In a new article at The Stream, Acton Director of Research Samuel Gregg offers good reasons why a move toward economic nationalism is not in the best interest of America. He starts with this:
Whatever the motivations for such policies, their costs vastly outweigh their benefits. In the first place, protectionism discourages American businesses and workers from focusing on producing those goods and services where they enjoy a comparative advantage vis-à-vis other nations. Not only does this undermine productivity, efficiency, and international competitiveness of American businesses. It also encourages American workers to enter industries that, no matter how much protection they enjoy, won’t be able to compete in the long term.
Gregg continues to give reasons against economic nationalist policies throughout his article, but one reason that seems to be quite relevant at the time is crony capitalism. Gregg says this:
Yet another problem with economic nationalism is that it encourages a growing problem in American economic life: crony capitalism.
Giving certain American businesses subsidies or lumbering foreign products with tariffs may seem like economic questions, but in practice they are ultimately political. Such policies encourage companies prefer to seek profits by lobbying legislators and bureaucrats rather than serving customers and creating value.
Gregg concludes his article by laying out some of the new challenges that free traders face with the movement toward economic nationalism. This is important because with the national perspective of free trade shifting toward economic nationalism, free traders need to know how to defend their position.
In the first place, free marketers should acknowledge that not every American wins, at least in the short-term, from economic globalization. Free marketers aren’t generally good at this. They don’t seem to realize that citing statistics about the falling costs of goods and services isn’t likely to impress people in rural Pennsylvania who have lost their jobs. However real such economic gains may be, they’re effectively “invisible” to many workers and their families.
Gregg ends his article by making the patriotic case for free trade.
Above all, free traders in America need to make it clear that they’re just as patriotic as economic nationalists: that they advocate economic openness to the world not because they’re out-of-touch bicoastal globalists, but precisely because they love America.
Patriotism is love of the true good of a nation. That’s the ground upon which resurgent economic nationalism needs to be debated. The real question is whether American free marketers are up to such a challenge.
You can read Gregg’s full article at The Stream here.