.
About the Author
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