@ARE_you_kidding_me
Since you brought up more points, I’ll give you the other 2 reasons that Ben Shapiro states on why economic protectionism is stupid.
America Is Not Damaged By “Unfair Trade Practices” Of Other Countries. Both Mitt Romney and Donald Trump have complained in the past about China’s “unfair” trade practices, particularly their devaluation of their currency. But devaluing your currency doesn’t give you any advantage, any more than pretending that Yao Ming is 5’9” gives Nate Robinson an advantage over him. Currency is merely an exchange unit. If China inflates its currency, the American dollar is worth more against it; that means we purchase more Chinese goods.
Well, good for us! That makes it cheaper for our consumers, supposedly. But not for long, since currency is a substitute for goods and labor, and government manipulation doesn’t change that. China’s consistent devaluation has led to economic crisis in the country, more poverty among the people who use their currency (namely, Chinese citizens) and multiple stock market collapses in the last year. Right now, the Chinese government is desperately attempting to stop a devaluation spiral. If devaluation were such a threat to the American economy, why wasn’t Weimar a world power when people were shoveling around cash in wheelbarrows?
How about China refusing to import American products? That’s obviously not good for either us or them, but that doesn’t mean that our attempts to stop their imports would help us. That would be cutting off our nose to spite our face. Jim Geraghty gives a good case example: our 2009 tariffs on Chinese tires, which resulted in – at best—$48 million in “additional worker income and purchasing power,” at the cost of $1.1 billion in American money spent on more expensive tires, plus another $1 billion in the poultry industry thanks to Chinese retaliatory tariffs.
Trade Is Not A Zero-Sum Game. Trump and others have constantly whined about America’s trade imbalance. This sort of economic silliness has a long history. Adam Smith pointed this out in The Wealth of Nations: “Each nation has been made to look with an invidious eye upon the prosperity of all the nations with which it trades, and to consider their gain as its own loss. Commerce, which ought naturally to be, among nations, as among individuals, a bond of union and friendship, has become the most fertile source of discord and animosity.”
As Thomas Sowell writes:
In general, international deficits and surpluses have had virtually no correlation with the performance of most nations’ economies. Germany and France have had international trade surpluses while their unemployment rates were in double digits. Japan’s postwar rise to economic prominence on the world stage included years when it ran deficits, as well as years when it ran surpluses. The United States was the biggest debtor nation in the world during its rise to industrial supremacy, became a creditor as a result of lending money to its European allies during the First World War, and has been both a debtor and a creditor at various times since. Through it all, the American standard of living has remained the highest in the world, unaffected by whether it was a creditor or a debtor nation.
Sowell points out that if the Japanese send us lots of cars and we send them lots of dollars, they will use those dollars to buy American assets. That’s exactly what they’ve done. As Scott Lincicome pointed out at The Federalist, “every dollar traveling overseas to buy imports (in excess of our exports) eventually comes back to the United States in the form of investment, and our “trade deficit” is matched by a “capital account surplus.” In other words, we buy goods and services from foreigners, and they buy an equal amount of our exports plus our financial assets (aka foreign investment in the United States).”
If trade were really about “beating” the other guy, as Trump seems to suggest, perhaps the best solution would be for us to sink all Chinese ships carrying imports. Wouldn’t that help the economy, after all? Countries that effectively do that with high tariffs invariably collapse economically and end up having to inflate their currencies. See, for example, Latin America. Nobody invests in countries with high tariffs; nobody trades with countries with high tariffs. If trade were a zero sum game, wouldn’t it be best to just keep everything in house?
But logic doesn’t matter in this conversation. All that matters is that tariffs and trade barriers represent yet another government policy with clear beneficiaries and diffuse victims. So they’ll be politically popular, even as they drive the American economy into the ground.)
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