Trump’s Outsourcing Snafu and the Missing Populist Case for Free Trade
Earlier this week, Buzzfeed unearthed a 2005 blog post in which Donald Trump explained the economic benefits of outsourcing jobs overseas. The piece flatly contradicts the boisterously protectionist rhetoric of Trump’s presidential campaign. No doubt it will be added to the many arguments for why Trump can’t be trusted, but there’s really nothing special about Trump’s flip-flop on trade. It is an exceedingly common tactic among politicians.
In this election cycle alone, we’ve see Hillary Clinton oppose the Trans-Pacific Partnership, which she once heralded as the “gold standard in trade agreements.” And Ted Cruz did a full 180 in opposing trade promotion authority last year after he eloquently praised the bill in the Wall Street Journal.
One of the most impressive trade flip-floppers in recent memory was Mitt Romney in the 2012 presidential campaign. Prior to running for office, Romney properly criticized protectionist tariffs the Obama administration imposed on Chinese tires as an economically harmful sop to labor unions.
But then the Obama campaign started accusing Romney of being the “outsourcer-in-chief” for helping companies invest abroad during his time at Bain Capital. In response, Romney struck a very confrontational tone against China, accusing them of cheating while criticizing Obama for being too soft on Chinese trade.
Four years later, Romney is back to talking sense about trade. In his recent speech warning Republicans about Trump, Romney directly addressed Trump’s signature trade policy proposal:
[Trump’s] proposed 35% tariff-like penalties would instigate a trade war that would raise prices for consumers, kill export jobs, and lead entrepreneurs and businesses to flee America.
Peter Suderman at Reason points to Romney’s duplicity in a scathing indictment of the GOP establishment he claims have enabled Trump’s candidacy:
Romney, like many Republican elites, has now changed his tune, and he deserves credit for speaking unequivocally about Trump’s many serious flaws. But Romney and others in the party played Trump’s game, and talked Trump’s language, for long enough that they helped legitimize it, and allowed it, even encouraged it, to fester and grow.
Republicans’ election-year flirtations with anti-trade populism are especially frustrating, because populist rhetoric doesn’t always have to be anti-market. You can and should make the case for free trade by railing against the evils of protectionism.
Every artificial trade barriers is an example of crony rent-seeking. You don’t have to extol the economic virtues of free trade in order to condemn corporate welfare. Republicans did a good job of this in their (temporarily successful) fight against the Export–Import Bank.
Some of Donald Trump’s primary opponents recently took a similar tack when they criticized Trump’s tariff proposal as harmful to consumers. Tariffs are taxes that raise prices. This is bad for consumers, especially poor consumers, and bad for U.S. businesses that need low-priced imports to remain competitive in a global market. By making it more expensive to do business in America, tariffs directly drive away investment and jobs.
Protectionism benefits big businesses with lobbyists while killing American jobs. That’s the populist case for free trade. It may be easier to blame foreign competition and outsourcing for perceived economic ills, but it’s not accurate and it won’t lead to good policies that help the American public.
In the end, elected Republicans shouldn’t be surprised that Trump’s belligerent economic nationalism resonates with voters. They’ve consistently failed or refused to articulate the broadly compelling case for good economic policy they desperately need at the moment.
Source: http://www.cato.org/blog/trumps-outsourcing-snafu-missing-populist-case-free-trade
