Many conservatives have embraced a big government philosophy that rejects free trade and supports various types of protectionism. Yet, on claim after claim, protectionist arguments fall short. The overwhelming economic evidence shows that protectionism hurts American businesses and consumers alike.
For instance, protectionists argue that the United States can’t compete with countries that pay far below domestic wages and that tariffs will solve the problem. It’s also a common refrain that “the United States doesn’t make anything anymore.” Alas, it’s just not true.
Real U.S. manufacturing output is near all-time highs, and the U.S. is well ahead of every other nation by value-added per worker. Domestic labor productivity outpaces the globe because U.S. workers are better trained and are supported by the biggest capital stock in the world. We produce advanced machinery, high-tech goods, electronics, and chemical products, among others.
Widespread confusion regarding the state of U.S. manufacturing exists primarily due to the half-century long trend of declining employment in the sector. However, this is not evidence of a weakened sector, but rather an increasingly efficient one that produces more goods with less work. It’s an economic boon and no more worth lamenting than the exodus from agricultural jobs that accompanied the Industrial Revolution.
Most importantly, there is no amount of protectionism that will bring those jobs back because they weren’t lost to competition, but to efficiency gains. Protectionist policies are not going to magically insource the manufacture of trinkets to the United States. The best way forward is to adapt to changing economic realities, not hobble ourselves in a futile attempt to turn back the clock.
Another common claim is that foreign interventions in the market should be met with our own equivalent policies. At the heart of this argument is a belief that government interventions such as subsidies and tariffs are a net positive for an economy, or why else would we care? But this is not so. At best, interventions benefit one industry at the expense of other domestic industries and consumers. Often, they even harm the intended beneficiaries, as limits on market competition allow greater inefficiencies to develop over time and stunt innovation.
Meeting counter-productive foreign protectionism with counter-productive domestic protectionism would likely result in a tit-for-tat spiral of foolish economic destruction. Living in a globalized economy, we must be nimble and work with partners to compete. The United States shares its values through engagement, not a closed door.
National security is also frequently cited as justifying protectionism. Here, some claims are not totally baseless. There is a case to be made for maintaining a certain capacity among key industries, but these arguments are often overstated, either by implying that its insufficient to source goods even from dependable allies like Canada, or by suggesting that all goods from adversarial nations are inherently suspect and need to be prohibited.
Proponents of country-of-origin bans rely on the latter argument, and their favorite target is China. If we were to ban everything manufactured in China, say goodbye to your MacBook, iPhone, iPad, Nike sneakers, Dell computers, Microsoft computers and most of your clothes, toys, and furniture. Even with some companies moving out of China, the political and business climate in the United States is doing nothing to entice them here.
The drone industry provides an example of protectionist overreach. The most popular and highest-quality drones are manufactured in China. A lot of American small businesses rely upon these inexpensive and high-quality drones, and they are heavily used by police and fire departments also. Some argue that national security concerns require banning all such drones from the U.S. This would harm the businesses that rely upon these drones and their customers and clients, as well as first responders and the people they protect. In this case, protectionist restrictions could quite literally cost American lives.
There is no credible threat to national security for American consumers to purchase foreign made drones to take pictures, fly for fun, and fight fires. Proponents of a ban claim that data will migrate to Chinese government officials but offer no concrete examples of this taking place and tend to ignore the fact that Chinese drone-manufacturers give customers the option to run their drones offline, meaning no footage from drones is ever even shared with the companies let alone any government entity. A similar argument could essentially be made against imports of any and all Chinese goods, including iPhones. Here, again, the national security arguments rely on the xenophobic premise that all things made in China are dangerous to Americans regardless of what the evidence says.
Protectionism hurts American businesses big and small. Almost every product assembled in the U.S. includes foreign components. Restricting access to imports will raise input costs for American businesses, which necessarily will be passed on to consumers, and leave them less competitive compared to foreign counterparts.
The economics of protectionism are bad for American consumers, businesses, and even ordinary folks in the unfortunate position of needing help from first responders. Lawmakers from both parties should firmly reject calls for big government policies that include harmful protectionism and get back to evidence-based policymaking.
