GOP Platform Walks Away From Freer Trade

The Republican Party’s new position on international trade – as stated in their draft platform – reverses decades of recognizing the benefits of free exchange of goods and returns to the mercantilist protectionism of Smoot-Hawley. Once, the GOP was the party of smaller government. Now, they want to know every import you buy and export you sell, and if they don’t match up to some bureaucrat’s liking, the world will tremble.

Here are the particulars, courtesy of CNN.

A Republican president will insist on parity in trade and will stand willing to implement countervailing duties if other countries don’t cooperate.

I understand that everyone else will want to yell and scream about the tweak in the party’s opposition to marriage equality, but I consider this to be far more important.

“Parity” in trade is wonk-speak for what the left likes to call “fair trade.” What neither the activists nor their wonky friends will admit is just how invasive – and nearly impossible anyway – “parity” or “fair trade” are. In theory, it’s a demand that American exports equal American imports, i.e., no “trade deficits.”

Of course, the notion of “trade deficits” is itself tomfoolery: we all have massive trade deficits with grocery stores, and huge trade surpluses with our employers. It is only at the national level that some Americans suddenly decide that either autarky or rank mercantilism is necessary. “Parity” is simply mercantilism by another name, with the insistence that what we sell a foreign nation must be equal in value to what we buy from it. Never mind how difficult that will be anyway with flexible exchange rates. Never mind how intrusive that would be on importers, retailers, users of imported inputs, and ordinary consumers. The Trumpenproletariat is angry and it wants fewer goods on shelves, higher prices, more bureaucrats, and more difficult relations with our allies around the world.

All of this is for an outdated notion of international trade that considers every import to be a lost job somewhere. Never mind that said “job” would be far less productive than what Americans produce in goods and services today. Never mind that the workforce that did those jobs can be retrained into something more productive (with better compensation). Never mind that imports lower prices, thus weakening inflation and improving real wages and real wealth for all (although, to be fair, recognizing this would mean giving up fear of deflation, which is hard to do in a world where Keynesian assumption have leeched into the Kool-Aid at a level rivaling lead levels in Flint, Michigan).

In reality, with “parity” in value so difficult to measure (and changing daily with the exchange rates – and let’s not forget the effect of Purchasing Power Parity in measuring goods and services), this demand effectively closes off any chance of new trade agreements. At a time when the United Kingdom has chosen to throw off the shackles of the European Union, America has a historic opportunity for a new and freer trade relationship with London, and perhaps the rest of the Commonwealth. This platform’s response is basically, “Get lost.”

There was a time when the Republican Party understood the benefits of free exchanges of goods and services, when they would be willing to take on the Keynesian nonsense on inflation and the mercantilist nonsense on taxing the poor and restricting markets. Republicans of all factions harken to Ronald Reagan as their hero, while twisting his words repeatedly, but on international trade he was breathtakingly clear: freer is better, period.

Today’s GOP has truly left that behind. They have become the past disguised as the future.

@deejaymcguire | facebook.com/people/Dj-McGuire | DJ’s posts

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