Trump and Clinton ignore downside of protectionism
Donald Trump talks about cutting taxes and regulation. Hillary Clinton, not so much.
But their economic visions, laid out in dueling speeches last week, reflect a strikingly similar fear of what happens when people are free to engage in peaceful, consensual transactions without government interference.
Those transactions would not happen if they were not mutually beneficial, and the same truism applies when the two parties happen to be on different sides of a political border.
But Trump and Clinton fear the unpredictable consequences of free (or relatively free) markets, which reward consumers and businesses that serve them well while punishing those that can’t compete.
“All of our policies should be geared towards keeping jobs and wealth inside the United States,” Trump says.
Clinton promises to “stop any trade deal that kills jobs or holds down wages.”
Both candidates claim to appreciate the benefits of international trade. But those benefits come from specialization that generates the greatest value at the lowest cost, which cannot happen without shifts in employment. If you oppose trade that “kills jobs” or that fails to keep them within the United States, you oppose trade, period.
“Let’s go out and build the future!” Clinton exclaims.
Trump says Clinton is “the candidate of the past,” while “ours is the campaign of the future.”
The future they have in mind looks a lot like the past. If American prosperity was once based on manufacturing, they say, it must always be so.
Trump, who thinks a reduction in manufacturing jobs is ipso facto evidence of economic decline, promises to “put our coal miners and steelworkers back to work” and “put new American metal into the spine of this nation.”
Clinton emphasizes “how important it is to build things,” saying, “We are builders and we need to get back to building!”
This manufacturing fetish is no more reasonable than pining for the days when most Americans were farmers. The share of the U.S. labor force employed in agriculture fell from nearly 80 percent in 1800 to 1.5 percent in 2012, mainly because of dramatic improvements in productivity. That trend involved a lot of “lost jobs,” so according to Trump and Clinton it was a disaster.
Two major causes of the decline in manufacturing’s share of employment are rising productivity and competition from moreefficient producers in other countries, both of which are a boon to consumers.
The government cannot prevent or reverse the loss of those jobs without sacrificing those gains.
Trump recognizes that regulations represent “a hidden tax on American consumers,” who pay more for products made by companies subject to the government’s costly mandates. But he refuses to admit the same is true of restrictions on trade, which by design protect domestic producers from lower-cost foreign competitors.
Clinton and Trump both want to punish American companies that take advantage of lower production costs in other countries to offer their customers more value for their money.
Trump complains that such companies “ship products into the U.S. tax-free,” while Clinton promises a “more patriotic tax code that puts American jobs first,” including “a new exit tax” for companies that “move their headquarters overseas.”
As a businessman, Trump understands why making products in America does not always make sense. As Clinton points out, “He’s made Trump ties in China and Trump suits in Mexico.”
Clinton’s campaign created a webpage listing U.S.-based alternatives to the foreign manufacturers of various Trump-branded products. It says these companies are “ready and able to produce the goods he makes overseas” — at a higher cost, of course.
Clinton never mentions that part, because she does not want to admit that an arbitrary preference for domestic producers takes money out of American’ pockets.
Maybe she could defend the protectionism she and Trump advocate even while acknowledging the cost it imposes on consumers.
But she prefers to pretend there is no price to be paid, knowing her Republican opponent will never keep her honest.