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In Favor of Free Trade

ICE Graveyard 21/04/2016 Remy Raisner

In the United States, Donald Trump threatens economic war on China and Mexico. Hillary Clinton lambastes the Trans-Pacific Partnership trade deal she backed as Secretary of State. Bernie Sanders brags about having opposed, as a senator, every trade deal Washington offered.
Candidates agree on little except being against free trade. Ranting is the flavor of the day. Anti-trade rhetoric, along with the bashing of the economy as rigged by Wall Street and Corporate America, has dominated the election campaign.
In Europe, populist politicians like Marine Le Pen, Viktor Orban or Geert Wilders thrive on similar messages.
Nevertheless, international trade and globalization have had undeniable benefits, and are here to stay. More than that, seeking to reverse them would be dangerous for any world leading country.
Anger has fueled much of the American election campaign, and free trade has fueled much of that anger. It is blamed for the large losses of manufacturing jobs (6 million in the United States between 1999 and 2011) and the erosion of the West's industrial base -what left an important swath of the population unemployed, broke and will little hope for better. For non-college educated workers still on payrolls, wages have been stagnant, and anxiety is high.
In the Western World, China is accused of having manipulated its currency in order to poach jobs from low-skilled workers, while stealing intellectual property from higher-skilled ones. In a nutshell, many feel that Europe and America were shortchanged.
Compound this with the financial crisis, which oftentimes left the economically weakest without homes in America, and/or with large losses in their retirement accounts, and the anger is understandable.
However, free trade has allowed more wealth creation than any other economic order. Historically, it has benefited America and Europe enormously, and still does. It has made the price of consumer goods fall dramatically, what has trickled down to the less well-off disproportionately, since they spend more of their disposable incomes on goods. It has brought more choices to Americans and Europeans.
And it has opened important, strategic new markets to domestic firms. We cannot have a dynamic, solid economy without cross-border trade when most individuals on the planet live outside of our borders.
Furthermore, as world leaders, the U.S. and the European Union have a duty to support free trade and set the global tone. A retreat from trade would be a retreat from the responsibility and moral obligation of global leadership. It would be a loss of influence; other nations would jump at the opportunity to fill in the role. Globalization is not reversible: withdraw and you lose out.
And perhaps most importantly, cross-border trade fosters world peace: when nations trade with each other, conflicts, military or others, are less likely to occur. In the 1930s, Nazi Germany opted for autarky -we all know what followed. In a world with as many conflicts as today, in the nuclear age, we should think about this twice.
Through the 2016 U.S. election, the depth of hurt and the level of damage experienced by low-skilled workers are on display on the national stage. It became very clear that the economy struggled at retaining them and assisting their transition.
Job losses, if not the loss of industries, are unavoidable with innovation, change and each step of human progress. The horse carriage industry went out of business when automobiles were invented.
Instead of trade bashing, the debate should focus on how mature economies of the Western World can best assist workers' retraining and reemployment. In the future, domestic economic and social policies should accompany free-trade ones. International trade can be rethought, and updated. Assisting workers thrive under new circumstances will make their transition easier and faster, and national economies leaner and meaner. Not to mention keeping social disorder and extremism away. More appropriate, more modern trade-adjustment assistance, more efficient job training programs and better education are a must. And in the age of the internet, this does not necessarily mean physical displacement.

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