A couple weeks ago, I did a quick blog entry directing readers to the “Great Trade Debate” between Cato’s Dan Griswold and Ian Fletcher of the US Business and Industry Council and hosted by the good folks over at WorldTradeLaw.net’s International Economic Law and Policy Blog. Being the complete trade-nerd that I am, I eagerly awaited reading the clash between an immensely knowledgeable and unabashed free trader like Griswold and an admitted, ideological (as opposed to political) “proud protectionist” like Fletcher.
Unfortunately, the debate didn’t turn out as I had hoped. Don’t get me wrong: the exchange was interesting and produced a lot of good argument, but for the most part, the two debaters either talked past each other or simply spent their allotted space debunking the other’s prior stats and assertions. Thus, the casual reader probably finished the debate just as he had begun it: confused about whom to believe and about which side he should support.
For my purposes, however, the debate was still immensely valuable because it provided a perfect example of how protectionists and free traders currently advance their arguments, and thus how free traders must revise their approach to the debate if they are ever to win the day.
Over the last year or so, I have attempted to show that for free traders to win the “great trade debate,” they must rethink their current, data-driven approach. This means that before getting into all of the fancy charts and historical lessons, free traders first must demonstrate that trade is foremost a moral issue, and that free traders, not protectionists, are on the “right side.” This is done simply by showing how anti-traders seek to forcibly thwart voluntary, mutually-beneficial cross-border transactions in order to transfer wealth from politically-underrepresented groups (i.e., individual consumers, service-providers, and downstream manufacturers) to other, politically-favored classes (typically heavy manufacturers or agribusiness). It is reinforced by showing how protectionism is an invisible and regressive tax that disproportionately punishes low-income American families by forcing them to expend more of their paychecks to buy protected (and more expensive) food, clothing and shelter. In short, protectionism is classic beltway politics, where special tax breaks, sweetheart deals and secretive earmarks rule the day.
Fletcher’s case is no different, even though he’s calling for an “across the board” tariff on all imported goods. His tax on all US import consumption would be a massive wealth transfer from those consumers in non-manufacturing/farming jobs (engineers, lawyers, IT professionals, waitresses, nurses, doctors, marine biologists, etc. etc.) to the US manufacturing sector (which he just so happens to represent) and domestic farmers. And oh by the way, a vast majority of all Americans work in jobs other than manufacturing or farming, so Fletcher’s “fair” tariff remains a giant, invisible, regressive tax on the many to line the pockets of the very few. And of, course, it’s only achieved through government coercion.
The “unfairness” of this tax, and any other tariff like it, is clear, and once the free trader establishes these essential facts and the morality of his free trade position, he places the burden on the protectionist to prove why the coercive government intervention that he advocates is justified. (We lawyers like to call this “burden shifting,” and it’s critically important in any debate.) In short, the free trader can and should demand that the protectionist demonstrate why the common many should support the privileged few.
With the burden on the protectionist to prove why protectionism is justified, the debate might as well end, because the free trader will always win the day. As I’ve repeatedly shown when debunking myriad “protectionist myths” out there, the facts simply do not support protectionists’ claims that (a) free trade harms the American economy, or (b) protectionism helps it. And with the burden of proof on protectionists, the key here is causation, not mere correlation. They must prove that trade causes pain, or that protectionism causes prosperity. Spurious correlation (e.g., the trade deficit and manufacturing jobs), is wholly insufficient.
In the Great Trade debate, like a lot of modern political debates on free trade or protectionism, the burden of proof was never established. Griswold’s opening salvo provided a lot of great data, but never challenged the morality of Fletcher’s underlying position. Without this challenge – without loudly impugning the morality of Flecther’s protectionism and demanding that he justify his regressive, immoral tax policies, Griswold left Fletcher free to simply rebut certain facts without ever actually justifying his own assertions that free trade causes economic harm and that widespread protectionism would cause prosperity. As such, the debate devolved into a series of point-counterpoints, whereby each person debunked the other’s data.
Indeed, Fletcher’s opening statement provides a perfect example of the problem. He states:
Fletcher does nothing to actually prove such bold assertions. He simply moves on to other, similarly-unsupported stances. And his follow-up posts attack Griswold's positions without ever justifying his own. As demonstrated above, however, such justification is very, very necessary, given that Fletcher is arguing for a massive wealth transfer from American consumers to manufacturers and farmers. He must prove why we should support such a scheme. Yet he never does.The most recent scholarship on the issue casts huge doubt on traditional theoretical justifications for free trade and makes clear why the mercantilism that is being practiced against us can be such an effective economic strategy. It is gradually realigning theoretical economics with both economic history and the common-sense experience of ordinary Americans.
And that's why Fletcher should have lost the Great Trade Debate instead of just running out the clock. Hopefully next time, he won't be so lucky.