Trump and Clin­ton ig­nore down­side of pro­tec­tion­ism

Honolulu Star-Advertiser - - VIEWS & VOICES - JA­COB SULLUM Ja­cob Sullum is a se­nior ed­i­tor at Rea­son mag­a­zine.

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.

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