Trump and the continuing ignorance on trade

my Trade Tripper column in this 9-10 July 2016 issue of BusinessWorld:

You know how messed up the Left is when it’s getting what it wants and yet remains angry.

After all, last week brought forth finally a global figure willing to say what Leftists have been saying for so long:

“We do not need to enter into another massive international agreement that ties us up and binds us down.” We have a “leadership class that worships globalism.” And finally, “globalization has made the financial elite who donate to politicians very, very wealthy... but it has left millions of our workers with nothing but poverty and heartache.”

This personality promises to keep jobs domestically (rather than being shipped abroad), to apply protective tariffs so that local industries are freed from foreign competition, and to keep his country away from signing into new trade agreements.

And yet the Left has been strangely silent as far as Donald Trump’s trade policies are concerned.

After railing for so long against international trade, globalization, and multinational corporations, one would think that Donald Trump is the change the Left has been looking for -- the one who speaks truth to power.

It’s an interesting study in politics and psychology really.

In the end, there’s the bind, with the Left forced to contradictorily respond to Trump’s trade pronouncements by relying on the fallacy of lack of charity (akin to ad hominem): since Trump said it, then something must be wrong.

But the thing is, no matter who said it, such criticisms of trade (and globalization) are just plain mistaken. Period.

Such ignores the benefits of trade in a globalized economy: lower prices, improved quality products, greater transparency in government procurement and investment rules, increased resources for environmental protection, better labor standards, as well as larger market access for developing countries (like the Philippines), thus translating to higher incomes and more jobs.

And Trump is utterly ignorant, as David French (Free trade isn’t a burden, March 17, 2016, National Review) points out, of the fact that the US “largely embraced free trade not for the sake of the few but because it has benefited the many. Families benefit from less expensive goods. We enjoy affordable access to technology unthinkable ten short years ago, with even poor families owning smartphones and televisions that couldn’t be bought for any sum of money even last decade. By virtually every measure of material progress, we have access to more for less than ever before -- so much so that our primary national spiritual challenges include consumerism and materialism.”

The great thing about trade is the utter democratic attitude behind it: people run trade, not governments. Governments rarely buy and sell with each other. If ever, governments buy from the private sector, whether local or foreign. And international trade helps put a spotlight on such transactions by applying transparency rules present in most trade agreements.

It’s the people themselves that trade: from the multinational to the local cooperative to the small home business, exercising their freedoms to buy and sell goods and services with each other, except this time the exchange is done not merely amongst neighbors within a village but on a much bigger scale.

And the benefits of trade are enormous, extending beyond the simple numbers of economics. Countries get to know other cultures, bring peoples together, and -- quite notably -- provide a disincentive for resorting to armed conflict.

But sadly, if it can get away with it, government hinders trade through tariffs, quotas and non-tariff measures.

As I pointed in a previous column, Jonah Goldberg (Arguments against Free Trade are Deeply Flawed; April 2016) nails it: protectionists are “wrong philosophically. Countries don’t trade with other countries; businesses and consumers transact with other businesses and consumers. Protectionism is corporate welfare by other means.”

What it means is that every time regulations are imposed on trade, it is never the ordinary citizen that benefits. Prices go up (because tariffs and license fees essentially make up additional costs), the choices (and quality) amongst available products go down, and the incentive to create and produce is dissipated (thus lessening opportunities for more jobs).

Instead, who benefits are government bureaucrats squeezing businesses and consumers to shell out more money, entrenched interests (including elite families) that can now do whatever they want because they are babied away from competition, and the corrupt because regulations strongly provide incentives for those cheating the system.

In short, stopping international trade helps the old rich, prevents the creation of new wealth, and hurts the poor.

Arguably, there would be some dislocations or problems that accompany trading between countries but “the solution isn’t to rip up trade agreements or impose barriers that could trigger a trade war. The solution is to help workers maintain their standard of living through retraining, relocation or retirement if necessary.” (Counting the Ways That Trump Is Wrong on Trade; Paula Dwyer, Bloomberg, March 23, 2016).

Hopefully, the new Duterte administration brings a consistent, effective policy on international trade.