A time for economic realpolitik

By Daniel Stratford

Much has been said over the latest trade imbroglio between the United States and China. The House of Representatives passed a resolution authorizing the leveling of added duties upon Chinese goods and labeled China a “currency manipulator” in response to the undervalued Chinese Renminbi. Despite the fact that the Senate is unlikely to affirm this motion, it is hopefully indicative of a new approach to the greater Sino-American trade issue, and to American trade policy in general.

As New York Times columnist Paul Krugman elucidated in one of his most recent articles, the threat of Chinese retaliatory tariffs on American poultry products should be the last thing on the collective mind of our Republic. The real issue at hand is the dearth of control that the United States has over its own economic destiny, especially with regards to issues of international trade. In the humble opinion of this columnist, this apathy stems from the prevailing dogma of so-called “free trade” that has been so relentlessly hammered into our collective conscience from an early age. There has been no consideration for the international political and economic realities of our time. Despite the rampant economic machinations of foreign powers, ranging from non-enforcement of trade agreements to currency manipulation and subsidization of exports, the defenders of “free trade” continue to espouse its many supposed virtues. These include cheaper products from abroad and the subjugation of allegedly inefficient domestic industries to supposedly more efficient foreign firms, especially manufacturing and service-sector jobs in call centers. What the proponents of unabated free trade do not seem to comprehend is that said system of trade only functions properly when trading partners are completely forthright amongst themselves and possess no desire to engage in economic gamesmanship to better themselves at each other’s expense. Invariably this always happens, as our beloved Republic will so lackadaisically surrender some semblance of control over its markets and industries without anticipating the subversive intentions and influences of other powers. Realistically, nations and large corporations with profit margins the size of GDPs will attempt to get a proverbial leg up in the global economic game. Regardless of abstract theories of free trade, such tribalism and suspicion of other’s motives are some of the most basic impulses of man. The notion that a laissez-faire international economic model will set the United States free is idealism of the most baleful kind. It is destined not to better the Republic, but to surreptitiously emaciate its economy and ultimately destroy it. It can be confidently asserted that the nation that cannot produce or feed itself cannot defend itself, and, at the very least, has sold itself into vassalage to its creditors and to those who provide for its material needs. In politics and economics, ideology should not be allowed to rule the day. To paraphrase Edmund Burke, it is an inextricably intricate matter in which only those of prudent temperament should be allowed to approach on the decision-making level.

            Instead, this columnist humbly offers a different approach – a policy governing the American approach to trade that is free from ideological impulses and, instead, is driven by the overarching concern of national interest. As I elaborated in another column, the Republic is, at heart, a grand community, though one in which the dogma of radical individualism has been so methodically infused as to render that community but a shell of its former self. However, the world at large does not share that same sense of community. Instead of relying upon faith in economic dogma, “free trade,” and the allegedly supernatural power of markets to lift all proverbial boats, we should retake our collective economic destiny. This could manifest itself in a myriad of ways, from fairly conventional economic programs such as lowering corporate taxes in the United States to restraining the value of the dollar. However, if our officials truly realized their role as prudential economic managers and not the white knights of free trade, they would begin to consider such things as promoting the growth – or rather, re-generation – of American manufacturing and exporting. Our officials should be working to help lessen the trade deficit as manufacturing and exporting are some of the only ways to truly create wealth and jobs and prosperity therein. If one wants inspiration for this very American degree of initiative, one should only look at our history – the American economy was very much built by the nurturing and protection of domestic industries, from George Washington’s funding of early American manufacturing endeavors to the passage of tariffs on foreign agricultural implements and textiles to aid Northern manufacturers. The Monroe Doctrine, supposedly designed to purge the Americas of further colonization, was conceived as a way to ensure American access to hemispherical markets and natural resources. Even the Bretton Woods Conference – a gathering in which free trade was supposedly rendered sacrosanct – was designed in part to ensure American economic preeminence after World War II, a world in which thirty-five percent of economic activity was American in origin. In short, we should learn from our own illustrious economic history, and retake control of the rudderless ship that is American economic policy. The very future of our Republic depends upon it.

Dan Stratford is a Collegian columnist. He can be reached at [email protected]