What's Wrong with Protectionism: Answering Common Objections to Free Trade (Mercatus Center at George Mason University)

Putting Tariffs On Imported Goods Or Setting Other Barriers To International Trade Can Be Tempting For Politicians. They Assume That Many Of Their Constituents Believe That Free Trade Is Not Fair Trade And That Other Countries Aren't Playing By The Rules. This Belief Makes It Easy For Industry Leaders To Demand Protection For Their Businesses And Their Workers--to 'put America First.' But Americans Should Resist The Siren Calls Of Protectionism. In This Highly Relevant Protectionism Primer, Pierre Lemieux Shows What Can Happen If They Don't. As The Author Demonstrates, Trade Between Any Two Countries Is Fair For The Same Reasons As Exchange Between Two Individuals: It Is To The Benefit Of Both. Lemieux Carefully Refutes The Arguments Of Those Who Would Curtail Americans' Access To The Benefits Of International Commerce--from The Claim That We Can Boost Economic Growth By Reducing Imports To The Belief That Free Trade Leads To 'shipping Jobs Overseas.' Yes, Manufacturing Jobs Are Declining In This Country And Have Been Since The 1950s. But, As Lemieux Points Out, That's In Large Part Because Americans Are Making More Advanced Products More Efficiently--that's Our Comparative Advantage. And This Is Happening As Less-developed Countries Are Producing More Labor-intensive, Low-tech Goods--that's Their Comparative Advantage. All Parties To A Trade Benefit. Lemieux Shows How Free Trade Improves The Lives Of American Consumers, Especially The Poor. The Narrow Agenda Of The Protectionists--to Protect A Small Minority Of Producers At The Expense Of Millions Of Their Fellow Americans--is The Wrong Path For An Increasingly Diverse And Complex Economy. This Concise Primer Shows You Why--back Cover. Objection: Americans Cannot Compete Against Low-cost Foreign Producers -- Essay 1: Comparative Advantage And Supply Chains -- Objection: Free Trade Harms The United States -- Essay 2: Imports Are Not A Deduction From Gdp -- Objection: The Trade Deficit Is Bad -- Essay 3: The Balance Of Trade -- Objection: The United States Is Losing Its Factories -- Essay 4: The New Manufacturing And The American Economy -- Objection: Trade Destroys Jobs -- Essay 5: Jobs, Jobs, Jobs, And Economic Growth -- Objection: Trade Lowers Wages -- Essay 6: Labor Productivity And Remuneration -- The Politics Of Trade And A Bit More Economics -- Essay 7: Free Trade Agreements And Nafta -- Objection: Free Trade Is Not Fair -- Essay 8: American Consumers Benefit From Trade With China. Pierre Lemieux. Includes Bibliographical References (pages 103-116) And Index. Erdmann uses a broad array of evidence on housing inflation, income, migration, homeownership trends, and international comparisons to demonstrate that high home prices have been largely caused by the constrained housing supply in a handful of magnet cities leading the new economy. He observes that the housing bubble has been broadly and incorrectly attributed to various "excesses." Policymakers and economists concluded that our key challenge was that we had built too many homes. This misdiagnosis of the problem, according to Erdmann, led to misguided public polices, which were the primary cause of the subsequent financial crisis. A sort of moral panic about supposed excesses in home lending and construction led to destabilizing monetary and regulatory decisions. As the economy slumped, a sense of fatalism prevented the government from responding appropriately to the worsening situation. The author provides a needed correction to the causes and consequences of financial crises and secular stagnation. --Adapted from publisher description Cover 1 Contents 6 Foreword 10 Introduction 18 1. Objection: Americans Cannot Compete against Low-Cost Foreign Producers 24 Essay 1: Comparative Advantage and Supply Chains 34 2. Objection: Free Trade Harms the United States 38 Essay 2: Imports Are Not a Deduction from GDP 46 3. Objection: The Trade Deficit Is Bad 48 Essay 3: The Balance of Trade 56 4. Objection: The United States Is Losing Its Factories 62 Essay 4: The New Manufacturing and the American Economy 66 5. Objection: Trade Destroys Jobs 70 Essay 5: Jobs, Jobs, Jobs, and Economic Growth 80 6. Objection: Trade Lowers Wages 86 Essay 6: Labor Productivity and Remuneration 90 7. The Politics of Trade and a Bit More Economics 94 Essay 7: Free Trade Agreements and NAFTA 100 8. Objection: Free Trade Is Not Fair 106 Essay 8: American Consumers Benefit from Trade with China 112 Conclusion 116 Notes 120 Index 134 About the Author 142