Last week I exposed, not for the first time, President Obama as a mercantilist. Alas, he is not the only one out there. It is time we all learn three truths about international trade.
1. Trade is a two-way street: If our government restrains the ability of consumers to buy imports or impedes foreigners who want to sell to us, we diminish their ability to buy from us. And the only reason we sweat to produce for the foreign consumer is to earn income to buy and enjoy the things that he is producing for us.
2. Outsourcing destroys less-efficient jobs at home but simultaneously creates more and better paying ones. Study after study shows that saving costs by using the cheapest global resources improves efficiency, increases productivity, and boosts real income, stimulating domestic investment and job creation.
3. Interpreting cheap imports as acts of aggression is silly. Milton Friedman pointed out in his Free to Choose series, "If foreign governments want to use their taxpayers' money to sell people in the United States goods below cost, why should we complain?"
My second accusation against Obama is that he believes in the virtues of central economic planning. In his third State of the Union address, the president quoted Abraham Lincoln, saying, "Government should do for people only what they cannot do better by themselves, and no more." Some find it ironic that today's Democratic leader turns to the first Republican president for wisdom instead of iconic figures in his own party such as FDR or LBJ. But do not be quick to expose the irony of such words spilling from the mouth of a planner in chief, whose "blueprint" for reshaping America expands the role of the federal government in scale and scope beyond anything we have seen so far.
There is no inconsistency between Obama's seemingly libertarian words and his interventionist plans and actions; the problem lies in his belief that the list of things Washington can do better than we can do for ourselves goes on and on. Most importantly, Lincoln's quote is not a prescription for limited government but for a giant loophole to be exploited by politicians of a totalitarian mindset. And because many of us fail to grasp that danger, we allow laws and regulations to be piled up on our backs as verses from "The Song That Doesn't End."
There are many things the people cannot do better than government, but is that a good enough reason to design a central plan to accomplish them? No, mainly because the people do not want most of them done. I'll start with the idea to put American manufacturing on steroids and leave the rest of my short list of things that we do not wish Uncle Sam to do for us for next week.
Our president advocates giving the "American manufacturer … a bigger tax cut." Why should we support such an idea? Did we not allow private interests in our economy to move resources from the traditional agricultural base into industrial production during the 19th century? Did we not benefit tremendously from letting the market dictate the allocation of productive resources? Why do some perceive the trend of the past few decades, when we voluntarily restructured our economy to create wealth mostly in the service sector, as a tragedy? I am genuinely puzzled and waiting for WORLDmag.com readers to tell me why we should care for Obama's "blueprint." Why should we command resources through Washington to "bring manufacturing back" instead of letting the economy follow its natural course?