Free trade’s ‘golden age’ is lacking in luster

“So, Tony, it sounds like you’re not a big fan of free trade”

“Oh, I think free trade’s great- so long as it doesn’t get in the way of anything really important, like putting Americans back to work.”

“What do you mean?”

“Look, Sean. Any economist will tell you free trade is even better than macaroni and cheese. But tell that to a tool and die maker whose unemployment insurance is about to run out.”

“I guess so.”

“Some people do have a way of making free trade work for them.”

“What do you mean? “

“Look at the CEO who’s just moved 17,000 jobs from Cleveland to Jakarta so he can announce record profits next quarter from lower labor costs. Wall Street runs his stock up five or 10 points”


“Think of it this way, Sean. We can’t trust the invisible hand of the market to allocate economic resources like capital and labor among nations if we all want to prosper.”

“What’s the alternative?” “Intelligent strategic management.” “Like trade agreements?”
“Right. Make deals; it’s a sacred free-market principle.”

“True. “

“Suppose a car is speeding down a twisting mountain road. Is any sane person going to argue that guiding this car around the inevitable sharp curves should be left entirely to the invisible hand?’

“What invisible hand? “

“You know, the subtle grooves in the road’s pavement; the way it’s banked on the turns.”

“I see what you mean. “

“Obviously, the car needs a driver to avoid running off a cliff.”

“And trade is no different?”

“Right. Trade needs the federal government to manage it intelligently on behalf of the American public.”

“Do you mean industrial policy, picking  winners?”

“Actually, the record shows that the feds have a pretty good history of picking winners. Look at World War II.”

World War II? “

“Sure. Who did President Roosevelt pick to manage the war? General Marshall, General Eisenhower, Admiral Nimitz- all-stars in any league. Germany and Japan couldn’t come close.”

“I guess you’re right. “

“And look at the big spending programs the Roosevelt administration picked to create a massive amount of armaments and superior technology in a flash. Like the Manhattan Project to produce nuclear bombs and the B-29 program.”


“For all Germany’s technological know-how, efficiency and discipline, Hitler’s government had a bad habit of picking losers and choosing managers who were forefathers of the people who drove General Motors off a cliff. So what’s wrong with having the federal government manage trade to benefit the American public?”

“But won’t the academics insist that isn’t free  trade at all? It seems to violate the hands-off principles supposedly espoused by Adam Smith and other big thinkers”

“So we’ll keep everybody happy by calling our approach something like ‘free trade with American characteristics,’ like Beijing describes its version of capitalism as ‘socialism with Chinese characteristics.”‘

“I should have known. “

“The patron saint of America as an industrial powerhouse was Alexander Hamilton. As George Washington’s treasury secretary, he pushed his vision of our nation growing into a land of urban-based industries that created widespread prosperity by making things. Hamilton persuaded Congress to pass a wide range of tariffs to protect and nurture home-grown industries that made things an increasing number of Americans wanted. He protected the prosperity of American workers by forcing our trading partners to play by sensible rules.

“Yeah. “

“Now fans of economic theorists who let logic run away with common sense may have trouble getting their minds around Hamilton’s unorthodox wisdom. But putting it into practice is what gave America the capacity to out-produce Germany and Japan combined during the 1940s.”

“I guess that makes sense. “

“The heroes of Hamilton’s America are people like those masterful tool and die makers, the Michelangelos of the machinist’s trade whose artful minds and skilled hands can sculpt metal into the jigs and tools of efficient mass production.”

Yeah, I knew of one of those guys. “

“But too many like him have been sacrificed at the altar of free trade and are trying to make ends meet by flipping burgers. But not to worry; the mainstream economists tell us everything will be fine. According to them, we are living in the golden age of free trade. Sadly, what really surrounds us are copper and lead.

originally published: September 15, 2012

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