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 let’s 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 America’s strength as it cripples a major source of our economic power. An economic nationalist could argue that free trade promotes America’s 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.
Atually China desperately needs us because they only consume about 36% of what they manufacture.
I will be careful to use sarcasm tag in the future...embarrassing for people to think I believe in global warming.
Free trade isn’t globalism. At least it isn’t the one world global laws type of globalism that is offensive. What I like about free trade, even asymmetrically applied free trade, is that we are better off. If a nation put a 1000% duty on all of America’s products, I would still be glad to receive their cheap imports.
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