In the debacle of World War I, French premier George Clemenceau said, “War is too important to be left to the generals.” In the same way, economics is too important to be left to the professional economists.
Professors of economics today are virtually unanimous in condemning all tariffs (including President Trump’s), but that is due entirely to the intellectual blinders they wear. When we take a wider perspective, one encompassing culture and the meaning of human life, Trump’s approach to trade makes perfect sense. Among other things, the epidemic of opioid addiction among working-class Americans demonstrates the grave danger of taking only the narrow approach of academic economics.
Professional economists subscribe to what we might call the Eleventh Commandment: thou shalt not deviate from Pareto optimality. A state of Pareto optimality (named after the Italian economist Vilfredo Pareto) is one in which it is impossible to make anyone better off without making someone else worse off. When a society falls short of Pareto optimality, it is theoretically possible to make everyone better off through a change in economic policies and income redistribution. Mathematically speaking, tariffs move us away from Pareto optimality. We could, in principle, make everyone in the United States better off by unilaterally ending any given tariff or trade barrier, through suitable income transfers from the gainers to the losers, on the assumption that the behavior of other international actors is unchanged. This mathematical fact, although beloved by professional economists, overlooks two crucial factors: the cultural and political costs of such income transfers, and the use of threatened tariffs as a bargaining chip in negotiating bilateral trade deals.
Opponents accuse President Trump of igniting a trade war. In fact, we’ve been in a trade war for thirty years and we have been steadily losing, by our unilateral retreats and concessions. Since 1980, we have accumulated over $10 trillion dollars in trade deficits. The last year we ran a surplus was 1976. We have $1 trillion in cumulative deficit with Mexico over the 23 years of NAFTA. We run an annual trade deficit with China alone of over $300 billion a year. The result has been the gutting of our manufacturing sector. As a percentage of American workers, jobs in manufacturing has declined from 24 percent in 1960, 19 percent in 1980, 13 percent in 2000, to only 8 percent in 2016. Since manufacturing wages are higher than wages in other sectors, the result has been a steady decline in the real income of American workers.
But hasn’t the influx of imports improved our standard of living by lowering the cost of consumer goods? Yes, but the benefit is very unevenly distributed — college-educated workers in management, media, and information industries are prospering, while blue-collar workers sink ever deeper into the slough of despair. Economists reply: let’s just re-distribute these gains from the affluent to the unemployed and under-employed! We could put half the country on the dole — the so-called “minimum basic income” proposal — and then we won’t have to worry about a growing underclass.
This proposal, however well it assuages the guilt of the high-tech globalist class, completely ignores the political, cultural, and psychological costs of such dependency. Human beings have a fundamental need to support themselves by their own efforts. Not everyone can do abstract verbal work — in bureaucracy, media creation, software engineering, or education. Many want and need to work with their hands, to make real, physical things that are beautiful and useful. Work is essential to a human being’s self-respect, especially for men. It is degrading and dehumanizing to be supported by others' labor when one is healthy and strong.
The psychological costs of un- and under-employment are well known and well documented: depression, anxiety, divorce, suicide, and drug addiction. It is no coincidence that opioid and other substance-abuse epidemics concentrate in those very regions (the Rust Belt) in which manufacturing has been devastated by unregulated global commerce.
Our massive trade deficits are unsustainable. As Herbert Stein once observed, if a thing can’t go on forever, it will stop. We have been able to run perpetual trade deficits in trillions of dollars because other countries have been happy to accumulate dollars as a substitute for gold. This is an inherently unstable and dangerous situation for the United States. At some point in the future, the international community will shift to some alternative form of hard reserves, in which case we will be flooded by the excess dollars, triggering domestic hyperinflation.
Finally, tariffs are indispensable bargaining chips in trade negotiations. Our manufacturers face many unequal and unfair barriers in seeking access to other countries' markets. If our threatened tariffs lower trade barriers, everyone benefits.
Rob Koons is a professor of philosophy specializing in logic, metaphysics, philosophical theology, and political thought. He is the author and editor of six books, including "The Atlas of Reality: A Comprehensive Guide to Metaphysics" (with Tim Pickavance, Wiley-Blackwell, 2017). He has been active in conservative circles, both nationally and in Texas, including the Intercollegiate Studies Institute, the National Association of Scholars, the Texas Public Policy Foundation, the Philadelphia Society, and the Austin Institute for the Study of Family and Culture. To read more of his reports — Click Here Now.
© 2023 Newsmax. All rights reserved.