Trump & Ross: The Free Trade Evolution

US trade policy has never enjoyed anything near unanimous agreement. On the conservative side, free trade doctrine is dogma, while liberals tend to more fully embrace governmental activity, price controls, tariffs and quotas in their efforts to stimulate US economy .

Conservatives accuse liberals of “picking winners and losers.” On the other hand, liberals accuse free traders of lack of concern about the eventual destruction of America’s industrial infrastructure, and sacrificing whole sectors of the economy for the purity of “survival of the fittest.”

Admittedly, this is a very very basic construction of what is an extremely complex economic set of theory. One fact is for certain, economic trade theory is as much art as it is science. The reason for this is the economic models are predicated on human behavior.

After roughly four decades of emerging disruptive technology and the maturation of a true global economy, it appears the economic trade policy solution for America might lie somewhere in the middle between conservative and liberal trade policy.

As recently as 1980, it would have been close to impossible to envision or understand the impact of the internet, the PC, technologies like server farms, not to mention the entire smart phone and/or tablet dynamic. Communication, analytics, and sophisticated logistics have also served to dramatically change how businesses think, plan, and operate.

In short, the world of business has changed diametrically in fundamental ways in which both free trade advocates and social governmental partnership champions did not and could not anticipate.

A lot has been written in speculation about why President Trump was elected. In almost every article dedicated to understanding how this could have happened, voter anger is predominantly mentioned. Most attribute this anger primarily to job loss,  a downturn in financial fortunes and loss of hope.

There can be no doubt voter dissatisfaction has risen over the past four decades, from a vague unhappiness to angst to the outright anger as shown by many Trump and Sanders voters.

Perhaps the current explanations for this anger really only skim the surface, perhaps there is a far deeper cultural DNA issue at play. Perhaps a change in culture has angered many Americans.

As recently as 2013, Forbes magazine declared America to be a “Service economy“:

According to the Bureau of Labor Statistics, the overall number of jobs in the U.S. has been flat since 2000, and the number of manufacturing jobs is down. But contrast, jobs in the service sector are up. [snip] The data reflects an ongoing trend:  the evolution of American business into a true service economy. As we look to renew our domestic workforce, bold and successful examples of U.S. companies embracing the service economy may help balance the debate and even encourage one of our 2012 Presidential candidates to change their campaign slogan to, “It’s the Services, Stupid!” (Emphasis mine)

As America’s technological advances moved us forward during the 80s and 90s and early in the new century, considerable thought was given to who we were as a nation. There seemed to be consensus that the US no longer needed to be in the “dirty manufacturing” business. Those manufacturing sectors belonged to “lesser developed” nations. We didn’t want the pollution, dangers to the environment, and job hazards, So, terms like “clean manufacturing”, and “service economy” became very popular.

To a very large segment of US workers, this not only sounded foolish then, it is still beyond foreign to them today. To fully understand why, historical context is necessary. From our very beginning, Americans “made” for itself. Survival depended upon the ability to “make” or manufacture required goods. Given the fact that those who settled our country had to be highly motivated to even get here, it is easy to understand how these “driven” achievement oriented citizens would not only excel at manufacturing, they would also be driven to continue to modernize all the while excelling in quality. Over the decades, Americans developed an innate pride in “Made in America” as well as the internationally admired “American Can-Do Spirit”.

We are, and have been, a country of “makers”. Manufacturing is in our very DNA. Whether it is textiles, steel, fuel, automobiles, or computers, making product is integral to our identity as Americans.

This is a primary reason President Trump ignited the passions of many of his voters. It is also why they stick with him now as the MSM attempts to crucify him daily. He represents hope. The return to a culture that more resembles who we are as a people.  Perhaps only a candidate neither really Republican or Democrat can span the trade policy divide.

Last week, Commerce Sec. Wilbur Ross declared the following, via the Washington Examiner:

Commerce Secretary Wilbur Ross touted the Trump administration’s more aggressive stance on trade issues in a post on the White House’s blog, saying the U.S. can “no longer afford to be ignorant or naive” in the global marketplace. Ross said that his department had pursued investigations into dumping of more than $1 billion of aluminum and metal imports from China and other countries and had imposed duties on imports of more than $2 billion in foreign steel and other products. “Our message is simple – the games are over, and improper treatment of the United States will no longer be tolerated. We will approach future negotiations and actions with a clarity of purpose guiding us as we work to establish both free and fair trade,” Ross said.

Sec. Ross seems to have a grasp on an important point. There really is no international free trade. We are fooling ourselves if we think otherwise. We have engaged in policies forcing US firms into “free trade” discipline, all the while allowing other countries to subsidize their manufacturing in numerous ways, allowing dumping of products into the US markets under the guise of good foreign policy, or through dollars expended by lobbyists.

America needs a durable foreign trade policy which not only protects US manufacturing firms, but also encourages the re-establisment of certain dormant industry sectors. A doctrine which doesn’t allow the government to choose sides domestically, but does make every effort to be blatantly pro-US manufacturing and allow it to thrive on the international stage.

This will require serious conversation about tariffs, border tax, quotas, penalties, and currency.  With a determination shown in the US for over 300 years, we can figure out how to protect our culture, singularly focus on how US manufacturing firms can thrive, all the while maintaining strong relationships with our trade partners.

President Trump and Sec. Ross have touch a chord in emphasizing just how important the manufacturing industry is to to America. Let’s hope they can work with Congress to begin to make America great across the board in manufacturing once again.

About the author

Wm. P. Fitzhenry

5th generation Texan, 2nd generation reformed Presbyterian, a twin and a serial entrepreneur.

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