Given the unfortunate passage of “fast track” trade authority for President Barack Obama this week, it’s past time to point out some of the deception being used to promote free trade to American citizens.
Proponents of free trade cite statistics that seem to make free trade sound like a “no-brainer.” But in reality, those facts do little to give people an honest assessment of whether free trade benefits us.
As an example, the White House states that trade has accounted for nearly one-third of our overall economic growth since the end of the recession in mid-2009. This makes trade sound like a key driver of our economy, but it ignores the fact that our government has done a poor job of creating a foundation for good-paying jobs here in the U.S. It would be like a farmer claiming that his plants grew best in the areas of his land where he actually watered the crops. If we fixed our income disparity problems here at home by creating good-paying jobs, trade would represent a negligible part of our growth.
Another line of free-trade propaganda declares that the middle class is growing by leaps and bounds in places like China and Vietnam. Once again, this sounds great and gives people the impression that there are huge opportunities in these markets for our products. What it doesn’t tell you is that a typical “middle-class” family in a place like China earns $10,000 a year. How many $30,000 American-made cars do we expect those “middle-class” families to buy on that kind of income? In order for products to be affordable in those countries, they typically have to be produced with cheap labor provided by those countries, which is why American businesses that hope to sell in those markets typically move production to those locations. The one exception seems to be agricultural products grown in the United States. This might provide some jobs, but we are increasingly told that the agricultural sector needs a guest-worker program where immigrants from poorer countries are allowed to come in and do the work.
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Finally, free-trade advocates cite the dramatic growth in exports as proof that these trade agreements are working to our benefit. The problem is that this growth comes from a base that is relatively small. If one penny turns into two pennies, that’s 100 percent growth, but it still doesn’t amount to much. Exports have never accounted for more than 14 percent of the U.S. economy, and, once again, if our leaders in Washington knew how to create growth in the other 86 to 90 percent of the economy, exports wouldn’t matter much.
What you’ll never hear free-trade proponents state is how many “net” jobs are created by their free-trade agreements. Yes, jobs are created by these agreements, but many more are lost due to them and hiding these facts is the key to getting the next free-trade agreement passed.
Free trade can work, but only when the countries involved have similar regulatory structures and living standards. Unfortunately for the United States, few countries measure up to us on those fronts. America made its economy great — without free trade — by choosing an economic system that fostered ingenuity and rewarded hard work. Other countries can do the same, without taking our jobs. Enacting free-trade agreements with poorer countries has undermined hardworking Americans and disabled the once-great American economy.
It’s time for a serious discussion about free trade, and that discussion needs to start with a little honesty about its true effect on our economy.
Aaron Swisher, of Boise, is an economist and the author of “Resuscitating America — An Independent Voter’s Guide to Restoring the American Dream.”