Artificial barriers and government are the sources of poor trade

The New York Times’ Eduardo Porter wrote a scathing review of Donald Trump’s trade policy as it relates to steel production, arguing that the President’s policy could lead to retaliation and higher prices for steel imports. Mr. Porter would like to see the United States follow a post-world order on trade that takes into account the participation and coordination of multiple state actors.

Mr. Porter, like most Americans, looks at trade like a football game. Team USA has to avoid trade protections in order to maximize economic output. In standard, public economics parlance, this means increasing income, production, and sales. And if a wage increase and worker productivity occurs as well, all the better for increased wages provides politicians with a win. They can be seen as “job creators” worthy of re-election.

Mr. Porter assumes that a win in global trade for the United States is a win for all Americans. How he comes to such a conclusion without describing for the reader what trade actually is is dumbfounding but not unexpected. Most journalists are not “deep” thinkers on economics, particularly a nation-state’s economic policy. They regurgitate the standard economic fare, that nation’s should produce what they are best at at trade for what they are not that good at producing. The world overall would benefit from specialization because each nation is dedicating scare resources to their best use.

The b.s. is so standard I spat out the above spiel from memory. It’s the same nonsense that Mr. Porter was probably fed while in undergrad or while taking a crash course in economics for his first writing gig. Trade is not about job creation or market share. Trade is about controlling as many world resources as possible. Apple produces smartphones in China, paying Chinese workers in Chinese currency; taking advantage of natural and human resources in China in order to produce a product at lowest feasible cost and sell it at a profit.  Trade is war and corporations are the tip of the spear for nations that wish to extract another nation’s resources on behalf of the mother nation.

Take the American layman’s view. Why does the United States, as technology and resource rich as it is, need to trade with any other nation? The United States can efficiently feed and clothe itself. It has enough access to petroleum, coal, and natural gas in order to generate electricity. It has an advanced communications system and global powerhouse internet companies that attract consumers to those advanced networks while making advertisement revenues. It’s no wonder the average American wonders about the brouhaha Mr. Porter and other so called free traders create over global trade.

As an individual, trade policy on global steel is not doing anything for my sovereign economic environment. I have no demand for steel and if I do need a few $100 sheets, I can contact a trader or broker and get what I need domestically.

Could I benefit from a foreign market for steel? Sure, if the price, after transport and other costs, is lower than that I can negotiate with domestic suppliers. The State creates a roadblock to those possibilities, however. Tariffs and other retaliatory acts by the U.S. against foreign producers threaten lower prices and make access to foreign steel difficult. For the individual, State trade policy does not create benefits.

 

About Alton Drew

Alton Drew brings a straight forward and insightful brand of political market intelligence. Alton Drew graduated from the Florida State University with a Bachelor of Science in economics and political science (1984); a Master of Public Administration (1993); and a Juris Doctor (1999). You can also follow Alton Drew on Twitter @altondrew.
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