Saturday, June 13, 2015
Free trade is no panacea
The failure of Congress to accept the latest free trade agreement led a host on Fox Business Network to condemn protectionism. Free trade always grows the economy, she said. She pointed to the raising of tariffs in the 1930s, which she said prolonged the Depression.
Perhaps that is true. But if free trade is a panacea, then why are we in a worldwide slump except for India, South Korea and a few other hot spots? After all, NAFTA and other free trade agreements already are in place.
Maybe the economy like the atmosphere is more complicated. Just as carbon dioxide levels do not determine the weather, free trade agreements don't determine the growth of the economy. Passage of the North American Free Trade Agreement was nice, but I think the development of computers and the Internet had more to do with the growth in the 1990s than making it easier to buy and sell items with Canada and Mexico.
Do not get me wrong. I am for free trade under most circumstances. However, protectionism is not a dirty word. Indeed, in the 19th century, protectionist tariffs helped America establish its industrial base.
Most Americans know about as much about the economy as they do meteorology. And look how many fall for global warming. This free trade agreement is suspect. I am glad Congress apparently said no on Friday.