The Candidates and Trade

David Ranson has a commentary in the Wall Street Journal on The Candidates and Trade. He looks at the views of the presidential contenders in the US on trade. And its not pretty.

The worst however may be Hillary Clinton about whom Ranson says writes,

Hillary Clinton has taken an even stronger stance against free trade, suggesting that the economic theories underpinning it no longer hold.

A long talk with Jagdish Bhagwati seems in order. Recently Bhagwati made the point, that,

[t]he truth of the matter is that free trade is alive and well among economists, their analytical arguments in favor of it, developed with great sophistication in the postwar theory of commercial policy, having hardly been dented by any original arguments by the few economists, including Alan Blinder in today's debate, arrayed against it.

Ranson ends his commentary by making an important point,

Government policy can influence trading patterns, but it can't force them. Politicians like Mr. Romney tend to feel most at home in a command-and-control environment. But they are living in a dream world if they think they can either dictate or enforce the patterns of trade. The rough justice of the markets will decide.

It's widely assumed that trade opportunities will be unfair unless balance is negotiated with foreign governments. Not so. U.S. imports and exports are tied into an integrated market system. The economy must export goods (or sell off assets) to pay for the imports it chooses. Because the system pays for its imports with exports, reciprocity is automatic. If imports are taxed or obstructed, that acts as an obstruction to exports too. We need a president who is wise enough to recognize that protectionism impedes our exports as well as our imports.

All countries need all politicians to be wise enough to recognise this.