The Fallacy of "Free" Trade

Craig Harrington writes:

President Obama's decision earlier this month to place a 35 percent tariff on imports of Chinese tires has caught a great deal of criticism from corporate media. President Obama's decision came roughly three weeks before the scheduled G-20 summit in Pittsburgh September 24-25. It is expected to be a major point of emphasis between Obama and Chinese President Hu Jintao whenever they meet this week.

TradeReform.org, a trade policy group which advocates for domestic job creation and balanced international commerce, detailed some of the criticism leveled against the administration. However, the media can do much more to point out the positives of this portion of Obama's trade policy.

The magazine Economist wrote a scathing piece declaring that the decision to place a tariff on tire imports was "bad politics, bad economics, bad diplomacy and hurts America". The column guarantees that this move will draw retribution from China and other trading partners as they react to the "protectionist" attack by the United States. Economist is certain that this decision will impede U.S.-China cooperation on environmental policy, North Korea, federal budget financing, and other mutual interests. In their view, this was nothing more than an act of "economic vandalism".

The New York Times also ran a piece attacking the decision, declaring that President Obama was merely pandering the interests of the United Steelworkers union (USW). In effect, the President was thanking the USW for their support in getting him elected. He had forsaken sound economic policy in order to repay a debt to the unions.

Acclaimed Washington Post columnist George Will, writing for The Houston Chronicle, also blasted the "protectionist" strategy which in his view can only harm the United States.

Will blames American consumers for preferring Chinese products, The New York Times blames unions for driving "protectionism" and closing the U.S. market to perfect competition. Every proponent of "free trade" in the United States agrees that this is a step in the wrong direction, but they completely overlook the fact that America cannot compete in international trade without some sort of oversight and restriction.

George Will points out that nobody forced Americans to choose Chinese tires over American ones, but he ignores the reason why Americans choose Chinese goods. The Chinese subsidize their exports so as to guarantee their products are artificially under-priced. Leo Gerard of the United Steelworkers union has leveled many complaints against foreign producers and called for import tariffs in many cases. But he only does so in cases where American workers are threatened.

Getting cheap tires from overseas does not help the United States nearly as much as having a thriving domestic tire industry. Wealth-producing jobs are more important than cheap consumption, but the free trade lobby wants to increase commercial volume at all costs. The animosity against President Obama ignores the facts.

The United States relies on consumption for 70 percent of its economy, and nearly two-thirds of that consumption is imported. The free trade lobby believes that economic growth is driven by consumption, but every economy in the world which is actually growing is doing so through production and exports.