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Craig Roberts, protectionist?
By W. James Antle III
I have agreed with Paul Craig Roberts about so many things over the years, it is perplexing to see him increasingly assuming such a confused posture on U.S. trade policy.
As a free-market economist and syndicated columnist, Roberts' defense of liberty and individual initiative is almost without par. When high marginal tax rates and reckless monetary policy threatened to choke the U.S. economy in an endless stagflation headlock, Roberts was among the economists who helped chart a way out. Working as a congressional aide to Jack Kemp, he helped devise the Kemp-Roth tax cut proposal that would move the Republican Party in the direction of supply-side economics and lower tax rates. Later, he would go to work in Ronald Reagan's Treasury Department and collaborate with the late Norman Ture as one of the architects of the Economic Recovery Act of 1981, the legendary tax-rate reduction that ended stagflation and unleashed an unprecedented economic boom.
While many supply-siders were reluctant to cut government spending and instead wanted to use the handsome revenues generated by pro-growth economic policies to continue funding the welfare state, Roberts continued to value the limits the U.S. Constitution placed on the federal government. He was the first prominent conservative to speak out against the prosecutorial abuses that stemmed from a weakening of constitutional protections during the drug war, even when some of these resulted from Reagan-era policies. He has even profiled some of the victims in his syndicated columns. Roberts has also been outspoken about how racial and gender preferences endanger the rule of law and has been one of the few libertarian-leaning writers to question America's post-1965 immigration policies.
Yet sadly, he has increasingly endorsed the proposition that the United States should embrace the free market only up to the water's edge. David Frum first noticed this when Roberts argued against the first President Bush's decision to increase Turkey's textile import quota before the Gulf War. Frum disputed Roberts' contention that this endangered U.S. apparel jobs because Turkey's quota increase was compensated for by a reduction in the quotas for some Asian importers, but then questioned why a free-market economist would be so concerned.
Roberts has left little question about this in more recent years, writing articles about "rethinking free trade." Although he never comes out and says whether the United States should pursue a policy of increased tariffs and new trade barriers, he argues that "free trade has become a shibboleth" and that it means little more than "opening U.S. markets to those who do not open their markets to us." In other recent columns, he has said that the United States has assumed "the export profile of a 19th century Third World colony."
Columnist Bruce Bartlett called Roberts on this, arguing that the official Commerce Department data do not support his contention. These figures show capital goods accounting for 44.7 percent of U.S. exports in contrast with only 6.2 percent for agricultural goods. Roberts retorts that only net trade figures count and that the U.S. has its largest trade surplus not in advanced technology but soybeans.
Yet trade surpluses and deficits are not particularly useful measures of economic power. The U.S. ran trade surpluses during some years of the Great Depression and has run trade deficits in years of record prosperity. When you run a trade deficit with your local shopkeeper, you do not begin to fear for your economic well-being.
Imports rise with economic growth as consumers have more money to purchase more goods and demand for both foreign and domestic goods rises. If Roberts was correct that imports were displacing rather than complementing domestic production, we would see U.S. manufacturing output fall as the volume of imports rises. But this is not the case. Federal Reserve figures show that total U.S. manufacturing output rose 55 percent between 1992 and September 2000. Domestic output of durable goods almost doubled. Our output of industrial machinery was up 160 percent and production of electrical equipment was up nearly 500 percent. Roberts was among the debunkers of those who claimed the U.S. was deindustrializing during the Reagan years; there is little more evidence of such a trend today.
But isn't trade exporting our jobs to the Third World? Since the tariff reductions of the 1990s, we have seen net job growth rather than net job loss. Technology, skills and changing market conditions cause far more job displacement than trade, as wages are not the most significant cost firms face and not their main motivation in selecting a location. According to the Bureau of Labor Statistics, only one-quarter of the 7.5 million workers over the age of 20 who were displaced from their jobs between 1997 and 1999 even worked in manufacturing.
Some of Roberts' concern about trade may be due to his admirable devotion to America's integrity as a nation-state. He has defended U.S. national sovereignty and there are legitimate concerns about the use of free trade agreements to subordinate American political institutions to supranational organizations like the World Trade Organization. But this doesn't require one to advocate the trade policy of Pat Buchanan. The late Enoch Powell, former National Review editor John O'Sullivan and Peter Brimelow are among those who have simultaneously retained their commitment to free trade and the nation-state.
Wealth is created not by the cold hand of government intervention but by the exciting innovations of free enterprise. Roberts has taught many people to trust what Adam Smith called "the invisible hand" over what Dick Armey called "the invisible foot" of government. Let us hope he does not forget this important lesson himself.
James Antle III is a senior writer for Enter Stage Right.
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