American Consequences - January 2019

If economic ignorance has prevented universal acceptance of the superiority of free trade – more goods and services, more employment, higher GDP, etc. – there is a more important reason to support it: liberty.

Thomas Jefferson wrote the brilliant, inspiring Declaration of Independence, wherein he claimed the Founders had concluded that we have certain “unalienable” rights and that among them are the rights to life, liberty, and the pursuit of happiness. No mention of a strong economy. Turns out, of course, that freedom naturally produces prosperity. And it was the quest for freedom and independence that inspired the Revolution. Thankfully, Hamilton didn’t write the Declaration. Give me a 401(k) or give me death! That passion for liberty was a common bond for most Americans up until the Great Depression. No time here to discuss the whys and wherefores of the Depression, but manipulation of credit by the newly minted Federal Reserve certainly had something to do with it. In any event, FDR and other advocates of an endlessly growing state were happy to blame capitalism. Laissez- faire capitalism, at that. Earlier recessions had righted themselves quickly because the government did not intervene. The Great Depression lasted a decade because the brilliant planners in D.C. intervened everywhere – particularly in trade. Remember Smoot-Hawley? Because Donald Trump thinks he is much brighter than he is, and because trade manipulation is about the only position he has never changed, we are living with tariffs, import quotas, and even threats to end trade completely with allies. Tariffs, as Henry George once said, are doing to your own economy in times of peace what your enemies would do to you in times of war. If liberty is the issue, I have a right to buy or sell to an individual or company in

Timbuctoo, regardless of what Donald Trump thinks. However, the 1962 Trade Expansion Act, Sec. 232, allows the president to levy tariffs for national security reasons. So everything, including leather, becomes a national security issue. Trump, needless to say, is all over that bogus rationalization. And now, for the first time, he has found a Harvard PhD who provides him academic cover. Peter Navarro, widely regarded as one of the worst economists in the cosmos, is head of the White House National Trade Council. He backs up every bad economic instinct the president’s gut generates. Given the rise of the so-called progressive movement, one would hope the GOP could at least try to hold up the banner of free trade. One would be wrong. The lame profile of Republicans these days is a direct result of it having given up on protecting liberty as its raison d’etre . When the supply-side revolution replaced liberty with economic growth as the GOP’s reason for existing, the energy in the party went south. And it will stay there as long as Americans are indifferent to the trade machinations of the unstable occupant in the White House. Edward H. Crane is co-founder and president emeritus of the Cato Institute libertarian think tank. He serves on the boards of U.S. Term Limits and the Institute for Free Speech.

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