“Every free trader has heard it: Sure, we’d all love for there to be free trade, sounds nice in theory, but in the real world it can’t happen. Supposedly free trade is a utopian position, and protectionism is the pragmatic, realistic alternative.”
But as Dominic Pino relates in “Free Trade Is How You Live Your Life,” the lead cover story of the May issue of National Review, “this common framing of the issue of international trade is exactly backward.”
Protectionism is a utopian theory based on the assumptions that individuals and businesses will act contrary to their self-interest, government will act in the national interest, and special interests will stay on the sidelines. Free trade is how you live your everyday life.
In The Wealth of Nations, Adam Smith endeavored to show how people acting in their self-interest could benefit others. The mechanism by which that happens is the division of labor. When people specialize in what they do best and trade for the rest, they make themselves and the people they trade with richer than they would otherwise be.
Indeed, Pino continues, “this insight lies at the heart of economics.”
Even if it’s “not obvious in the abstract,” our experiences and a look at history have “shown it to be true.” “Countries where people don’t specialize and trade — countries where people grow their own food, make their own clothes, build their own houses — are the world’s poorest.”
But should free trade be limitless, especially when it comes to our adversaries? Michael Brendan Dougherty’s essay, “The Small Exception,” also on the cover, argues that it shouldn’t be in the case of Communist China.
“China is not just first in the world in value-added manufacturing,” MBD writes, “it is larger than the next four largest manufacturing powers — the United States, Japan, Germany, and India — combined.”
It achieved this position through aggressive state investment in industry combined with massive foreign investment. After decades of expanding its manufacturing base, and rashes of intellectual property theft, China has successfully climbed the value chain. By the late 2010s, Apple CEO Tim Cook could honestly tell investors and reporters that China was no longer attractive to him for cheap labor. It was attractive to him as a manufacturing destination because it had so many more skilled engineers than America had.
“What our policymakers need to decide is this,” MBD argues: “What industries are necessary for maintaining America’s political preeminence? Which are best located here and which in friendly democratic nations with whom we have good relations such that trade seems reasonable to Americans?”
Read both essays in the new issue of National Review magazine.
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