T Nation

Free Trade

I’m curious as to why so many Americans support free trade. Can anyone explain why they support free trade and not protectionism?

[quote]SexMachine wrote:
I’m curious as to why so many Americans support free trade. Can anyone explain why they support free trade and not protectionism?[/quote]

Comparative advantage. Autarky is the height of economic folly. Strict protectionism has a horrid track record and prevents an otherwise dynamic economy from operating.

I would think that free trade was a corporate driven agenda.

[quote]Bismark wrote:

[quote]SexMachine wrote:
I’m curious as to why so many Americans support free trade. Can anyone explain why they support free trade and not protectionism?[/quote]

Comparative advantage. Autarky is the height of economic folly. Strict protectionism has a horrid track record and prevents an otherwise dynamic economy from operating.[/quote]

I’m not talking about a closed economy/self sufficiency. I’m talking about protectionist barriers to gain advantage over other nation states. I realise that if country A tariffs against country B then country B will respond by raising tariffs against country A but it’s not a zero sum equation. Country B may be dependent on country A’s exports for example. Country A may have a much larger export market than country B etc.

The U.S. is a net importer so I don’t think we want to get into a tariff war.

I remember that in high school we were indoctrinated in the wonders of free trade vs the horrors of protectionism. As I got older I realized that the reality wasn’t as cut and dry as the propaganda makes out and the mantra of free trade is a lie. Our trading partners are not all free traders.

New methods of protectionism have been developed since the nineteenth century but our definition of protectionism has not been allowed to evolve in order to bring these new methods into our consciousness.

China for example is extremely protectionist. Only instead of using the old fashioned simple method of tariffs or import duties which only makes imports more expensive they use the more subtle and much more effective method of currency manipulation which not only limits imports but also makes their exports less expensive giving their exports a priice advantage.

Germany is another country that is using currency manipulation only they do it through the Euro. If they were not in the Euro right now the Deutschmark would be the strongest currency in the world. But having basket cases such as Greece, Italy, Spain in the Euro keeps the value of the Euro from raising even as Germany is an export powerhouse.

The US and British use quantative easing, simply printing more money which depresses the dollar and the pound.

The reality is we are in a protectionist trade war except instead of taxing imports we use currency manipulation.