Free Trade and Candlemakers

Economists are infamous for disagreeing with each other, but one of the few issues to consistently receive unanimous support is free trade.  Policymakers however have failed to take this lesson to heart.  GOP Presidential candidate Donald Trump recently admonished Ford Motor Company for planning to build a new plant in Mexico.  He claims that by hiring foreign competitors, they are taking away these jobs from American manufacturers.  Trump has consistently advocated for policies to keep Americans from purchasing foreign goods. He states in his book Time to Get Tough that “I want foreign countries to finally start forking over cash in order to have access to our markets. So here’s the deal: any foreign country shipping goods into the United States pays a 20 percent tax.”

This rhetoric is shared on the opposite end of the spectrum as well.  Senator Bernie Sanders has lamented the millions of jobs “lost” to America by hiring foreigners.  His campaign website states that “If corporate America wants us to buy their products, they need to manufacture those products in this country.”  To say the least, the modern political climate is not very friendly toward foreign trade, especially with recent controversy surrounding the Trans-Pacific Partnership.

There is an important lesson that can be learned here from the 19th century French economist Frederic Bastiat.  Once upon a time, a group of particularly ambitious candlemakers and lantern manufacturers joined together to petition their government for a law to defend them from a vile foreign competitor.  This rival would steal all of their business by flooding the market with his cheap products, which the woefully unpatriotic consuming public were all too eager to use.  This is why, in the name of defending the economy from such an evil, the candlemakers proposed a mandatory closing of all windows, curtains, and blinds in France.  The foreign rival was none other than the sun itself.

Bastiat told this satire in 1845 to expose the fallacies of protectionist practices, pushing them to their logical conclusion.  The sun is a blessing precisely because it is free.  People turn to this “competitor” because it offers a better deal, and to try to stop people from using it is nothing short of insanity.  The same logic applies to free trade.  If a foreign nation can offer us cheaper goods and services, we should receive it happily.  If the work of “candlemakers” has become superfluous, then as painful as it might be the only sensible thing to do is switch professions.  A wise government should aim to make this transition for them as smooth as possible, not destroy abundance so that it may be sold back to us.

Colin Combs is a Research Associate with the National Center for Policy Analysis.

 

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