By Chris Rossini
Today's Liberty Report focused on free trade vs. protectionism and how the latter has historically been a segue into war. Ron Paul and Daniel McAdams also discussed the heroic Richard Cobden and the political movement called the Anti-Corn Law League that was formed in 1838. See here for more on Cobden.
It's very easy to look at foreign trade on a superficial level. Those big American corporations go to China to exploit cheap labor, thus destroying "our jobs". That's about as far as most people are willing to contemplate the situation. Sadly that's a very naive perspective to hold.
Moving a company's operations (especially for a giant multi-national) is a big deal. It goes way beyond the "cheap labor" argument. Just imagine the legal implications of moving overseas. Now you have to deal with another set of laws in a totally different nation. There are foreign customs and language barriers that must be factored in as well. Then the foreign government itself must be considered. Will your assets be safe? Will the foreign government someday nationalize your business and take it all away from you? Will they strangle you with bureaucracy and red tape?
Amazingly enough, even with a laundry list of things to consider before moving your operations overseas, many American companies conclude that the pros outweigh the cons. If anything, it's not a testament to "exploiting cheap labor," as your average American will conclude, but that the U.S. business environment is so messed up that it's worth the move for many businesses.
Yet, how many Americans consider that they live under the largest government in the history of the world? How many consider that about 1,000 new regulations are created each day? America is swimming in oceans of red tape and bureaucracy. There are laws for everything. Who can you hire? How can you fire? Will you get sued if you fire? Are you discriminating? Are you "socially responsible"? Are you "green"? Are you following the edicts of more government agencies than you can keep track of?
Many business owners throw their hands up and say: "Forget it!"
They find greener pastures and governments that will welcome their businesses. Yet, the average American is well-trained to conclude only one thing: "cheap labor".
Unfortunately, American politicians that run for president don't look to roll back the biggest government in history. They perpetually campaign to take a bad situation and make it even worse.
Donald Trump is a prime example.
Trump likes to talk about trade as a zero sum game, as if there are "winners" and "losers". That's a fundamental misunderstanding of trade and exchange, but it works on the campaign trail, so he sticks with it. Trump boasts about how "we're" going to "beat China" and how he's going to slap tariffs on them.
Unfortunately, his audiences don't understand that when they cheer for tariffs, they're cheering for Trump to tax them! Yes, you read that correctly. Trump plans on "beating China" by taxing Americans!
Trump, as president, would have no power to tax the Chinese. But he can tax Americans, and that's what a tariff is. American consumers would be forced to pay higher prices for Chinese goods. The tariff would also raise revenues for the U.S. government. In other words, money out of your pocket and into the largest government pockets on earth. Trump, instead of shrinking the gargantuan U.S. government would, with tariffs, bloat it further.
In keeping with government tradition, Trump is essentially promising us "Always Higher Prices". Perhaps he can trademark that along with "Make America Great Again".
Protectionism is very dangerous. When governments get started in trade wars, they all too often lead to actual hot wars.
Trump's ideas must be thoroughly rejected.
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