Friday, August 12, 2016

Clinton, Trump, and Trade

One of Hillary Clinton's recent and frequently used attacks against Donald Trump is entirely wrong-headed.

Granted, Republican presidential candidate Donald Trump should be allowed nowhere near presidential power. However, this does not mean that everything said against him is beyond criticism.

In her speech accepting the nomination of the Democratic Party for the office of President, Clinton said,

He also talks a big game about putting America First. Please explain to me what part of America First leads him to make Trump ties in China, not Colorado. Trump suits in Mexico, not Michigan. Trump furniture in Turkey, not Ohio. Trump picture frames in India, not Wisconsin. Donald Trump says he wants to make America great again — well, he could start by actually making things in America again.

Again, in a speech in Michigan, she said:

He’s made Trump ties in China and Trump suits in Mexico instead of here in Michigan. He keeps saying it’s not possible to make these things in America anymore, and that’s just wrong. So we created a website — — on it we list a hundred places across the United States that already producing similar goods. Now one positive thing Trump could do to make America great again is actually make great things in America again.

Here's the problem that I see with this. There is a factory in, say, Mexico that is manufacturing suits. If those suits are made in America, then those Mexican workers lose their jobs. This isn't like in America where we have unemployment insurance, food stamps, aid for dependent children - where we can afford to provide the displaced workers with education and training to find new jobs and provide them with housing, food, and medical care while we do so. Those people are thrown into squalor . . starvation . . . their children dying from easily preventable diseases because their parents cannot afford even the most basic medical care.

The fact that we do not properly care for those displaced by trade is not the fault of the global poor - and there is no justice in making them suffer for it. The correct solution is to let them work, and to take proper care of those Americans that are displaced. We can afford it.

Yet, to Clinton, and Trump, and Sanders, and those who cheer these statements and say, "For this reason, I am voting for her, they simply refuse to even consider these facts. It does not matter how much human suffering comes from their actions - they end up slightly better off, and that is all that matters. That is all that anybody ever talks about. That is all that they even think about.

I find few things in American politics more objectionable than the utter disregard that many voters show for the global poor.

Furthermore, I would argue that Clinton actually knows better. Both Donald Trump and Bernie Sanders displayed a distressing inability to understand economics - and Trump quite likely does not care. However, Clinton likes to surround herself with experts - real experts. She seeks their actual opinions on matters, and does not think that she knows everything there is to know.

Almost certainly, those experts are telling her that global trade is good for America, but it is particularly important for the global poor. Billions of people are now able to afford food and basic medical care who could not have afforded it earlier because of American jobs that have been shipped overseas. Unlike Trump, I suspect that she cares.

However, for political reasons - because the American voters are preferring candidates that embrace the myth of "made in America" - in spite of the harms that she knows will come from these policies. Whether, when she gets into office, she will do what is right or what is popular, is yet to be seen.

Having said this, there is a legitimate concern regarding the treatment of the global poor - the concern of exploitation.

Some of those who bring up the problem of exploitation seem to think that the appropriate solution is to say, "In order to prevent you from being exploited by the big, evil capitalist, we are going to force you to remain in squalor and watch your children die of starvation and easily preventable disease. We can't let you possibly have a job where you can afford food and medical care. That's just wrong."

One of the ways that American companies can actually exploit foreign workers is by using their influence to deny those workers other options - to leave them no options but to accept whatever the American company offers. This can be done by buying influence in the government - buying officials or promoting regulations and restrictions that will prevent others from competing for the same laborers. Once the workers' other options are eliminated, the worker is left with no option but to accept whatever the exploiting company offers.

Where this happens, a proper concern for the plight of the global poor would be to take action to prevent those barriers. This means allowing companies to compete for this inexpensive labor and, in doing so, bid up the wages and benefits. In this way, the workers who start off making 50 cents per hour and no benefits, in a few years time, are making $3.00 per hour with basic medical care. A few decades later, they are earning $5.00 per hour with family leave and company-funded child care.

Hourly wages in China were about $0.60 per hour in 2003, and are now nearing $3.00 per hour in 2014 - a 500% increase. Now, $3.00 per hour is not a lot of money, but it's a significant improvement. More importantly, the global poor are likely merely passing through this level on to salaries that would allow them to do much better for themselves.

As those foreign workers acquire more wealth, they will be able to afford more things. As they purchase more things, the opportunities open up for others to get the jobs that make those things.

Consider this: Are the people in Los Angeles suffering from the fact that there are people in New York who can afford to purchase movie tickets? Is New York somehow worse off because people in Los Angeles buy banking services? Is the future of Los Angeles to be found in impoverishing New York, or of New York to be found in impoverishing Los Angeles?

I rather doubt it.

In fact, much of the prosperity we find in the United States is because we have a large country where goods and services cross borders without impediment. If it were possible to make a state wealthier with trade barriers and banning the "export of jobs" to another state, we would have reason to allow states to engage in these practices. However, we have no such reason. If those barriers went up, they would contribute to poverty, not prosperity. What is true between states is also true between countries.

Hillary Clinton does have an unfortunate disposition to follow the current, even when the current goes in an ultimately self-destructive direction. In a democracy, the best way to change the course of government into a more useful and beneficial direction is to get the voters to push it in that direction. I hope this post makes a contribution towards that end.

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