The Skeptical Liberal: Raising barriers isn't 'fair' trade

The Skeptical Liberal

How can we live together in peace, prosperity, and harmony, while retaining our liberties as autonomous individuals who can, and must, create our own values? -- J.M. Buchanan


Raising barriers isn't 'fair' trade

The following appeared Sunday, 5 August 2007 in the Lansing State Journal:

Michigan’s future hinges on the decisions we make in the next few months regarding … trade. What, you were expecting me to say union contract negotiations?

As important as those, and a variety of other issues are, the possibilities of punitive tariff threats against China by the US Congress tops my list. That’s why I recently signed a petition that was released in the Wall Street Journal on August 1 opposing the proposed tariffs.

There are those in the state who think that trade is a zero sum proposition: if China gets more, we get less. If our traditional industries aren’t winning, we must be losing. They argue that it is only fair to prevent further expansion of trade with China. Making trade “fair” is their mantra; and punitive tariff protection is the means they want to employ.

The problem with the “fair trade” mantra is that what they are calling for really isn’t fair. The expansion of trade with China has led to more affordable goods for ordinary Americans and Chinese, higher productivity in both countries, expanded opportunities for businesses in both countries, and a higher standard of living for both countries. Cutting off that trade would hurt us all. The biggest losers would be those without the political clout of the advocates of “fair trade”—small and medium size businesses, individual households, and ordinary citizens and businesses in the other country that don’t get to participate in our political process. That just wouldn’t be fair. Trade with China, India and the rest of the world has been, and continues to be, a win-win proposition.

The fair trade advocates will tell you that increased trade has taken jobs in traditional Michigan industries. But those industries thrived until we forgot that innovation and expanded opportunities through trade were the keys to their success. Michigan once supported a vibrant entrepreneurial culture which competed with the world and built industries that were strong because they were good at what they did. They won, but they did so because they created value for everyone affected by their industries. We need to regain their vision of creating value for the world, knowing that in the process, the value we need will be returned to us as well.

Fair trade advocates will tell you that free trade is fine as long as the playing field is level. But the reality is that the playing field is never level; various policies create barriers, as do simple things like geography and education. It is free trade, not “fair trade” that provides the greatest range of opportunities to overcome those obstacles.

Free trade promotes innovation, entrepreneurial activity, the efficient use of our resources, and prosperity. We need to resist the call for a return to “beggar thy neighbor” policies and instead promote free trade, innovation and prosperity.

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