If there’s one thing that Donald Trump and Bernie Sanders can agree on, it’s that they don’t like free trade. Or at least they think that attacking it is good politics. And with the Trans-Pacific Partnership in the dustbin and the prospects for NAFTA increasingly precarious, the anti-trade agenda is also becoming policy.
For both the populists on the right and the progressives on the left, trade and the entire global system underpinning it have become an alleged obstacle in the fight to help the American worker. Yet despite their successful demagoguery, they are wrong on the merits and arguing against the interests of their own constituents. For proof, one need look no further than the career of William Jennings Bryan, three-time presidential candidate and perhaps the greatest advocate for the poor and downtrodden in the annals of American history.
For his entire life, Bryan, a lawyer, editor and politician, argued correctly thatfree trade was in fact the most effective tool to raise prosperity for the great mass of Americans and that it was rather the special interests who had an interest in its hindrance. An electric orator, Bryan was one of the great figures on the American political scene at the turn of the 20th century.
He was called the “Great Commoner” for his dedication to the working poor and farmers of the West, and was best known for championing a looser gold standard that would have helped them by increasing the money supply. Among the progressive causes he fought for over his distinguished career in Congress were women’s suffrage, a progressive income tax and the direct election of senators.
And, most disorienting to today’s populists, he consistently and relentlessly railed against the system of tariffs protecting American enterprise.
Today, trade is a piñata for demagogues and a scapegoat for the loss of traditional blue-collar jobs. This is largely a red herring with as much as four-fifths of job losses due to continuous improvements in automation and not “off-shoring.” Moreover, the number of jobs created — some 11.5 million today — by free trade dwarfs the number of those lost.
It is generally entrenched industries facing international competition and their labor unions that lobby for tariffs, draining wealth from consumers who must pay a higher price for inferior goods. Bryan compared this to thievery, declaring on the floor of the House of Representatives: “‘Impose upon somebody else a tax for my benefit,’ is what the pickpocket says, ‘Let me get my hand into his pocket.’. . . This government has no right to use their taxing power either directly by bounty or indirectly by a protective tariff.”
Then, as now, tariffs are not only a tax but a regressive one that hits poorer consumers far harder than the wealthy. As Bryan asked, “Is it right to tax all the people for the benefit of the few?” The goods that dominate lower-income expenditures such as food, clothing and footwear, are globally traded and become more expensive when the free trade of goods is choked off. Small wonder then that Bryan wanted everything put on the “free list,” declaring “that instead of preventing foreign countries form deluging us with something which they can sell us cheaper than we can produce it, we had better let the flood come.”
Subsidies and tariffs almost always cost the vast majority of the citizens. The issue is almost never framed this way, but most consumers would not willingly agree to pay thousands of dollars more for their automobile or refrigerator to help specific businesses and their employees. For example, the Obama administration’s 2009 tire subsidies are estimated to have saved 1,200 jobs at the cost of almost $1.2 billion — or $1 million per job — to the consumer.
And it’s not only consumers that suffer. The Bush Administration’s steel duties in 2003 temporarily aided a small number of steelworkers but harmed those working in the much larger group of steel-using industries — from automobiles to appliance manufacturers. Indeed, 50% of imports to the United States are intermediate goods and the ramifications echo through the supply chain.
“Business should not be built upon legislation; if should stand on its own merit,” Bryan declared. The free movement of goods allows America to focus on what it does best and to create the higher paying jobs that drive the economy. Or, as Bryan put it, “Protection does not make good wages. Our better wages are due to the great intelligence and skill of our workingmen.”
Bryan’s critique is as true today as it was a century ago. The vast majority of people are better off in a free trading system, through lower prices and better quality of goods, and in the long run the competitiveness of our enterprises is far superior without walls erected to create inefficient monopolies. We can do a better job of retraining those negatively affected by free trade, and the cost of those programs is far less than the subtle damage wrought by economic nationalism that ripples through the country. Trump, Sanders and their like should learn from the Great Commoner and embrace free trade. There’s no better way to help America’s workers.