What's Wrong with Protectionism: Answering Common Objections to Free Trade

142 Pages·2018·1.144 MB·English

by  Pierre Lemieux

WHAT’S
WRONG
WITH
PROTECTIONISM?

WHAT’S
WRONG
WITH
PROTECTIONISM?
ANSWERING COMMON OBJECTIONS
TO FREE TRADE
PIERRE LEMIEUX
Lanham • Boulder • New York • London
Published in partnership with the Mercatus Center at
George Mason University
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Contents
Foreword
by Donald J. Boudreaux and Daniel Griswold ix
Introduction 1
1. Objection: Americans Cannot Compete
against Low-C ost Foreign Producers 7
Essay 1: Comparative Advantage and Supply Chains 17
2. Objection: F ree Trade Harms the United States 21
Essay 2: Imports Are Not a Deduction from GDP 29
3. Objection: The Trade Deficit Is Bad 31
Essay 3: The Balance of Trade 39
4. Objection: The United States Is Losing
Its Factories 45
Essay 4: The New Manufacturing and the
American Economy 49
5. Objection: Trade Destroys Jobs 53
Essay 5: Jobs, Jobs, Jobs, and Economic Growth 63
6. Objection: Trade Lowers Wages 69
Essay 6: L abor Productivity and Remuneration 73
Contents
7. The Politics of Trade and a Bit More Economics 77
Essay 7: F ree Trade Agreements and NAFTA 83
8. Objection: F ree Trade Is Not Fair 89
Essay 8: American Consumers Benefit from Trade
with China 95
Conclusion 99
Notes 103
Index 117
About the Author 125
vi
Balance of trade is against us in almost e very country in
Eur ope, b ecause t hose countries who rival us in manu-
facture and commerce by living cheaper and paying lower
wages, undersell us in most foreign markets.
John Powell, English mercantilist, 1772

Foreword
Donald J. Boudreaux and Daniel Griswold
After more than seven dec ades of bipartisan commitment to trade
liberalization, the US economy t oday is arguably more open to
world trade and investment than at any other time in our history.
Yet the policies that brought about that historic opening are being
questioned by our pol itic al leaders at the highest levels. Almost
daily, the news carries stories of threats of our own government
to impose tariffs, terminate free t rade agreements, and punish US
companies for “shipping jobs overseas.”
In What’s Wrong with Protectionism?, Pierre Lemieux has writ-
ten an essential book for our time and for dec ades to come. This
book draws on more than two centuries of economic thinking and
experience while marshaling the most current data and examples
to illuminate the key trade issues of t oday, such as the trade deficit,
free trade versus “fair” trade, and manufacturing in a global
economy.
Americans who are concerned about the f uture of our econ-
omy and our place in the world should keep a copy of this book
by their side whenever they watch TV or read a newspaper or
scan their Twitter feed. Lemieux’s work is an antidote to the mis-
understandings about trade that prevail in our public discourse.
ix