The BLOG: Campaign 2016

Free trade, economic freedom and the election

Across party lines, one of the most used campaign slogans goes something like, “I’ll bring back the jobs!” Out of context, this quote could be as easily attributed to Bernie Sanders as to Donald Trump.

However, the language of the candidates shouldn’t be to bring back jobs which the free market deemed irrelevant years ago, the language should be around opening up new markets and developing a greater free trade policy with other countries.

Trump and Sanders see the flight of certain jobs, namely manufacturing, to places like China and Mexico as reason to oppose free trade measures. However, their avowed stances are nothing more than populist pandering. In reality, the shifting of these jobs to developing countries is good for America because it creates more jobs in America and grows the economy. Additionally, these newly created jobs are more desirable than the old ones they replace.

The Trump-Sanders crowds argue that the shifting of traditionally blue collar jobs to foreign countries is benefiting the rich and hurting poorer, working class Americans. This could not be further from the truth. By manufacturing goods abroad for less, American consumers pay less than if they had been made domestically. Obviously, this would benefit someone with little money in their bank account more than a millionaire. This increase in purchasing power for the lower and middle classes contributes to market growth.

Market growth means more jobs. If more people have more money in their pockets, they will be spending more money than otherwise. This creates more demand for goods and services, thereby creating more American jobs. Additionally, these newer jobs will be more desireable and useful to the economy, because they would have been dictated by the natural free market, not government interference.

Free trade also opens the door for small businesses. By expanding free trade, smaller American companies, including manufacturers, will be able to do business in other countries, expanding their consumer base. This contributes to more jobs, economic growth and a more competitive free market.

With all these companies making greater profits, competition will be fierce and drive wages and innovation up. This is why those entry-level factory jobs in the past were relatively high-paying. It wasn’t because the 1950s versions of Ford and GM were more generous than today’s companies. The fact is they were just as profit-driven as the ones of today. They paid their workers so well because they were offering a high-quality, affordable product, and competition between the auto companies was high.

If the government were to just force these old manufacturing jobs, archaic relics of the past, back to the United States, there is no reason to think they would be as lucrative or available. The cars produced would be more expensive, rendering them less affordable to Americans and driving down profits. This means less employees and lower wages.

If free trade grows, these expanding, competing companies will need to hire American workers to help in other, non-manufacturing aspects of the good/service they provide. These include sales, marketing/advertising, management, software/programming, web design, administrative/clerical, transportation, and more. These types of jobs are more desirable and lucrative than being a factory line worker.

The key is to make sure that we are providing citizens with the opportunity to qualify for these new, more desirable jobs. Considering the plummeting value and rising expense of a four-year college degree, higher-education funding should be shifted more toward cheaper, two-year vocational schools, offering courses specifically for the new American economy. Additionally, these two-year schools would compete with universities, driving the cost of four-year schools down.

Free trade can come with its growing pains. The images of the once bustling Detroit resonate profoundly to Americans. The city lost its luster as manufacturing shifted to more affordable locales. However, the takeaway shouldn’t be against free trade, it should be for economic diversification.

It is never advisable to put all your eggs into one basket. Pittsburgh, too, was once one of the great manufacturing cities in the world. However, unlike Detroit, Pittsburgh has evolved into a robust, diverse economy, and its citizens now enjoy a higher standard of living than ever before. City officials recognized they could not have their fate directly linked to the steel plants. The city attracted healthcare and technology firms with subsidies, and had well-regarded college curriculums specifically needed in those fields. The city has truly become a leader in innovation.

There is strong statistical support for the benefits of free trade. Ironically, Sanders, ever the fan of the Scandinavian model, fails to realize that when it comes to free trade, Scandinavia is more capitalist than us. The Boston Globe recently put out a mock cover story imagining a Trump presidency. In it they blamed Trump for starting a trade war.

Let’s not, in favor of protectionism, grant government more market control.

Matthew Goldberg

Matthew Goldberg

Matthew Goldberg is a recent Political Science graduate from UMass-Amherst and lives in Quincy. He can be reached at [email protected].

NBPEconomic

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