Will no one take on the trade cowards?

By Jennifer Rubin in The Washington Post.

"Among the many discouraging aspects of the 2016 presidential race is the remaining candidates’ unanimous support for trade protectionism. There are those who know better but choose to pander to the crowd. There are those who are ignorant and insist on long-discredited arguments. It’s worse than climate-change denial, and it is bipartisan.

Alan S. Blinder, former vice chairman of the Federal Reserve and now a professor at Princeton, recites — in simple terms that even Donald Trump could grasp — some basic facts about trade. These are not opinions or matter of ideology; they are truisms about which economists regardless of ideological bent can agree. Blinder recaps: Capitalism, not trade, is responsible for job-churn (“Every month roughly five million new jobs are created in the U.S. and almost that many are destroyed, leaving a small net increment”); trade is a counterweight to wage stagnation (“It’s not mainly about creating or destroying jobs. It’s about using labor more efficiently, which is one key to higher wages”); and trade imbalances are both inevitable for the nation with a reserve currency and unimportant. As to the latter, he explains:

A trade deficit means that foreigners send us more goods and services than we send them. To balance the books, they get our IOUs, which means they wind up holding paper—U.S. Treasury bills, corporate bonds or other private debt instruments. That doesn’t sound so terrible for us, does it?

One exceptional country—the U.S.—is the source of the world’s major international reserve currency, the U.S. dollar. Since ever-expanding world commerce requires ever more dollars, the U.S. must run trade deficits regularly. That’s sometimes called our “exorbitant privilege,” since we get to import more than we export.

The upshot is simple: “America’s chronic trade deficits stem from the dollar’s international role and from Americans’ decisions not to save much, not from trade deals.” As for the policy implications, “Trade deficits are not a major cause of either job losses or job gains. But some people do lose their jobs from shifting trade patterns; and the government should do more to help them. Importantly, trade makes American workers more productive and, presumably, better paid.”

What is even more clear is that protectionism does not work. History teaches us that it almost always provokes political conflict and economic malaise. The “cure” for what amounts to a psychosomatic illness is a prescription for recession and international conflict."