As our trade deficit continues to rise to new heights, Americans can anticipate increased pressures for "protecting" American business and labor by restricting imports. Because of its apparent simplicity, the protectionist approach always has its followers. However, given the widespread weakness in the global economy, there is special reason for opposing trade restraints.
The United States is both the world's largest exporter and its largest importer. Many American businesses and their employees have a powerful and direct stake in healthy, expanding international commerce. This is especially true in the case of our key high-tech industries, which export far more than they import. Any reasonable analysis would show that, on balance, the US benefits from the competitive forces of an open economy. American consumers enjoy lower prices as a result of the global marketplace. However, many US companies benefit from the lower costs of using imported components. Often, that cost differential is essential in maintaining the international competitiveness of American producers.
Of course, it is unreasonable to expect that any set of economic policies will only generate winners and no losers. Adoption of a protectionist strategy would mean jeopardizing the benefits to the far more than 90 percent of our people who are participating in the national prosperity in a misguided effort to respond to the concerns of the far less than 10 percent who are not.
Americans should be concerned over jobs lost when factories close down. Public policy shouldn't ignore the losers in economic change: A rising tide does not lift all boats. The social safety net available to Americans in financial distress should be, and is, very substantial - unemployment compensation, food stamps, and job training. It is sad that so many advocates of protectionism ignore the vital role of training and education in helping people adjust successfully to an increasingly global economy.
Advocates of trade restrictions like to cite the "infant industry" argument. Actually, we still teach that concept to our economic students to explain why some emerging economies rely on the temporary crutch of protectionism to new industries. But in no way do our steel or textile companies qualify as infant industries. Challenged to ward off flabbiness, the last thing they need is special treatment to shield them from the rigors of competition. Indeed, the new mini-mills that were built in this country in recent years are now exporting steel.
Preoccupied with imports, protectionists neglect the many self-inflicted wounds the US suffers from its own barriers to its own exports. These special-interest provisions range from the ban on timber exports from lands west of the 100th meridian to the prohibition on exporting oil from the North Slope of Alaska. Eliminating such obstacles to our exports would be more constructive than trade restrictions in adjusting to the pressures of the international marketplace.
One of the favorite targets of protectionists is the US-based multinational corporation - which supposedly "exports" domestic jobs. Of course, if specific companies were mentioned, Americans would react with laughter rather than anger. KFC, McDonald's, Coca-Cola, and Pepsico are typical "multinational" corporations. Do the proponents of economic isolationism really expect consumers in other countries to import cooked hamburgers, fried chicken, or cold soft drinks from a US-based store?
As for economic isolationism, Henry George, a century ago, provided perhaps the most incisive defense of free trade: "Protectionism tariffs are as much applications of force as are blockading squadrons whereby nations seek to prevent their economies from trading. What protection teaches us to do to ourselves in time of peace is what enemies seek to do to us in time of war."
* Murray Weidenbaum is chairman of the Center for the Study of American Business at Washington University in St. Louis.