Free trade doesn't work, the global economy is a myth and the U.S. has been duped during trade negotiations for the past 40 years according to economist Ian Fletcher.
HUFFPOST: You argue that protectionism is more "American" than free trade. How would you respond to libertarian types who might see this as an assault on America's deeply-held capitalistic values?
IAN FLETCHER: Libertarians simply don't know their history. Take out a $10 bill and have a look at the portrait on it. Alexander Hamilton, founding father and intellectual architect of American capitalism, was a protectionist, and protectionism was American policy from Independence until after WWII. The reality is that a blend of government support for economic growth along with vigorous market-oriented competition has been the American tradition from the transcontinental railroad to the Internet. Entire industries like semiconductors and aircraft were effectively launched by Cold War military industrial policy. Is it an accident that nations, like China, that still do this sort of thing are cleaning our clock right now?
Click hear to read the entire interview at The Huffington Post.
HUFFPOST: You thoroughly and convincingly document, supported by countless inconvenient facts, how protectionism has been much more beneficial to the U.S. throughout history than free trade. If protectionism is clearly the better economic policy, why is the U.S. so resistant to change?
IAN FLETCHER: The U.S. isn't totally resistant to change on this issue, and it is, in fact, changing. Since the late 1990s, one can trace public opinion and congressional majorities inexorably turning against "free" trade, which has really been a distinctive, offshoring-focused approach to trade policy to benefit multinational corporate interests. Why has it taken so long? Corruption, both the obvious kind driven by campaign finance, and the subtler kind deriving from the laziness, complacency, and intellectual arrogance of economists.
The "American" multinationals, which are no longer American corporations but find this fiction convenient on Capitol Hill, and other free trade advocates have prevailed because a critical mass of American voters has not yet seen through the delusional economics of free trade, and because America can still borrow money abroad and sell off assets to cover its trade deficit. But this music is going to stop fairly soon.
HUFFPOST: But doesn't foreign competition force U.S. corporations to become leaner and more productive?
IAN FLETCHER: Sure, but I'm not against foreign competition. I'm not against trade either. I'm against free trade and the ersatz version thereof we are being subjected to, neither of which are the same thing as trade per se. Companies need enough competition to keep them on their toes, but not so much as to knock them off their feet. The U.S. color TV industry hasn't exactly been driven to heights of efficiency by foreign competition--because foreign competition killed it. And a lot of that competition wasn't free at all; it was subsidized by foreign nations seeking a foothold in strategic industries, i.e. those with a future.
HUFFPOST: India's prime minister recently suggested offshoring processes to India makes American corporations more productive overall. Is there any validity to this statement?
IAN FLETCHER: This is a mirage created by the fact that if you offshore the low-productivity jobs from an American company, the jobs remaining in the U.S. will have, by definition, higher productivity--creating the illusion that the company is now more productive. But jobs have still been lost, and there is, pace laissez-faire economic theory, no guarantee that the workers who formerly held them will find new jobs of equal or greater value. What works on the level of the individual company is a net loss for the economy as a whole.
And it's erroneous to suppose that merely upgrading skill sets will be enough to protect American wages and employment levels if we do nothing to fix our employment situation. Educating people for jobs that don't exist because they've moved abroad will not magically cause jobs to come into existence.