The Fact That Trump Hates Free Trade Doesn't Prove That Free Trade Is An Unalloyed Good
But try making that argument now
In a speech delivered a few weeks before Donald Trump opened the Pandora’s Box of tariffs, Treasury Secretary Scott Bessent said something that progressive economists have been repeating for years: “Access to cheap goods is not the essence of the American Dream.” Globalization, and the free-trade regime that has amplified its force, has put the fifty-inch television set within reach of almost every American family; it has not, however, offered equally widespread access to “prosperity, upward mobility, and economic security.”
Right on, Secretary Scott! And about time! That’s why President Trump was. . .imposing devastating tariffs on every country in the world (well, not Russia) until the United States ran a positive trade balance with each of them. At which point the American Dream would be restored. And citizens would buy fifty-inch TVs from General Electric. In black and white.
I wonder if we will ever be able to rescue the seed from which this poisonous tree has sprung. Trump’s tariffs don’t feel like a good idea gone wrong so much as a tyrant’s catastrophic whim. Apparently none of the sycophants with whom Trump has surrounded himself were prepared to tell him that whopping tariffs would so damage our own own that the stock market would seize up in a kind of paralytic shock. Now that he’s pushed the pause button our economic policy is stuck halfway between the status quo and the daft fantasies in his head.
There Was A Good Idea In There Somewhere
Yet Bessent’s comment–which sounded less than fully sincere coming from a Wall Street plutocrat–reminds us of the principled argument for re-thinking what has come to be known as “neoliberal” economics. The Biden Administration was staffed by figures who questioned that orthodoxy, most prominently national security advisor Jake Sullivan, but also antitrust reformers like Lina Khan and Tim Wu. They, in turn, occasionally made common cause with conservative skeptics of untrammeled markets including Josh Hawley and even JD Vance.
What united all these figures was the recognition that globalization hadn’t worked out the way it was supposed to. The frictionless movement of products, services and money had vastly enriched the rich, lifted out of poverty hundreds of millions of people in export-oriented Asian countries–and accelerated the collapse of the industrial working-class in the West. Workers were enraged at “the system,” not because they couldn’t afford household doodads but because the escalator of capitalism had stalled. That anger, in turn, gave us Donald Trump and Marine LePen and Viktor Orban and Matteo Salvini and on and on.
The economist Robert Frank came up with a brilliant formulation of this problem. Frank invented a metric that he called the Toil Index, which measured the number of hours a median worker would need to labor in order “to be able to rent a house in a school district of at least average quality.” That figure, Frank wrote, went down from 1950 to 1970 and then rose steadily upwards. During that time the average person became far wealthier when measured by household goods but much less well off in regard to goods like health care and higher education that enable social mobility. Per-capita GNP, economists’ favorite measure of well-being, didn’t capture the distinction. The economy could get better, as it did under Biden, while ordinary people felt worse.
The post-neoliberals–they never came up with a good name for themselves–were skeptics, but not enemies, of free trade. They did not, as a number of recent critics have argued, want to stop working-class Americans from buying cheap TVs. The question they asked of trade agreements was: how will this help the middle class? (See this "symposium" on neoliberalism in Democracy Journal.) Why should American trade representatives fight to give multinational pharmaceutical companies access to the Indian domestic market? But trade was only a small part of their agenda. Biden’s economic policy team sought to use government funding, incentives and research to encourage investment in key technologies like semiconductors and batteries–as they succeeded in doing both in the CHIPS Act and the (so-called) Inflation Reduction Act. That was post-neoliberalism in action.
If you squinted, and gave yourself a pep talk, you could imagine Donald Trump ushering in a kind of post-neoliberal entente that combined policies liberals loathed, like tax cuts for the rich and deregulation, with ones they sought, like a focus on middle-class jobs. At the Republican convention Vance had boldly declared, “We’re done, ladies and gentlemen, catering to Wall Street. We’ll commit to the working man.” In a conversation with the Times’ Ezra Klein just before the election, Gary Gerstle, the historian and author of The Rise And Fall of The Neoliberal Order, observed that “the convergence” between Biden and Trump “on the need for tariffs, for reshoring, for creating a whole different relationship with China. . .is much more powerful than any divergence between the two parties.”
Can Anything Be Rescued From The Wreckage?
That convergence is no more. Even conservatives like Oren Cass who largely endorse Trump’s tariffs have an affirmative agenda, including the encouragement of unions, that Trump has simply ignored. Trump’s understanding of economic policy is purely negative: you help yourself insofar as you hurt your adversary. And everyone (except Russia) is an adversary. No figure in American history has done more to destroy the nation’s capacity for research and investment than Trump has just in his first few months in office. And by the way, Trump just decided to exempt smartphones and other beloved electronic goods from his tariffs, because. . .access to cheap goods is the essence of the American Dream.
The president seems to have devoted no thought to the question of just how America’s eroded industrial base will reconstitute itself once we’ve stopped importing steel, cement, rubber, forest products, etc. Nor has he troubled himself about the inflationary effect of substituting expensive domestic goods for cheaper foreign ones, even though anger over inflation probably got him elected. You almost have to admire the sheer blitheness of a man who says he “couldn’t care less” if the price of a car goes off the charts.
What will be left when the rubble is cleared away? Will anyone be able to make the measured and strategic case for trade protections after Trump has dynamited the system? Will those nations once quaintly known as our “allies” even listen to the kind of arguments for joined-up action that Biden had made in regard to China? The Biden team already discovered, if far too late, that voters have very little willingness to endure the short-term pain of inflation in the name of the long-term good of economic restructuring. What happens when citizens find that the much greater pain that Trump is inflicting on them leads only to higher inflation, rising unemployment and trade wars?
We have to somehow negotiate a path to an economic model that delivers hope and security to the average American. Donald Trump has almost certainly discredited his own nihilistic route. We will learn, if we ever reach the other side, whether he has undermined the very idea of planning for a better world.
Bonus Read: My essay in Liberties on lying in journalism