March 11, 1996
"Attack on Free Trade is Bad Economics"
San Jose Mercury News
By Timothy Taylor
<< Back to 1996 menu
PAT BUCHANAN says that he gave up his life-long belief in free trade while
campaigning for the 1992 New Hampshire primary, when he toured empty factories
that had been shut down. The story has a sympathetic ring, like any tale of epiphany,
but I have a hard time knowing what to make of it.
Didn't Buchanan happen to notice any closed factories at any time in his life
prior to 1992? Had he been sleepwalking through the landscape for several decades?
Moreover, Buchanan's conversion to the anti-trade brigade fails to explain why
economists are nearly unanimous in believing that free trade is of great benefit
to the U.S. economy.
The suffering of workers who lose jobs is real. But an anecdote is not a policy
argument. After all, there are many situations where some workers are worse off,
but other workers and society as a whole benefit.
For example, real defense spending has declined by almost one-third since 1989.
These cuts clobbered workers at major New Hampshire employers like Raytheon and
Lockheed, but they also helped keep the budget deficits from soaring, and shifted
resources away from weapons toward other needs.
Competition from inside the United States drives firms into bankruptcy, too.
Tough Silicon Valley firms created unemployment in the New Hampshire and Massachusetts
computer industry. High productivity automobile factories in Tennessee can put
workers on the unemployment line in Michigan.
Creating new products and technologies generally hurts those whose jobs relied
on the earlier skills. Improving the education system hurts the job prospects
of those who remain less educated or literate.
But you don't hear many people say that we should shut down education or new
products, technology, or market competition inside the United States, or that
we should pump up defense spending purely as a jobs program. Similarly, the argument
for free trade is not that it is painless, but rather that the benefits outweigh
For example, the $500 billion a year in U.S. exports are good for America's
workers in high technology, chemicals, farm-related products, aircraft, machinery,
and other industries. Import competition helps consumers get the best deal for
their hard-earned wages, and provides a jolt of competition to U.S. businesses.
While international trade certainly shifts the pattern of employment, away
from industries that are least competitive in global markets and toward those
that are most competitive, it has essentially no impact on the total number of
It has been mainstream economic wisdom for decades now that the United States
should embrace the catalysts of economic change, which include new technology,
education, investment, and tough competition both domestically and abroad. Confronting
and taking advantage of change is how workers and companies and nations get rich
and stay rich.
Even before Pat Buchanan first noticed a boarded-up factory in 1992, it was
recognized that this embrace of economic change involved a process of job losses
and job gains. The policy response has been to develop a social safety net, including
programs like unemployment insurance, to help people over the canyon between jobs.
This safety net supported anyone who lost a job, regardless of the reason.
After all, a worker who loses a job because of tough foreign competition is no
more unemployed than a worker who loses a job because the CEO messed up the company,
or defense spending declined.
The government could do more to help workers who are between jobs. But arguing
that foreign trade hurts the economy is like arguing that regular exercise injures
your health. Sure, they can both make one feel sore, wheezy and disoriented at
times. But nations that turn away from trade, like people who shirk exercise,
soon become flabby, out of shape, and less productive.
<< Back to 1996 menu