Wednesday, June 29, 2016

Trump and His Critics on Trade

Donald Trump's speech yesterday on international trade announces policies that would damage the US economy.  Making international trade more restrictive hurts the US.  Job creation is not done by restricting trade.  Job creation comes routinely from free market activities of entrepreneurs and companies. If you want jobs, reduce the role of government, don't start restricting transactions freely entered into between willing individuals.

Trump's critics are fatuous.  They act as if NAFTA and the TPP are free trade agreements.  They aren't.  Not even close.  They are loaded up with special concessions to unions and environmentalists that rob both agreements of much of the benefits that free trade would provide.

The idea that Trump is waging war on laissez-faire, espoused today by Eduardo Porter in the NY Times, is beyond ridiculous.  We don't have laissez-faire.  What we have is rigidly and tightly controlled trade policies that restrict the free movement of goods and services between countries.  These rigidities are part and parcel of NAFTA and TPP.  True enough, Trump's policies would make things worse.  But, the current situation is not free trade. It is politically hampered trade.

Trump and his critics are both wrong.  The US needs free and unhampered trade and free markets in its own domestic economy.  At the moment, it has neither.  The result:  a stagnant economy.

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