What’s it like being a free-market advocate in the 21st century? I think it can be summarized as follows: Another day, another dollar — and another attack on capitalism.
While I’m obviously exaggerating, it sure does feel that way every so often.
The spoken word and the written word have established an informal bond of friendship with anti-capitalists, antiglobalization activists and other radical leftists. Their politically charged economic message continues to spread — and, in turn — convert more lost souls to their cause.
Yes, there are columnists, commentators and pundits (like me) who continue to fight back. For every Thomas Piketty and Naomi Klein we oppose, there are many others who blast away at capitalism, liberty and freedom with a reckless nature — and a feckless misunderstanding of these important economic principles.
Here’s a recent example: In an Oct. 5 op-ed in The New York Times, Jeff Madrick penned an extremely negative assessment of free trade. The economist, author and Century Foundation senior fellow wrote, “Free trade creates winners and losers — and American workers have been among the losers.” More to the point, “[f]ree trade has been a major (but not the only) factor behind the erosion in wages and job security among American workers. It has created tremendous prosperity — but mostly for those at the top.”
How does Mr. Madrick reach this conclusion? By weaving through the rich history of global economic trends in a whimsical manner.
He writes: “Since the 1970s, economic orthodoxy has argued for low tariffs, free capital flows, elimination of industrial subsidies, deregulation of labor markets, balanced budgets and low inflation.” Yet today’s wealthy countries “pursued the very opposite policies: high tariffs, government investment in industry, financial regulations and fixed values for currencies” during the Industrial Revolution.
Along came World War II and the desire to cut tariffs. “Astonishing American prosperity in the three decades after 1945,” according to Mr. Madrick, “led economists to overestimate the impact of free trade under the influence of free-market enthusiasts like Milton Friedman, economists urged further removal of barriers to trade and capital flows, hoping to turn the world into one highly efficient market, unobstructed by government.”
In a nutshell, this decision apparently led to “often disastrous” results. Massive financial collapses occurred in Latin America, Asia, Europe and the United States as a result of advice from “Mr. Friedman’s acolytes.” This continued well into 2008, when the global economic crisis tore nations apart.
There are so many things wrong with Mr. Madrick’s position that it’s hard to know where to start.
Contrary to left-wing myths, free trade would produce an environment where winners and losers are established based on certain criteria. These include: hard work, creative planning, sales techniques, trade liberalization and free-trade zones, thinking on a global scale, competition and success, among others.
Free trade would create higher company profits (and higher wages), as well as new job opportunities (and less unionized job protection). It would also give Americans an equal opportunity to succeed in the free-market economy, and achieve their hopes and dreams.
Anti-free-traders such as Mr. Madrick refuse to accept the fact that state control, government regulation (and overregulation), and limited trade zones would decrease the chances for free trade to succeed. When you place hurdles in front of potentially beneficial domestic and international economic measures, the exact results can’t be properly examined.
Here’s the real kicker: American workers haven’t failed in the era of free trade. The problem is, and has always been, the U.S. government’s overextended reach into the free-market economy with controls, restrictions and tariffs on trade. This has made the economy less free for those involved — something “Mr. Friedman’s acolytes” have been saying for decades.
In other words, free trade hasn’t failed because free trade hasn’t been achieved (yet).
There are many Republicans, and more than enough Democrats, who obviously believe that free trade can lead to greater economic prosperity. Paying lip service to this popular theory isn’t enough, however. There has to be a real push toward removing the various shackles of government, eliminating restrictive trade policies, opening the doors to real competition and true economic freedom, and alleviating fears of a global economy.
That’s how you could create a pro-free-trade environment, unlike anything the United States has ever seen. I firmly believe it would succeed in this country — and many other countries worldwide.
With all due to respect to Mr. Madrick, the era of free trade isn’t over. Most free-trade advocates are still waiting for it to begin.
Michael Taube is a contributor to The Washington Times.