Is Pat Buchanan Economically Illiterate?

Perhaps the most persistent and vocal opponent of the policy of free trade is Pat Buchanan.  Although Buchanan possesses an admirable regard for the American worker, his single-minded focus on the "trade deficit" undermines the force of his position.  In a recent article, Buchanan chides a Cato Institute scholar for applauding the growth of U.S. exports in 2006, because the gentleman also failed to mention that the nation's overall trade deficit hit an all-time high.  For Buchanan, the trade deficit is proof positive that the American economy is in decline and being overtaken by foreign competitors, especially China.

This is nonsense.  All the trade deficit shows is that Americans purchase more goods and services from foreigners than foreigners purchase goods and services from Americans.  Not thatforeigners don't buy our products.  On the contrary, they buy many billions of dollars worth of American products each year.  But Americans buy even more of their products.  The simplest and most logical explanation for this is that Americans are richer than foreigners, and so we have more money to spend on their products.  Clearly this is the case.  Hardly a sign of American economic decline.

Buchanan is a smart guy.  His book on immigration, State of Emergency: The Third World Invasion and Conquest of America, despite its sensationalist title, is the best book on the subject I have read, full of careful arguments supported by mountains of socioeconomic data and historical analysis.  The same cannot be said for his constant opposition to free trade.  If there were hard evidence that the trade deficit, or free trade generally, is harmful to the American economy, then surely Buchanan would cite it in his articles on the subject.  He never does.  Why not?  Because from a macroeconomic perspective, it is very, very difficult to make the case that free trade hurts Americans, as I have argued before.

Are some workers and some companies hurt by foreign competition?  Of course.  Unfortunately, this is one of the "costs" of a free market economy.  Do legitimate national security concerns trump the rights of producers and consumers to do business with whomever they wish?  Yes.  No one's business interests should be allowed to jeopardize our collective safety.  There are plenty of serious issues to be debated in this area. 

But there simply is no economic or historical support for the notion that strictly limiting our commercial relations with foreign nations will benefit the United States.

smwarshawsky@hotmail.com  

Perhaps the most persistent and vocal opponent of the policy of free trade is Pat Buchanan.  Although Buchanan possesses an admirable regard for the American worker, his single-minded focus on the "trade deficit" undermines the force of his position.  In a recent article, Buchanan chides a Cato Institute scholar for applauding the growth of U.S. exports in 2006, because the gentleman also failed to mention that the nation's overall trade deficit hit an all-time high.  For Buchanan, the trade deficit is proof positive that the American economy is in decline and being overtaken by foreign competitors, especially China.

This is nonsense.  All the trade deficit shows is that Americans purchase more goods and services from foreigners than foreigners purchase goods and services from Americans.  Not thatforeigners don't buy our products.  On the contrary, they buy many billions of dollars worth of American products each year.  But Americans buy even more of their products.  The simplest and most logical explanation for this is that Americans are richer than foreigners, and so we have more money to spend on their products.  Clearly this is the case.  Hardly a sign of American economic decline.

Buchanan is a smart guy.  His book on immigration, State of Emergency: The Third World Invasion and Conquest of America, despite its sensationalist title, is the best book on the subject I have read, full of careful arguments supported by mountains of socioeconomic data and historical analysis.  The same cannot be said for his constant opposition to free trade.  If there were hard evidence that the trade deficit, or free trade generally, is harmful to the American economy, then surely Buchanan would cite it in his articles on the subject.  He never does.  Why not?  Because from a macroeconomic perspective, it is very, very difficult to make the case that free trade hurts Americans, as I have argued before.

Are some workers and some companies hurt by foreign competition?  Of course.  Unfortunately, this is one of the "costs" of a free market economy.  Do legitimate national security concerns trump the rights of producers and consumers to do business with whomever they wish?  Yes.  No one's business interests should be allowed to jeopardize our collective safety.  There are plenty of serious issues to be debated in this area. 

But there simply is no economic or historical support for the notion that strictly limiting our commercial relations with foreign nations will benefit the United States.

smwarshawsky@hotmail.com