Shattering The Myth of “Free Trade”
by James Veltmeyer, MD | Jun 28, 2019
If there is one issue that dramatically sets President Donald J. Trump apart from the corporate-political ruling class elites of both parties, it is the issue of trade. President Trump has never deviated from his long-standing view that America’s trade policies over the last several decades have been an unparalleled catastrophe, stripping our nation of its industrial might and manufacturing prowess and millions of high-paying middle-class jobs in the heartland along with it.
The President was advocating fair trade as long ago as the 1980s when U.S. trade policies were transforming Japan into such a global economic behemoth that Ronald Reagan was forced to intervene and impose quotas on Japanese cars and tariffs on motorcycles to save Harley-Davidson from extinction.
Yet, the globalist elite that controls both the Democrat and Republican parties have been addicted to the myth of “free trade” for more than half a century, dating back to 1962 when John F. Kennedy’s so-called Trade Expansion Act launched the process of America’s unilateral disarmament in the trade wars.
At the time, the only three votes against the legislation were stalwart GOP conservatives Barry Goldwater and Strom Thurmond as well as Prescott Bush, father and grandfather of future Presidents.
JFK’s bill seemed relatively innocuous at the time, as few would see where it would eventually lead. The idea of reciprocal tariff-cutting by nations was highly appealing and Americans began enjoying the fruits of cheaper foreign imports, from Honda and Toyota automobiles to the massive assortment of inexpensive Chinese goods, from toys to clothing and shoes.
However, within a decade or so, the Trade Expansion Act’s impact began being felt across the U.S. economy. Our once huge trade surpluses with the rest of the world began shrinking and then disappearing. Foreign imports flooded the American market. Detroit was hammered as Motor City fell victim to cheap automobiles from Japan. The steel industry – once our invincible fortress in war and peace – began closing factories and shedding jobs. The textile industry was devastated. In industry after industry, the negative consequences of “free trade” was clear-cut and indisputable. Yet, American policy-makers continued down their merry path of believing trade deficits didn’t matter, manufacturing jobs were a thing of the past, and the future lay with corporations moving operations abroad to take advantage of lower labor costs.
Libertarians swooned to the siren song of ‘free trade,” arguing that nothing was more important than producing goods as inexpensively as possible anywhere on the planet, regardless of how many American jobs were destroyed in the process or how many American factories were shuttered. Their views could hardly be classified as “America-first.”
Yet, it is President Trump’s trade policies – not those of the libertarian scribblers at Reason magazine or the leadership of both political parties whose donors profit off the exploitation of cheap labor overseas – that are actually in the true mainstream of American economic and political history.
All of America’s founding fathers were dyed-in-the-wool trade protectionists, not “free traders.” All embraced the Hamiltonian economic principles that sought to erect a wall of protection around the infant industries of the newly-born republic. They would never have fathomed the idea of throwing open the markets of the new nation they sacrificed and died to create to the mercantilist traders of the world’s empires, including the British Empire from which they had just freed us. This devotion to protectionism carried through the remainder of the 19th century and into the 20th century. Abraham Lincoln excoriated “free trade,” famously saying that the difference between “free trade” and protection is that with the former “we get the goods but the foreigners get the money,” while with protectionism “we keep the goods and we keep the money.” The great pivotal election of 1896 was fought over protectionism and hard money with victory for William McKinley who believed in a high tariff policy to protect American wage-earners against cheap foreign labor and products. His successor, Teddy Roosevelt, proclaimed “Thank God I am not a free trader.”
In fact, it was the Republican Party that was historically the Party of trade protectionism and restrictive immigration laws. It was the Democrats who wanted open borders and free trade.
Of course, trade protectionism got a bad rap during the Great Depression as two chaps named Smoot and Hawley were forever condemned by libertarians for “causing” the Great Depression with their tariff bill. The truth is far more complicated than that. The fact is the stock market crash occurred months
before the Smoot-Hawley tariffs were imposed and they were hardly the highest tariffs imposed in American history. And, they just applied to about one-third of imports at a time when those imports only represented a meager 4% of our Gross Domestic Product. Herbert Hoover’s huge tax increases of the early 1930s as well as the Federal Reserve’s contraction of the money supply by one-third between 1929 and 1933 had far more to do with the Depression than poor Mr. Smoot and poor Mr. Hawley.
Fast-forward to the 1990s, the decade when “free trade” went on steroids. First, we had the North American Free Trade Agreement signed by Bill Clinton in 1993. The President is correct in saying this legislation was probably the worst trade deal in U.S. history. NAFTA led to the loss of over one million U.S. jobs, a $200 billion trade deficit with Canada and Mexico, and the displacement of more than one million Mexican campesinos as well as a doubling of immigration from our southern trade partner. A year later, GATT was ratified leading to the creation of the World Trade Organization which surrendered
Congress’ Constitutional authority to regulate trade and foreign commerce to an unelected supranational body. Seven years later, the world’s most predatory trader, Communist China, was ushered into the WTO. Between 2001 and 2017, 3.4 million more American jobs were lost, including 2.5 million in manufacturing and 70,000 factories closed.
And, who benefited from these “free trade” agreements? Certainly, not U.S. workers or their families who saw their jobs cruelly ripped away, wages suppressed, and their living standards shredded. However, the giant global corporations profited immensely as these agreements encouraged them to
“offshore” American jobs, relocate to foreign countries, build their factories there and ship their products back into the American market, practically duty- free. It’s called “outsourcing” and it is un-American and unpatriotic. To a large degree, President Trump was elected to stop this insanity which only enriches the donor class and the ruling elites at the expense of the American family.
The President’s policies are working. By imposing tariffs on China, renegotiating NAFTA, and killing TPP, manufacturing jobs by the tens of thousands are returning to the United States. Factories are reopening at home as the incentive to move abroad has been removed. The American heartland, states like Ohio,
Michigan, and Pennsylvania, is starting to come back to life. We need to continue and build on these successful policies. Congressman Sean Duffy of Wisconsin has proposed the U.S. Reciprocal Trade Act which would impose the same tariffs on foreign nations that they impose on American goods. Do
you know that Communist China imposes 40% tariffs on U.S. automobiles and India levies a 100% tax on U.S. motorcycles? It is time to replace the discredited libertarian classroom theory of “free trade” with “fair trade” policies that place the interests of American workers and families ahead of the profiteering of faceless global corporations that owe allegiance to no flag, no creed, and no nation, least of all the United States of America.
Dr. James Veltmeyer is a prominent La Jolla physician voted “Top Doctor” in San Diego County in 2012, 2014, 2016 and 2017. Dr. Veltmeyer can be reached at email@example.com
Dr. James Veltmeyer is Chief of the Department of Family Medicine at Sharp Grossmont Hospital in La Mesa, California. His views are his own and do not necessarily reflect the views of Sharp Grossmont Hospital or its staff. Dr. Veltmeyer can be reached at firstname.lastname@example.org