Donald Trump's 'Fair Trade' Rhetoric Hurts Republicans' White House Chances

After a recent phone conversation with Donald Trump, syndicated columnist Charles Krauthammer concluded that The Donald is "absolutely" serious about seeking the GOP Presidential nomination. That's unfortunate. The illiberal media will have a field day with Mr. Trump's flawed ideas on free trade.

In January, Trump complained to talk radio's Michael Savage that Americans "no longer make things" and in March told a CNN interviewer, "Nobody, other than OPEC, is ripping off the United States like China." In the CNN interview, Trump also said that China "is stealing all our jobs" and "making all our products." He advocated "a 25 percent tax on products that come into the United States."

The billionaire professes a preference for "fair trade" over free trade and promises that as President, he would not raise taxes. But taxing previously untaxed products does constitute a tax increase. Perhaps Trump doesn't understand that prosperity and jacked-up prices are mutually exclusive conditions. Confusion is not what America needs in its next President. Already the current President exhibits enough wrong-headedness to stifle economic growth for decades.

Trump's foreign trade ideas are way off base. Cato Institute's Daniel Griswold examined America's economic performance over the last thirty years. In a new report, Griswold finds

... no evidence that a rising level of imports or growing trade deficits have negatively affected the U.S. economy. In fact, since 1980, the U.S. economy has grown more than three times faster during periods when the trade deficit was expanding as a share of GDP compared to periods when it was contracting. Stock market appreciation, manufacturing output, and job growth were all significantly more robust during periods of expanding imports and trade deficits.

Higher economic growth correlates with larger trade deficits. The link makes economic sense to sound thinkers. When we Americans prosper so much that domestically-produced stuff is insufficient to meet our needs, we buy more and more stuff from other countries. This healthy economic condition causes a trade deficit. Protectionists like Trump seem oblivious to such basic facts.

The last time Washington reacted in a big way to calls for trade protectionism of the sort promoted by Mr. Trump, the resulting Smoot-Hawley Tariff of 1930 raised import duties almost 60 percent on agricultural and manufactured goods. America's global trading partners enacted retaliatory tariffs. Exports and imports dropped by more than 50 percent and helped turn a recession into the Great Depression.

Trump's belief that Americans "no longer make things" is plainly false. Even during the current major downturn, American manufacturing output has been running near record highs. Cato Institute's Alan Reynolds observes that protectionists like Trump ignore the fact that "the U.S. is by far the world's largest manufacturer [his emphasis], with China trailing by 22 percent" as of 2008. China is a more distant second place in good economic times. But manufacturing output is not even the biggest bugger-boo on most people's minds. University of Michigan economist Mark Perry captures Americans' most distressing concern -- jobs:

It's true that the U.S. has lost more than 5.5 million manufacturing jobs in the last ten years, from more than 17 million jobs in 2000 to fewer than 12 million jobs in 2010... And yet during that same period, manufacturing output (data here) actually increased by more than 5%, from $3.1 trillion in 2000 to $3.26 trillion (measured in 2005 dollars) this year... On a per employee basis, manufacturing output per worker increased by more than 50%, from $182,000 in 2000 to $278,000 [in 2010.]

George Mason University economist Don Boudreaux adds:

It's true that manufacturing jobs are decreasing, but rather than blame the Chinese, [Trump's] anger would be better targeted... if [he] blamed American innovators and even American manufacturing workers.

Boudreaux's point makes protectionists on both left and right squirm. Neither China's nor any other country's workers pose the biggest threat to American manufacturing jobs. Productive workers and continuously improving technology keep America in first place output-wise and render domestic manufacturing job growth categorically unnecessary. That's reality.

Would President Trump have forced manufacturers to forgo productivity improvements and continue to pay 5.5 million unneeded employees? Such logic smacks of the utopian world that lives in the minds of progressives, a world in which citizens wearing saccharin smiles work the fields with horse-drawn plows while government and union "protectors" keep farm equipment manufacturers at bay. Government edicts that force companies to retain extra employees, or pay artificially high wages, or charge unnaturally inflated prices put companies out of business-just like FDR's interventionism did in the 1930s.

Sadly, Mr. Trump doesn't restrict his flawed thinking to tariff nonsense. In a CPAC address, he claimed, "We are rebuilding China because we buy their products." Don Boudreaux asks:

What do the Chinese do with the dollars that we use to buy their products? Do they burn these dollars or otherwise not use them commercially? ... If the Chinese do not burn their dollars, then they (or other foreigners with whom the Chinese deal) must use these dollars either to buy American products or to invest in the U.S. economy (or both). To the extent that foreigners buy our products, by [Trump's] reckoning they must be "rebuilding" America. ... Do such investments harm America? Does foreign investment in America not help to "rebuild" America? If not, why not?

Inconvenient questions. Boudreaux's line of reasoning highlights a stark realization: China's businesses and economy would be mortally wounded by any strategy that weakens their best customer's prosperity. Why indeed would the Chinese government intentionally decimate an American economy on whose health Chinese people depend?

America is a nation most threatened by the economic dunderheadedness of its own politicians, progressive and conservative alike. Today's voters have no business putting faith in someone who pushes one of the most jobs-destroying farces of all: trade protectionism. Mr. Trump's protectionist ideas certainly stir popular support, but acting on those ideas would reincarnate the 1930s on steroids.

Nevertheless, Trump will probably continue to preach "fair trade." He will advance seductive fallacies that boost his popularity among easily seduced voters. Between The Donald's foreign trade rhetoric and his scrutiny on the circumstances surrounding Obama's birth, the most significant effect of a Trump presidential campaign would be to make a mess out of the Republican nomination process.

A writer, physicist, and former high tech executive, Chuck Rogér invites you to sign up to receive his "Clear Thinking" blog posts by e-mail at www.chuckroger.com. Contact Chuck at swampcactus@chuckroger.com.

This is what it comes down to: Globalists vs. Patriots. It’s all good and well to grovel at the altar of “Free Trade”, but you cannot deny that the globalists and international bankers have gotten rich off the dismantling of economies world wide. Do you think Soros is the only villain?

Go on Youtube and watch “Argentina’s Economic Collapse”. It’s a multiple-part series about how globalists came in and cherry-picked the productive assets of the country and left their government, which is no more or less corrupt than our own, hopelessly in debt.

The truth is that the average IQ is still 100. An average worker in any industrial country wants to work with things, not ideas. These people have been taught for a hundred years that they should be able to make a living working 40 hours per week. Any less and they think the boss is shorting their hours; any more and they are being screwed unless they get bonus pay.

In the town where I grew up, the cotton mills are gone. The machines have been crated up and sent God-knows-where, and the buildings have been torn down. I’m not saying that cotton mill jobs were the greatest jobs ever, but average people could make a living there. In order to change that for the better, the educational establishment would have had to shift the bell curve to the right, and we all know that hasn’t happened.

Productive workers and continuously improving technology keep America in first place output-wise and render domestic manufacturing job growth categorically unnecessary. That's reality.

That is outright nonsense. Do Americans still wear clothing and shoes? Are those now being made by robots in the USA?

Few of the labor intensive jobs, or jobs that required significant manual dexterity, or manual labor, have been replaced by technology since WWII. They've simply been exported to cheap labor nations like China, and they were not high paying union jobs, but mostly lower paying, non-union jobs.

Of course there has been a need for manufacturing job growth to supply the US consumer market. And that job growth has occurred. It's just occurred in cheap labor nations where the jobs to supply US consumer products have been located.

There are probably more jobs necessary to supply the US consumer market now than ever before because there are so many products that didn't exist only three or four decades ago, not to mention a population that has doubled since the 1950s. And those labor intensive jobs to produce clothing and shoes and many other products for the US market also still exist - just in various cheap labor nations rather than in the USA as they did until they were exported started in the 1950s until the present.

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