Bill Walker: Just to be clear, trade wars are not good

  • President Donald Trump walks with Canadian Prime Minister Justin Trudeau along the Colonnade to the Oval Office of the White House on Oct. 11. AP

For the Monitor
Published: 3/18/2018 12:25:08 AM

A blockade is an act of war. It isn’t somehow less than war, it is war. Those who starved to death in Yemen from the U.S.-backed Saudi blockade are just as dead as those hit by our Hellfire missiles.

A tariff so high that it keeps out foreign products is a blockade under another name, a “trade war.” Trump tells us that “trade wars are good.”

From Trump’s inaugural address: “We must protect our borders from the ravages of other countries making our products, stealing our companies, and destroying our jobs.”

Singapore, Liechtenstein, Dubai, Switzerland, Hong Kong, Luxembourg, Macao – all the wealthiest, highest-employment nations and enclaves are centers of international trade. None of these models of economic success instigate “trade wars” or threaten other countries over tariff policy. They just keep their own tariffs as low as possible and enjoy the huge profits from the “ravages” of trade.

One country does agree with Trump on trade. North Korea’s total international trade is nearly non-existent, just a bit over $3 billion in exports from over 25 million people. And we can see the results on satellite pictures – North Korea is that black pit surrounded by the lights from global capitalism.

In reality (a region which will not experience an official Trump visit during his presidency), trade is what lifted the world out of universal poverty.

Ricardo’s Law of Comparative Advantage explains why even the highest-tech country trades. The U.S. worker, for instance, could make any given product. But instead of making burlap worth 50 cents per hour, an American worker makes software, silicon chips, pharmaceuticals, etc. We spend our limited time making the highest-value product.

The larger the trade zone, the more specialized and efficient the process. Today some parts for “U.S.” cars are made overseas, while the software for iPhones marked “Made in China” actually comes from Cupertino. Cutting off trade between nations destroys the benefits from comparative advantage, making everyone poor.

If trade were not beneficial, then North Korea would be the perfect model. Every nation would just become a Hermit Kingdom. And why stop there? New Hampshire could stop trading with Florida and grow our own oranges. Plainfield could stop trading with Portsmouth and grow our own lobsters. Everyone could just stay in their own houses and carve their own smartphones out of flint.

But no, the good quality flint comes from Flint Ridge, Ohio – the Abenaki traded for it. Trade is vital even for Stone Age life.

Trump isn’t the first politician to cripple the U.S. economy by cutting off trade. The Smoot-Hawley tariff under Hoover and continued under FDR was what made the Great Depression great. G.W. Bush put on a 30 percent steel tariff that hurt all U.S. manufacturers badly. A CITAC study found that about 200,000 U.S. workers lost their jobs due to the Bush tariffs. (Consumers, of course, don’t matter because we have no lobbyists, but we all paid more for products.) Obama came out with a surprise attack on tire imports that cost us an estimated $1.2 billion.

It’s always popular to blame evil foreigners (and/or witches) for our problems. But foreign workers didn’t appropriate the roughly 15 trillion dollars that the U.S. spent on foreign wars over the last 30 years. Or the U.S. finance industry bailouts. Or the expensive U.S. public-education system, which spends more per pupil, relative to educational performance, than any other in the world.

As the marsupial said: “We have met the enemy and he is us.” The U.S. has no important problems that we did not cause ourselves. Trump’s “national security” excuse for steel tariffs is transparent nonsense – any major-power war will be decided in the first half-hour. There will be no time to pour any steel before the ICBMs’ impact.

The U.S. Constitution does not give the president the power to declare war. A trade war is a war – against ourselves. The president should not have the power to launch tariffs via Twitter.

Congress, especially the Republicans who claim to be for free markets, should legislate a long-term, low-tariff, trade-friendly policy. A declaration of trade peace would stabilize and enrich the world.

(Bill Walker lives in Plainfield.)

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