April 25, 2005
Protectionism
During a rare face-to-face meeting of ThreeSources folk, Johngalt and I had a good squabble about trade with China. I was listing President Clinton's accomplishments in the free-trade arena, wilting poor jg with every kind word about a President neither of us admire. When I got to China's entry in the WTO, I was interrupted.
I have blogged some good things about China of late, and have blogged nothing about the anti-Japan protests, saber-rattling across the Taiwanese Straights, or any of China’s bad behavior.
Why does a freedom lover give this despotic nation a pass? Maybe I need to rethink it, but the answer is clearly self-interest. Dallas Fed President Richard W. Fisher spells it out today in a guest ed for the Wall Street Journal, Protect Us From Protectionists
Financial markets deplore protectionism, and even talk of it can send stocks into retreat. In the days after the tariff measure survived its first Senate vote on April 6, the Dow Jones industrials tumbled 400 points. Import-bashing preceded the market crash in 1929 and Black Monday in 1987. The market knows the value of imports.The U.S. followed the domestic deregulation of the early 1980s with deregulation at the border through trade liberalization in the late '80s and into the '90s. Presidents of both parties delivered Nafta, the Uruguay Round, China's entry into the World Trade Organization and free-trade agreements with Singapore, Chile and Australia. Our markets opened wide. Imports came rushing in. Americans bought a record $1.9 trillion from other countries last year -- or 16% of GDP, nearly double the 8.5% of a decade ago.
And all the while, our economy has strengthened. Output has grown 3.3% a year since 1994. Despite a recession, we've added nearly 16 million jobs, and unemployment has been low. Productivity has been the best in decades. No other major country matches our economic performance during this period of rapidly rising imports.
The protectionists think exports are good and imports are bad, but as Fischer states, "When consumers pay less for clothes, shoes and electronics, they have money to spend elsewhere -- to the benefit of local businesses."
If the US wanted to discourage trade formally with this human rights abuser , for political reasons, I'd be all ears. But don't let the ghosts of Smoot-Hawley choose military might or human rights as an excuse.
Lastly, I will cede to no one my dislike for El Jefe, but I am forced to compare the embargo of Cuba with the engagement of China. Which one has freed more people and elevated human rights? Clearly, trade with China.