Monday, 9 March 2009

Glaeser on trade

Edward L. Glaeser writes in the Boston Globe on Building walls with US trading partners. He says
FREE TRADE is a child of economic confidence; protectionism is pessimism's progeny. In today's fearful economic climate, policy-makers have again cried "buy American," and embraced interventions that support domestic producers at the expense of our trading partners. Protectionism is bad economics and worse foreign policy, for many of our trading partners have only a tenuous link to peaceful democracy. To avoid the terrible path of the 1930s that led to prolonged depression and global conflict, the United States must maintain its commitment to globalization.
and a little later
The United States had adopted the Smoot-Hawley Tariff, setting off a global tariff war. Between 1929 and 1934, world trade declined by two-thirds. In the dark years that followed, thuggish dictators snuffed out nascent republics and Europe descended into the madness of war. Today as we contemplate an international recession, it is worth remembering that worse terrors than double-digit unemployment have stalked human history.
The link between economics and foreign policy was perhaps best put by F.D.R.'s Secretary of State Cordell Hull, when he said
If soldiers are not to cross international borders, goods must do so.
Glaeser remakes the link between the two in his closing paragraph
Other countries provide us with clothes, cars, markets for exports, and lending for the government and banks. Shutting our markets will make life more expensive for us and hurt the rest of the world. In the 1930s, legislators embraced high tariffs, but putting America first led to a devastating world war. Today, US lawmakers need to choose hope over fear, and stick with free trade.
So free trade is not only good for the economy, it's also good for peace.

(HT: Cafe Hayek)

2 comments:

Mark Hubbard said...

Agreed. But under Obama the US is most probably going to back-peddle into an extended period of protectionism - starting with the now 'deferred' Free Trade deal with NZ.

Paul Walker said...

Mark: I have to agree, Obama's stand on trade has never been good and the signs, like the deferred trade deal, make it look even worse.