President Obama finally spoke out in favor of “free” trade last week, though his version of free trade is one that only a mercantilist would recognize. Speaking at the Export-Import Bank’s annual conference, Mr. Obama said an “obstacle that our exporters face is that the federal government frankly just hasn’t done a good enough job advocating for them abroad.” Like everything with this administration, you see, the private sector just needs more government intervention, and things will be all right.
In launching his National Export Initiative, Mr. Obama talked about the need to “marshal the full resources of the United States government” and announced that he “signed an executive order instructing the federal government to use every available federal resource” to push his central plan. Nothing was said about getting government out of the way of business because that’s not his plan. Mr. Obama wants to double exports within the next five years by subsidizing exports by those companies the government deems worthy of subsidies. Obviously, shareholders and workers in some industries benefit from those subsidies while shareholders and workers in other industries bear the taxes that pay for the subsidies.
As part of his central plan, the president will set aside billions of dollars to subsidize the financing of overseas sales through Ex-Im Bank, use various Cabinet agencies to promote the products of certain approved companies and expand the role of the Nixon-era President’s Export Council.
Unfortunately, winners and losers just don’t cancel each other out. The gains to the winners are less than the losses to the losers. There’s a good reason why American firms that are being helped aren’t already selling certain products abroad in the absence of a subsidy: Their costs are greater than the value foreigners place on them. A subsidy can’t make that simple fact disappear. By underwriting the cost, even through financial mechanisms, the U.S. taxpayer ends up paying foreigners to buy products that cost more than they are willing to pay. That doesn’t sound very free.
Mr. Obama is sure to take credit for any jobs created at subsidized firms. But you won’t hear a peep about jobs lost at their competitors, companies that will be forced to pay Mr. Obama’s bill to benefit someone else’s business. This should sound familiar because it’s how the president set up his failed stimulus package. He seems to think the money he tosses around miraculously appears like manna from heaven, when in fact, every cent the government spends has to be extracted from the hides of Americans. Mr. Obama gives lip service to the deficit, but he keeps proposing more spending that takes from some to benefit others. His trade initiative is no different.