Free Trade is Good. Protectionism is bad.
Posted by kingkull on August 1, 2007
The Club for Growth sponsored 1,028 economists from all 50 states to pressure congress not to enact protectionist policies against China. Democrats have been rattling their sabers for months now with any number of suicidal thoughts on trade. Not only is the trade helpful to both countries, but China buys billions of dollars of low interest treasuries with their American dollars, keeping rates low. Who in their right mind would want to stop either of those things? Here’s the 2007 petition (PDF) as it ran in the Wall Street Journal this morning. It is deliberately reminiscent of the 1930 petition (PDF) also signed by 1,028 economists as it ran in the New York Times, in hopes of dissuading the government from signing the Smoot-Hawley Tariff Act. The 1930’s petition was not successful and the resulting tariffs drove the nation into depression.
PETITION
Concerning Protectionist Policies Against China
We, the undersigned, have serious concerns about the recent protectionist sentiments coming from Congress, especially with regards to China. By the end of this year, China will most likely be the United States’ second largest trading partner. Over the past six years, total trade between the two countries has soared, growing from $116 billion in 2000 to almost $343 billion in 2006. That’s an average growth rate of almost 20% a year. This marvelous growth has led to more affordable goods, higher productivity, strong job growth, and a higher standard of living for both countries. These economic benefits were made possible in large part because both China and the United States embraced freer trade. As economists, we understand the vital and beneficial role that free trade plays in the world economy. Conversely, we believe that barriers to free trade destroy wealth and benefit no one in the long run. Because of these fundamental economic principles, we sign this letter to advise Congress against imposing retaliatory trade measures against China. There is no foundation in economics that supports punitive tariffs. China currently supplies American consumers with inexpensive goods and low-interest rate loans. Retaliatory tariffs on China are tantamount to taxing ourselves as a punishment. Worse, such a move will likely encourage China to impose its own tariffs, increasing the possibility of a futile and harmful trade war. American consumers and businesses would pay the price for this senseless war through higher prices, worse jobs, and reduced economic growth. We urge Congress to discard any plans for increased protectionism, and instead urge lawmakers to work towards fostering stronger global economic ties through free trade.
I love it. Congress would be beyond silly to go ahead now. And I wonder what the reaction will be in The New York Times, after this incredibly silly article of a few days ago. This story will be fun to watch. Reason backed up by statistics and logic vs. alternate reality claptrap always provides great theater. It’s like watching Hitchens debate Michael Moore.
Stay tuned.
Tags: Free trade, Economics, China, Politics, Sanctions
Powered by Qumana
