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Wednesday, February 18, 2009

On Free Trade and Reasoned Debate

"Men decide far more problems by gate, love, lust, rage, sorrow, joy, hope, fear, illusion, or some other inward emotion, than by reality, authority, any legal standard, judicial precedent, or statute." - Cicero

Recently, an article appeared on the New York Times blog Room for Debate with the title "That 'Buy American' Provision." For those not familiar with the blog, the idea is to give a range of viewpoints on issues and topics currently in the news, via an introduction and a collection of short (~5 paragraph) statements by various guest authors.

In "That 'Buy American' Provision," the subject was the section of the recently passed stimulus package which essentially requires government funded projects to use US-made steel, rather than foreign-made steel, even where domestic materials are more expensive. The guest writers included 5 economists, a union official, a historian, and a US Senator, Sherrod Brown. The article can be found here.

Upon reading Senator Brown's piece, I felt that a response of some kind was necessary. The Senator, an ardent critic of unrestrained free trade and a proponent of 'fair trade,' constructed an argument for the provision that was, in my humble opinion, essentially hand-waving and demagogic. The following is a letter I sent to his office, and I'll post his reply, if I receive one (and no, the actual letter was not signed using my pen name).

-- Marcus Tullius Tiro


Senator Brown,

After reading your comments in the article "That 'Buy American' Provision" (February 11, 2009) on the New York Times website, I must say that I'm disappointed, and more than a little offended. In an impressive display of irony, you took an opportunity for honest discussion of an important issue and sunk to name-calling and making sarcastic comments - on a blog entitled 'Room for Debate.'

You're right in saying that "some Ivy League economists don't like" protectionist trade policies, such as favoring domestic suppliers. But you fail to mention that, by and large, most economists agree with the basic theory of free trade, such as David Ricardo's original assertion that free trade allows countries to mutually prosper via the existence of comparative advantages. You may claim that the theory fails to take into account many of the complexities of the modern economy, or that existing trade agreements fail to guarantee standards of environmental stewardship, or that the effect of 'creative destruction,' which is a natural outgrowth of free trade, should factor more significantly into the discussion on trade policy -- but you do none of these things, and instead offer a snide dismissal of those who disagree as 'elitists.'

Correct me if I'm wrong, but wasn't this exactly the kind of attitude that was supposedly rejected by the American public in our last round of elections? The dismissal of the expert opinions of people who have devoted their lives to studying this issue based on the fact that they are experts is bordering on the absurd! Of course, one can always add that there are many highly respected economists and other experts who support the concept of free trade who, unlike yourself, are not Ivy League alumni.

Contrary to what your claim about these 'elitists,' many of them are exactly the people whose jobs are threatened by free trade policies. In my doctoral program, the vast majority of my colleagues are not US citizens; rather they are foreigners who came to this country in search of educational and academic opportunity. When I enter the job market, many of my competitors will be Americans, but many others will be American-educated foreigners, here by virtue of our policies on the free flow of intellectual capital.

Ignoring, for a moment, your dismissal of "some Ivy League economists," the point that there may be lessons to be learned from the Smoot-Hawley Tariff Act and its impact on the Great Depression is a valid one. Although the actual impact of Smoot-Hawley is still debated today, history shows us that retaliation from our trading partners is a real threat to be mindful of, especially when our country is economically weakened.

If you'd permit me, I'd like to submit another claim to the people of Ohio for 'straight face test': the act of subsidizing domestic producers at the expense of foreign producers, by explicitly favoring them in government spending bills, is anything other than protectionism. Reasonable people can disagree on whether protectionism is right or wrong under different circumstances, but let's not try to avoid calling it what it is. Closing a door, whether it's open a foot or an inch, is still closing a door.

Senator, I believe that you care deeply about the issue of free trade, and I'm sure that you understand the intricacies of US trade policy much more that I do. So, when given the opportunity to voice your opinion in a forum like Room for Debate, to an audience that genuinely wants to understand the conflicting views on such an important subject, why reduce yourself to name-calling and drastic oversimplification? A solid case certainly can and should be made for trade policies that help strengthen American industries and protect American workers, and the Room for Debate blog would have been the perfect forum for such a case.


Marcus Tullius Tiro

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