Skip to comments.Economic Nationalism - Mercantilism vs Free Trade
Posted on 06/10/2019 9:27:59 PM PDT by impimp
There seems to be a growing appreciation among some on the right for economic nationalism. If the goal is global growth then the concept of comparative advantage makes free trade a clear winner. If the goal is America First then there are certain situations in which one could claim Mercantilism is the best thing for the USA. I contend that the USA is currently not in one of those situations in which Mercantilism is best.
Mercantilism adherents believe that tariffs should be placed on high value imports and raw material exports, for purposes of a definition. They also dislike free trade because a prospective 1% gain to our economy is offset by lets say a 10% gain to a foreign economy.
Mercantilism only succeeds in the long run if a nation (or reliable block of trading allies) represents more than half of the global economy and an enemy represents less than half. In this case the antagonist country will produce less output as their trading block should, all else being equal, be smaller than the trading block that represents more than half of the global economy. The USA represents only 20% of the global economy so protectionism will stunt the USA relative to the rest ISD the world and stunt itself relative to any larger trading block.
Secondly, the USA has the global reserve currency. The US dollar and US financial services dominate the planet. The US is also the home of many major global corporations outside of financial services. Protectionism hurts Americas strength as it cripples a major source of our economic power. An economic nationalist could argue that free trade promotes Americas interest because of the global nature of our economy.
For the aforementioned reasons an economic nationalist should reject mercantilism and embrace free trade if the goal is to maintain US global superiority.
Note that I am not economic nationalist but I wanted to present an argument to support free trade for the growing group of America First people on the right. I prefer global economic growth through free trade to America First growth because an economically integrated planet is a more peaceful planet - the cost of war with a trading partner is too high. I also think we have more to gain by trading with all countries than we do by demonizing economic competitors.
I used to be a big free trade kind of guy, but experience has shown that it’s a hypothetical thing only; the real world contains zero counterparties willing to free trade on even terms.
And if you’re free trading while the other partner is not, you’re going to get asset stripped, and your industrial base will be absconded with, as China has done to us over the past few decades.
Ultimately, free trade is immoral; it harms the survival of the nation in exchange for phantom benefits than never really materialize.
Since free trade is a two way street, what other countries use free trade as a policy?
What do you do if your trading partners steal all your technical and IP property? What do you do when your trading partners obtain the chip sets and technical secrets and stuff used by your military to make your ships, planes and tanks lethal? What do you do after you offshore all your steel and aluminum producing capacity to your next enemy? What do you do after you’ve completely gutted all your manufacturing capacity, then suffer another Pearl Harbor? Gonna rely on your trading partners (China, for example) to build your ships, planes. missiles, tanks, trucks, guns and right on down to your combat boots?
The free traders are all claiming we will economically fail because of tariffs. Trump is saying China leverages our free trade practice by cheating. That's all anyone is saying. I hear nothing but the same chest beating by the libertarians. I wish Trump would do a better job at explaining the means of cheating. It is clear that China has taken many manufacturing jobs from America. So have the Japanese and Koreans among others. Maybe it was American capitalists who saw foreign cheap labor who screwed America. It's a complex picture. I'm betting that Trump has a good understanding of the corruption associated with American Free Trade. He is a pragmatist, That is something libertarians can't grasp.
That Beats the Heck out of my response of pretty much just anger.
Knowing what one wants to say and articulating it are two different things.
Thanks for doing the hard work.
How do supposed economic “geniuses” miss these VERY important points??
They scoff at those that aren’t “savvy” enough to understand their genius.
And all the while, China’s military grows and grows and grows as a result of $$ pouring in from the U.S.
We also need to take into account that they get more bang for their buck because they woefully underpay their military personnel.
The flip side is our military personnel are infinitely better warriors.
I prefer global economic growth through free trade to America First growth because an economically integrated planet is a more peaceful planet - the cost of war with a trading partner is too high. I also think we have more to gain by trading with all countries than we do by demonizing economic competitors.
You fail to recognize that some economic competitors are, in fact, demonic and mean us ill.
There is NO such thing as ‘free trade’ in human history.
There is ‘free trade’ in some economic books, but that is theory and real life involves human beings.
As a Kirk conservative, I have explained this over 35 years to what I refer to as the ideologue crowd of lazy-fair (my derogatory term for those who blindly preach it not understanding that 100% free trade never existed).
Now, you can emphasize trade in general, but it cannot EVER be pure true theoretical free trade because that is silly. It is as silly as ‘world peace’.
If you want to see the ideological results of allegedly ‘free trade’, visit all the areas of the country, including those counties that Trump won in the mid-west from the 2016 election.
Ideologues of the ‘free trade’ crowd are looking for that silver bullet of perfection which does not exist.
Trade generally is good, but since human nature gravitates in millions of ways, mercantile countries will always rack up large surpluses to those of deficit countries due to cultural and other factors because they know that their cultural well-being depends on its citizens having meaningful, steady and good-paying work as study after study shows how important this is to humans.
The ‘free trade’ ideology has gutted the USA gradually and Americans suffered tremendously. The only reason we are still a first world nation is due to the US Dollar still holding sway as the premier fiat currency thereby allowing us to rack up huge deficits without plummeting our standard of living across the board despite the standard of living getting stagnant for many since the 70’s.
If your citizens can’t hold their families together due to cultural issues and economic upheaval from free market capitalism, human beings as God made us, will not be able to resist the forces tearing apart society.
The ‘free trade’ is pushed by multi-national corporations who have NO loyalty to American citizens.
What good is it if imports have lower prices but you have no job and can only buy them on credit.
Tell the people who lost good jobs due to ‘free trade’ that it’s ok due to free trade.
And you wonder WHY people think Republicans are cold people.
- Article. I. Section. 9. Constitution of the United States
[I]n general, the protective system of our day is conservative, while the free trade system is destructive. It breaks up old nationalities and pushes the antagonism of the proletariat and the bourgeoisie to the extreme point. In a word, the free trade system hastens the social revolution. It is in this revolutionary sense alone, gentlemen, that I vote in favor of free trade.This seems to explain why the left is in favor of free trade so much.
Permit free trade between all nations regardless of communist affiliation and regardless of whether or not items could be used for war.
Communist goal #4 of the list of 45 communist goals for the USA
What a load of self-serving nonsense.
Doggone you’re smart Jim. Beautiful.
Free traders never really factored in the effects of labor migration. It’s even worse in the modern, globally connected era.
Fair trade does not disadvantage trading partners.
Free trade takes from one side advantages to itself while economically disemboweling the other side.
Arsenal of Democracy.
That once was common sense before libertarian true believers sold Americans on the idea that national security isn’t nearly as important as being able to buy everything in the world at the cheapest possible price, and screw national security or anything else that gets in the way.
Tariffs are used by Trump to encourage Free Trade. It isn’t free trade if the tariffs aren’t reciprocal.
We dont have free trade. Almost every country in the world has a trade surplus with the US because they dont allow us equal access to their markets. It is not a level playing field. American workers are paying the price of lost jobs and depressed wages.
Years ago National Review used to run essays by Wilhelm Roepke, one of the founders of the Mont Pelerin Society as well as being the author of the postwar German economic miracle.
Roepke’s best known book was his ‘A Humane Economy’, in which he argued that non-market factors have to be included in economic policy making because people can’t be disposed of in the way that obsolete machinery can. And this is a view that Trump obviously shares, because he is interested in returning jobs to the Rust Belt for more than simple economic reasons.
Paul Craig Roberts has said that what we have been experiencing isn’t the benefit of “Comparative Advantage” promised by free trade; instead it has been simple global labor arbitrage- global corporations seeking the lowest cost labor in a world where it has suddenly become possible to quickly relocate manufacturing plants anywhere in the world.
Exactly. Labor mobility, I should have said.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.