Tuesday, April 22, 2008

Balanced Trade

Supporters of free trade like to paint all with concerns about trade as against trade, or at least as protectionists or mercantilists. I am none of these.

Protectionists believe in restricting imports in order to protect inefficient domestic industries. I do not believe in supporting inefficient industries.

Mercantilists believe in building up exports in order to increase the power and productive capacity of their country at the expense of others. I don't like exploiting others any more than I like seeing the U.S. exploited.

Supporters of free trade believe that unfettered international markets will lead to the best outcomes at home and abroad.

With the free traders I believe that trade is potentially wonderful for the economy. I believe that without trade we would be poorer. BUT I recognize that trade can be distorted and manipulated. I recognize that the U.S. government, the Chinese government, the Japanese government and others manipulate capital flows and trade. I recognize that the massive U.S. trade deficits have hurt millions of American workers and reduced American economic power while creating massive imbalances that threaten our economy and those of other countries.

People used to say that a conservative is a liberal who has been mugged. I am a free trader who has been mugged. Therefore, I am a balanced trader.

I recently found some additional links for people advocating balanced trade.

Michael Pierce McKeever, Sr lays out an argument for balanced trade that complements that of Trading Away Our Future.

Jack Davis with Save American Jobs makes a related argument for balanced trade.

The authors of the blog Gone With the World also advocate efforts to keep trade in balance.

The point of balanced trade isn't to limit trade. It isn't to prevent the market from encouraging efficiency. Its goal is to prevent the market from being gamed. In the face of trade wars, free traders advocate unilateral disarmament followed by persuasion that arms should be laid down (trade agreements). Protectionists and mercantilists say we should start shooting. The balanced trade perspective is cooperative for mutual advantage but not willing to be exploited.

No comments: