To Trade or Not to Trade

Column 2017-5 (2/20/17)                                   

     Since long before my time a battle has raged over whether to
trade or not to trade with people who live in other nations.  A quarter
century ago Ross Perot proclaimed that the sucking sound was our jobs
going to Mexico.  Others were of the mind that the sucking sound was
Ross Perot sucking all of the intelligence out of the room.

     Donald Trump now waves the banner passed down by Perot. 
Now the main villain is China.  Mexico still has a supporting role. 
What is the truth about foreign trade?  Does anyone care?

     Trade is a two-way street.  That is what "trade" means.  Each
party gets something from the other.  When the wealth moves only in
one direction it isn't trade.  It is either a gift, robbery or extortion.   
Believe it or not the Chinese and Mexicans are so selfish neither will
send us an endless stream of gifts.  Even if they would, Why should we
complain?

     We aren't losing jobs to China or Mexico.  When we trade
goods we also trade jobs.  When shirt makers lose their jobs because we
import shirts from China, other jobs are created in the US making
something to pay the Chinese for the shirts.  Those new jobs usually
aren't as obvious as the ones lost.  Sometimes those new jobs do show
up on our radar.  Boeing recently announced that a sale of airplanes to
China would create 50,000 jobs in the US.

     Trade does mean some workers have to find new jobs.  There is
nothing unusual about that.  In Michigan every year 700,000 or so jobs
are lost and replaced with new jobs.  The only way we can increase our
standard of living is to replace low productivity jobs with more
productive jobs.

     Trump claims he will bring our manufacturing jobs back from
China.  That would be a neat trick considering that those jobs didn't go
to China.  So where did the manufacturing jobs go?  They went the
same place the farm jobs went.

     In colonial times about 90 percent of workers were farming. 
Now only about 1 percent are farmers.  We didn't lose those jobs by
importing our food from China.  Farmers now produce more than ever
before.  Mechanization makes it possible for one farmer to grow as
much as many used to.

     Manufacturing jobs are now going the way of farm jobs.  And,
we will be better off because of it.  Imagine what life would like today
if 90 percent of workers were still farming.  Those displaced farmers
make most of the stuff we have today.

     In colonial times no one could have imagined all the non farm
jobs we have today.  Likewise, no one today can imagine all the non
manufacturing jobs that will fill the future.  As long as people have
unsatisfied wants, there will be work to be done.  All we need to do is
give entrepreneurs the freedom to dream and create.  They will find
ways to employ available labor to produce the goods and services
people want.

     Some may ask, What about the money China lends to the US
government instead of spending?  Be assured, the government spends
that money.  The jobs the spending creates may not be very productive. 
They will be as productive as they would be if government borrowed
the money from people in the US.  And, the borrowing from China
won't drain investment capital from the US economy.  Please don't
interpret this as suggesting government borrowing is a good thing.

     The reason people trade is that they find it easier to make
something to trade for what they want than to make what they want. 
Trade benefits both parties, even when they live on opposite sides of the
world.

     Blocking trade may benefit some politically connected special
interests.   The price we pay is that we all have to work harder for what
we want.  Blocking free trade always increases the price of something
people buy.

aldmccallum@gmail.com
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Copyright 2017
Albert D. McCallum