First Thoughts on Free Trade

Jonathan Rick
Issue XXIII - June 21, 2004
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In the January 6 New York Times, Charles Schumer and Paul Craig Roberts penned an op-ed titled, “Second Thoughts on Free Trade.” Schumer is the senior senator from New York and Roberts was assistant secretary of the Treasury for economic policy in the Reagan administration, so their argument is important as it reveals how today’s politicians rationalize their politics.

“[T]he United States may be entering a new economic era in which American workers will face direct global competition at almost every job level—from the machinist to the software engineer to the Wall Street analyst. . . . When American companies replace domestic employees with lower-cost foreign workers in order to sell more cheaply in home markets, it seems hard to argue that this is the way free trade is supposed to work.”

Of course, these “second thoughts” are old-hat; the anti-free trade argument amounts to an obnoxious and embarrassing money-grab. For protectionism, in any form, is nothing more than the art of lobbying—bribes and blackmail, or what Ayn Rand called “pull-peddling.”[1] Indeed, as philosopher Harry Binswanger observes in an essay titled “‘Buy American’ Is Un-American,” “Economic nationalism, like racism, means judging men and their products by the group from which they come, not by merit.”

Furthermore, U.S. companies transfer labor overseas en masse because American relative prices and wages are artificially high. And they’re only that way because the U.S. government, via tariffs, subsidies, and countless similar statist mechanisms, insulates certain industries, like steel and agriculture, from the global market.

Sure, many Indians and Chinese will work cheaper and longer irrespective of how low and long American wages and hours go. Sure, Japan will heavily subsidize its automobile industry. But since when did Americans—we titans of industry—become afraid of a little competition? Indeed, the land of opportunity should embrace these assiduous “foreigners,” instead of heaping the welfare state on domestic moochers.

[1] Real campaign finance reform therefore means, as the Web site puts it, “To take money out of politics, take politics out of money.”

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