Sanders and Trump are Dead Wrong on Free Trade
Based on the views of this year’s leading presidential candidates, it would appear that our next president is determined to move our country away from free trade.
Sen. Bernie Sanders of Vermont has claimed on the campaign trail that recent trade agreements “have been a disaster for the American worker.” His opponent for the Democratic nomination, Hillary Clinton—a one-time advocate of free trade—has now reversed herself, claiming to “have been a critic of NAFTA from the very beginning” and expressing reservations about the Trans-Pacific Partnership (TPP).
On the Republican side, front-runner Donald Trump, while insisting he is “all for free trade,” has called for abandoning NAFTA and TPP, and imposing a hefty new tariff on automobiles imported from Mexico. “Our country is in serious trouble,” he is fond of saying. “We don't win anymore. We don't beat China in trade. We don't beat Japan, with their millions and millions of cars coming into this country, in trade. We can't beat Mexico, at the border or in trade.”
This growing political consensus in favor of economic nationalism runs counter to the views of practically all economists. Experts across the political spectrum – from conservative Gregory Mankiw at Harvard University to liberal Paul Krugman at Princeton – support free trade. One recent poll of economists showed that 96 percent of respondents agreed with the statement, “Freer trade improves productive efficiency and offers consumers better choices, and in the long run these gains are much larger than any effects on employment.” As MIT’s Richard Schmalensee put it, “If that's not right [that the benefits of free trade outweigh the costs], almost all of economics is wrong.”
But there’s another benefit of economic internationalism that is less frequently discussed: its contribution to world peace.
Enlightenment thinkers, writing during a period of almost constant warfare, were the first to predict that trade would promote a more stable world order. “The spirit of commerce,” wrote Immanuel Kant in 1795, “sooner or later takes hold of every nation, and is incompatible with war.”
The first great age of free trade was the nineteenth century, an era in which goods and capital moved freely across Europe, and between Europe and the rest of the world. Not coincidentally, it was also a time of relative peace; between the defeat of Napoleon in 1815 and the outbreak of World War I in 1914, not a single conflict occurred that involved four or more of the Great Powers of Europe.
Toward the end of the nineteenth century, governments turned back toward protectionism. Burgeoning industrial powers such as the United States, Germany and France erected high trade barriers to protect their economies from foreign competition. The movement of goods and capital slowed—and World War I was not long to follow.
In the 1920s, governments paid lip service to free trade, but were afraid to offend powerful domestic constituencies by exposing their industries and agriculture to foreign competition. As a result, tariffs remained roughly where they had been in the years before the war.
Then, when the Great Depression hit, the nations of the industrialized world responded to the crisis by erecting even higher trade barriers, focusing on domestic recovery, even if that meant hampering recovery elsewhere. By 1932, international trade had come to a virtual standstill and, sure enough, just a few years later the planet was engulfed in the most destructive war in history.
Recognizing the role that economic nationalism had played in bringing on the two world wars, delegates from around the globe gathered at a conference in Bretton Woods, New Hampshire, in 1944 to lay the foundations for a new order of economic internationalism.
One of the greatest products of that conference was the General Agreement on Tariffs and Trade (GATT), which enshrined the principle that free trade was the key to a lasting peace. It was also under GATT that the United States enjoyed decades of economic growth and became the world’s leading industrial power.
Indeed, seventy years hence there has been no military conflict remotely comparable to World War II. Those who would recommend a return to protectionism would do well to heed the lessons of the past.
Free trade has brought tremendous benefits to the American consumer, but more importantly, it has helped keep the peace. As psychologist Steven Pinker has explained, “You don't kill your customers or your lenders, so the arrival of the infrastructure of trade and commerce reduces some of the sheer exploitative incentives of conquest.”
A saying attributed to, among others, Cordell Hull, the secretary of state under Franklin D. Roosevelt, expresses the principle slightly differently: “When goods don’t cross borders, armies will.”
Let us hope that our leaders remember his advice.
John Moser is co-chair of the Master of Arts program in American History and Government at the Ashbrook Center at Ashland University, Ohio, where he is also a professor of history. His most recent book, The Global Great Depression and the Coming of World War II, was published last year.
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