Free trade is good for US

A trade liberalization agreement with Central American nations, CAFTA, is before Congress. Regrettably, the usual assemblage of protectionist forces has amassed enough political force to torpedo this highly desirable treaty, and its passage appears unlikely.

CAFTA is being marketed on the basis of its beneficial effects on the emerging economies of Central America. These nations, most of them still impoverished after centuries of colonialism and misrule, are our neighbors, and have all too recently been the objects of communist insurgency. Their economic troubles have the potential to spillover across our borders, and their potential for causing problems in our hemisphere is enormous.

Although communism has ended in Eastern Europe and Russia, Castro remains a revolutionary thorn in the side of the Western Hemisphere, and as Venezuela's Hugo Chavez shows, communism is still capable of causing serious disruption in Latin America. This is no small consideration in the cost/benefit analysis we ought to be undertaking.

But the real reason that the United States ought to adopt CAFTA relates to our own domestic economic benefits. Free trade keeps our economy efficient and competitive. Its opposite, protectionism, restrains us, hobbling our ability to undertake the continuous transformation necessary to remain the world's preeminent dynamo of technology, ideas, and productivity. Without the stimulus of continuous economic competition, our corporations and workers, like those everywhere, will be tempted to rest on  the laurels, enjoying more leisure, not taking the extra steps to continuously improve our methods and efforts, and falling behind the hungrier bosses and workers of China (for one exmaple), who know they have a lot of catching up to do.

Protectionist forces point to the layoffs in industrial firms, such as those currently being undergone by UAW members in the American auto industry. They bemoan the loss of 'good' factory jobs, and mischaracterize the options available to such workers as hamburger—flipping 'McJobs.'

Such rhetoric ignores the reality that the automobile industry is following the classic pattern of maturation followed by all the other major industries of the world, starting with textiles (the engine of the Industrial Revolution). The plain fact is that the technology to produce quite decent automobiles has diffused to the point where any number of countries — Korea, China, Malaysia, and Thailand, to name some of the recently—risen forces in the car biz — are capable of producing quite competitive vehicles. Their workers will accept wages far below the $40 an hour or so wage and benefits package demanded by the UAW. The 'value—added' worth of automobile assembly jobs in the world market is set by the low cost producers.

Yes, we could choose to protect, and thereby subsidize our auto workers. But they money they would receive would be denied to researchers and workers in the biotechnology, entertainment, software, electronics, and other sectors which are growing and accounting for an increasing share of our economy. Most of these new jobs will be 'service' rather than 'production' jobs, but they won't be hanburger flipping. They will be far more pleasant and satisfying than factory work. Their ability to contribute to our growth and future prosperity vastly exceeds that of the old jobs we would be protecting.

Ask yourself: would the United States be better off if we still had millions of workers making textiles, instead of employed in the dynamic new businesses which have grown up in the last century? Would we better of if clothing cost five times as much as it does today, and we couldn't afford to buy computers and software? Is it better for workers to be installing high speed internet in your home than tending the looms of Lawrence and Lowell, Mass?

The economist Joseph Schumpeter explained to us long ago the concept of 'creative destruction.' Yes, there is pain to those who lose their factory jobs, just as there was pain to those who lost their livelihoods carding wool, harvesting crops with a scythe, and tilling the soil with mule—driven plows when the Industrial Revolution displaced agriculture as the driving force of economic (and social) progress. Back then there were many who disparaged the dark satanic mills, and bemoaned the loss of a better way of life. With the perspective of time, we see these critics as romantics and reactionaries.

The Information Revolution is altering human civilization no less than the Industrial Revolution did two centuries ago. A revolution, as Chairman Mao memorably pronounced, is no day at the beach. But the additional wealth it generates can ameliorate some of the suffering change brings. We should not allow that suffering to be compounded by the folly of protectionism. Ratify CAFT, support free trade, and fuel the engine of progress.

Thomas Lifson is editor and publisher of The American Thinker.

A trade liberalization agreement with Central American nations, CAFTA, is before Congress. Regrettably, the usual assemblage of protectionist forces has amassed enough political force to torpedo this highly desirable treaty, and its passage appears unlikely.

CAFTA is being marketed on the basis of its beneficial effects on the emerging economies of Central America. These nations, most of them still impoverished after centuries of colonialism and misrule, are our neighbors, and have all too recently been the objects of communist insurgency. Their economic troubles have the potential to spillover across our borders, and their potential for causing problems in our hemisphere is enormous.

Although communism has ended in Eastern Europe and Russia, Castro remains a revolutionary thorn in the side of the Western Hemisphere, and as Venezuela's Hugo Chavez shows, communism is still capable of causing serious disruption in Latin America. This is no small consideration in the cost/benefit analysis we ought to be undertaking.

But the real reason that the United States ought to adopt CAFTA relates to our own domestic economic benefits. Free trade keeps our economy efficient and competitive. Its opposite, protectionism, restrains us, hobbling our ability to undertake the continuous transformation necessary to remain the world's preeminent dynamo of technology, ideas, and productivity. Without the stimulus of continuous economic competition, our corporations and workers, like those everywhere, will be tempted to rest on  the laurels, enjoying more leisure, not taking the extra steps to continuously improve our methods and efforts, and falling behind the hungrier bosses and workers of China (for one exmaple), who know they have a lot of catching up to do.

Protectionist forces point to the layoffs in industrial firms, such as those currently being undergone by UAW members in the American auto industry. They bemoan the loss of 'good' factory jobs, and mischaracterize the options available to such workers as hamburger—flipping 'McJobs.'

Such rhetoric ignores the reality that the automobile industry is following the classic pattern of maturation followed by all the other major industries of the world, starting with textiles (the engine of the Industrial Revolution). The plain fact is that the technology to produce quite decent automobiles has diffused to the point where any number of countries — Korea, China, Malaysia, and Thailand, to name some of the recently—risen forces in the car biz — are capable of producing quite competitive vehicles. Their workers will accept wages far below the $40 an hour or so wage and benefits package demanded by the UAW. The 'value—added' worth of automobile assembly jobs in the world market is set by the low cost producers.

Yes, we could choose to protect, and thereby subsidize our auto workers. But they money they would receive would be denied to researchers and workers in the biotechnology, entertainment, software, electronics, and other sectors which are growing and accounting for an increasing share of our economy. Most of these new jobs will be 'service' rather than 'production' jobs, but they won't be hanburger flipping. They will be far more pleasant and satisfying than factory work. Their ability to contribute to our growth and future prosperity vastly exceeds that of the old jobs we would be protecting.

Ask yourself: would the United States be better off if we still had millions of workers making textiles, instead of employed in the dynamic new businesses which have grown up in the last century? Would we better of if clothing cost five times as much as it does today, and we couldn't afford to buy computers and software? Is it better for workers to be installing high speed internet in your home than tending the looms of Lawrence and Lowell, Mass?

The economist Joseph Schumpeter explained to us long ago the concept of 'creative destruction.' Yes, there is pain to those who lose their factory jobs, just as there was pain to those who lost their livelihoods carding wool, harvesting crops with a scythe, and tilling the soil with mule—driven plows when the Industrial Revolution displaced agriculture as the driving force of economic (and social) progress. Back then there were many who disparaged the dark satanic mills, and bemoaned the loss of a better way of life. With the perspective of time, we see these critics as romantics and reactionaries.

The Information Revolution is altering human civilization no less than the Industrial Revolution did two centuries ago. A revolution, as Chairman Mao memorably pronounced, is no day at the beach. But the additional wealth it generates can ameliorate some of the suffering change brings. We should not allow that suffering to be compounded by the folly of protectionism. Ratify CAFT, support free trade, and fuel the engine of progress.

Thomas Lifson is editor and publisher of The American Thinker.