March 11, 1996
"Attack on Free Trade is Bad Economics"
San Jose Mercury News
By Timothy Taylor
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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 the costs.

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 jobs.

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.

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