One argument Trump and Sanders have used to notch impressive victories lately – including a shocking Sanders upset of Clinton in Michigan – is that free trade is a bad deal for the United States.
That couldn’t be further from the truth, says Weinstein.
“It concerns me that both parties seem to be voicing a lot of anti-free trade rhetoric, saying we’re losers because we have trade deficits and that’s bad,” Weinstein says. “A trade deficit is neither good nor bad. Most years our inputs have exceeded our exports, so what? We have low unemployment and more jobs and lower prices for American consumers. That’s what matters.”
Weinstein explained away much of the deficit talk as accounting quirks, saying as an example that parts made in the United States are then sent to Mexico for assembly. He added that much of the country’s manufacturing job loss is a result of the average American being more productive today than ever before, not because of free trade. Weinstein says the proof is that manufacturing as a portion of America’s GDP has held steady even as manufacturing jobs have declined over the years.
“It’s ironic when you hear this anti-free trade argument in the Midwest because the Midwest had benefited most from free trade,” Weinstein says. “We export equipment and airplanes. We’ve seen a big turnaround in our auto industry, selling a record number of cars and trucks in 2015, which helps the economies of Ohio and Indiana.”
The cause of the political uproar over free trade, says Weinstein, is “economic illiteracy.”
“Most Americans are economically illiterate, and most politicians are too, so they play to that and yell, ‘Hey! You lost your job, and it’s because of imports.’” Weinstein says. “True, there are a lot of displaced workers who won’t get their old jobs back, but that’s been true for hundreds of years. The real solution is making sure our workforce is educated and has the skills to compete in the new economy – reading, writing and math skills – and to their credit, Clinton and Obama have talked about reeducation and job assistance programs. In fact, that’s been embedded in our trade laws going back to the 1960s when we started negotiating these agreements. There is trade adjustment assistance available to some people who lose their jobs due to free trade, which can provide them federal grants so they can train or relocate. It’s populist jingoism to say, ‘Free trade is why you can’t find a job.’”
Weinstein is an economist and associate director of SMU’s Maguire Energy Institute. He can discuss:
- energy and public policy.
- taxation policy.
- economic development policy.