Posted on 06/20/2002 11:14:43 AM PDT by madeinchina
The United States should continually press to boost levels of international trade: This view has become a mantra even among many trade policy critics. Maybe one of these days, these figures will stop simply parroting this position, and explain exactly why expanded trade is an unalloyed good -- because nothing known so far about economics or America's own interests supports it.
The case for encouraging trade makes sense in many circumstances. By encouraging competition as well as specialization, trade can and often does promote the efficient use of resources, boost economic growth, and give consumers more choices, better quality, and lower prices. Still, just as obvious as the benefits of trade expansion are the many reasons for caution.
As noted by economic nationalists and strategists for centuries, even free market icon Adam Smith understood that national security comes before trade expansion. Therefore, "more trade" with declared enemies and even with potential enemies is hardly a no-brainer.
In addition, the types of products traded with unfriendly countries need much scrutiny. Trade in actual weapons and other military systems clearly would be foolhardy in these cases. But nowadays the emergence of "dual-use technologies" -- which are used for both military and civilian purposes -- needs to be managed as well. Further, doesn't discouraging trade with enemies logically imply actively fostering trade with friends? Finally, although it's the product of "more trade," few Americans are happy about U.S. dependence on Middle East oil imports.
Reasonable people can differ over exactly where these various national security lines need to be drawn. But who aside from the wildest-eyed libertarian would dispute that lines of some kind and constant reassessment are necessary? Simply repeating "more trade is better" doesn't cut the mustard.
The yellow light flashed by national security concerns not only underscores the need for thinking carefully and strategically about trade in a politically and culturally divided world. It reminds us that expanding trade is only one important policy priority among many that citizens and governments constantly need to juggle. Why would anyone believe that trade expansion should always come first?
For example, because we (rightly) value moral considerations, Americans have decided to outlaw importing products made by slave and child labor. Because we (rightly) worry about environmental damage, large majorities of Americans (according to many polls) favor using trade restrictions to punish polluting governments and companies. Because we (rightly) believe in property rights, we prohibit trade in pirated goods. Because we (rightly) believe in representative government, most Americans oppose authorizing international bureaucrats at the World Trade Organization to declare our consumer safety and other public interest regulations to be illegal barriers to trade expansion.
Even within the economics field, trade policy often involves major and difficult trade-offs. Some issues are relatively easy. Thanks to the Asian financial crisis, Washington seems to be learning that trade expansion can be dangerous and destabilizing when subsidization is the method -- whether through IMF bailouts of debtor countries or U.S. government loan guarantees for export financing. Countries deep in foreign debt (like the United States), don't always need more trade, either, especially when most of this trade is imports.
More controversial, but still worth thinking about, is the makeup of U.S. trade flows. Although most economists consider all goods to be of equal intrinsic value, it's no coincidence that countries exporting mainly manufactured products usually are richer than countries exporting mainly raw materials or agricultural commodities -- not to mention more firmly in charge of their own destinies.
Trade expansion, in other words, is like any other legitimate objective of public policy. Its value and wisdom constantly depend on circumstances, and it usually competes with other compelling and legitimate priorities.
Trade expansion is also like any other objective of economic policy -- a means to the greater end of raising living standards, not a goal in and of itself.
And those ideologues who still insist on debating trade with homilies can think of it this way: You can have too much of a good thing.
Years ago I was undecided about NAFTA. The short version is that south-of-the-border maquiladora facilities created a huge increase in Mexicans walking north with disposable income to eat at American fast food franchises.
Which in turn pumped up franchise purchases of American supplies.
Which also increased, incredibly, the franchise cash flow thus increasing the franchise site value, which had a lovely affect on extended family who started those franchises years ago on a borrowed nickel and a wet dream.
Capitalism is beautiful!
The sad fact is some of those neon franchises are on former cattle grazing land. Adios old west.
WASHINGTON (AP) ? The U.S. trade deficit swelled to a record $35.9 billion in April as Americans' appetite for foreign-made cars and consumer goods, such as TVs and clothes, hit monthly all-time highs.
USA Today June 20, 2002
As if American's had a CHOICE about buying foreign-made or American made TVs or clothes.
Also notice that the Euro hit an 18 month high verses the dollar yesterday. The party is coming to an end and it will not be pretty.
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