Weekly E-Letter 3/3/2017 – Free Trade. Is It Fair?
It would be a yuuuge understatement to say that newly elected President Donald J. Trump is controversial. And it would not be an understatement to say that a great deal of the noise and clamor is nine parts theater to one part substance. Contributing to the substance part is the issue of free trade.
President Trump says that he thinks the United States has done some bad deals with trade agreements — that all the other countries we’ve negotiated with have profited much more than we have and it’s time to fix that. He says we need to renegotiate NAFTA and probably put some large scale tariffs in place when it comes to foreign imports from a lot of places…but mostly China. And the Trans-Pacific Partnership? Fugeddaboutit!
Here’s the problem: Most economists tend to think that free trade really does end up helping much more than hurting. And not just a few businesses, or a few people, but almost everybody.
Of course the subject can be complicated. Indeed, many politicians have moderated their positions over time. Secretary of State Clinton vigorously supported the TPP but presidential candidate Hillary vigorously opposed it.
Free trade, unarguably, does generate harm. As markets shift, different contributors to the balance of supply and demand will be affected differently: Some will profit and some will suffer.
What makes it difficult in determining the net effect is that, in many cases, the hurt comes now and the benefit later. This is why the free trade discussion can be a powerful one in the realm of politics.
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