There's just way too much rhetoric out of the last election against free trade that needs to stop. Tariffs and other trade restrictions will not make America great ...it will make us poorer.
The pro-consumer argument is clear: making people pay more for things makes them poorer. That's fairly straightforward. What's confusing is that major importers and major exporters happen to be largely the same people!
In "What If US Importers and Exporters are Largely the Same?" economist Timothy Taylor presents evidence from a collection of studies that show that:
Out of the 2,000 US firms that are in the top 1% of exporters, 36% are also in the top 1% of importers; conversely, of the 1,300 US firms that are in the top 1% of importers, 53% are also in the top 1% of exporters.
Black and white arguments from mercantilist days of yore that portray exporters and importers are different groups, and subsidizing the former as being beneficial for a country are just wrong. The arguments make for good politics, but terrible economics.
Free trade makes domestic productions much more efficient, and therefore helps boost exports. Politicians love to point out the jobs lost from some industries, but they never consider all of the jobs gained in others due to trade.
Manufacturing Output Is Higher Than Ever
Real manufacturing output has never been higher in the U.S., so one has to wonder why politicians always claim that manufacturing is dead?
People seem to be biased pessimistic, for starters. For as rich as our society is, richer than at any other point in human history, we should all be far more optimistic. However, manufacturing jobs have been decreasing. Trade is not the cause, though; politicians have been lying to you, it is productivity gains that have decreased about 88% of manufacturing jobs.
It would be patently silly to argue against improving productivity as a national policy. That would surely protect some jobs, but it'd kill a whole bunch of others and make the country much poorer in the long run.
What are your thoughts?
If you like this post, please upvote, resteem, or share below! Please check out my other articles and follow @finpunk to keep in touch with future content.
Rob Viglione is a PhD Candidate in Finance @UofSC with research interests in cryptofinance, asset pricing, and innovation. He is a former physicist, mercenary mathematician, and military officer with experience in satellite radar, space launch vehicles, and combat support intelligence. Currently a Principal at Key Force Ventures, LLC, a start-up consulting group in North Carolina, and Head of U.S. & Canada Ambassadors @BlockPay, Rob holds an MBA in Finance & Marketing and the PMP certification. He is a passionate libertarian who advocates peace, freedom, and respect for individual life.
Image source: https://conversableeconomist.blogspot.com/2017/01/what-if-us-importers-and-exporters-are.html
Manufacturing chart: https://fred.stlouisfed.org/series/OUTMS