Is Free Trade Good?

The question isn’t meant to ask whether trade between nations without tariffs has moral qualities.  No, the query is:  does trade without barriers produce economic positives for the inhabitants of countries that practice as distinct from lands that don’t?

Free trade proponents argue from the perspective of economic efficiency.  If clothing is cheaper to manufacture in, for instance, Mexico than North Carolina, so be it.  The cheaper foreign-made shirt will be sold in the U.S. and – quality being the same for our illustration – will eventually drive the more expensive American-made product from the market.

The consequences are not pleasant for the North Carolina manufacturers who go out of business and their employees who lose their jobs.

But there is a positive side, too.  Clothing for the American consumer costs less than before (or below what it would otherwise be).  That means that the purchaser has more money to spend or invest on other things. 

And what about the Mexican companies and their workers?  Because of their ability to sell shirts in the U.S., they have increased ability to purchase here what we can make more efficiently (like sophisticated electronic devices).  That increased business aids the fortunes of those home industries and their employees.

From an emotional perspective, the loss of a business or a job is wrenching – the fact that consumers benefit from the economic circumstances that brought about the losses, however, are not obvious (although no less real).

Consequently, political pressures usually align behind “protectionist” measures.  To cite the clothing example again, if the cost to produce shirts in Mexico is twenty-five percent less than in North Carolina, impose a tariff (duty) upon their importation.

But the reality is that the effort to save jobs in such a manner imposes a tax on shirt buyers (they must now pay twenty-five percent more).

Although history proves that free trade – economic efficiency – is good for economies, it is a lesson easily forgotten, if ever understood. 

Thus, in today’s political environment, polls show that a majority of Republicans believe that free trade costs American jobs.  (Democrats are even more opposed.)

This is noteworthy since the GOP, traditionally more favorable to business, had long been a stalwart of free trade.

It is a lament shared by The Sensible Conservative that, from civility to free trade, many Americans no longer believe in what is good for us.