Regularly forgotten amid all the false compassion for the individuals supposedly "left behind" by free trade is why individuals work in the first place. They work in order to import, whether from across the street, or from the other side of the world. Working is all about getting.
That's why open trade always and everywhere benefits every worker, regardless of locale. Open trade means that workers enjoy the world's competition for their money, which means workers are the beneficiaries of competition that not only enhances product quality, but that also leads to lower and lower prices for all those who pursue remunerative labor. Free trade means regular raises for workers regardless of whether their paychecks increase, stay the same, or even shrink.
The Path to Specialization
To the above, the frequent response is that free trade has consequences for workers whereby global competition renders formerly remunerative jobs less lucrative, or wipes them out altogether. Ok, but all technological advance is about erasure of formerly necessary work. If it were just about maintenance of existing jobs, the U.S. and other countries could mimic the former Soviet Union and abolish technology so that the jobs of tomorrow will be the same as the ones today. If so, the world, much like the former Soviet Union, would be very poor.
When we're more and more able to do the work most commensurate with our unique skills, our productivity surges. Never forget that, before technological advances that saved on labor, the only work available was on the farm. All toil was focused on feeding oneself. No sane person would desire a return to what was a very bleak past in which wealth was wholly a function of one's ability to work in the fields.
All of this speaks to the greatest aspect of free trade: it's the path to individual specialization. When global competition for customers brings down the cost of everything, rising disposable income leads to new wants in the marketplace being discovered, and with these new wants, new forms of work rise up as a necessary way of fulfilling the needs of consumers who desire all sorts of goods and services as a reward for their work.
Free trade leads to lower prices, which lead to greater individual specialization, and by extension much greater productivity. When we're more and more able to do the work most commensurate with our unique skills, our productivity surges.
Breaking it all down to the individual, economies are just collections of individuals, no one person on this earth could live beyond the barest of subsistence absent the ability to trade freely. Life without trade would be defined by unrelenting poverty, and for a high percentage, death by starvation, lack of protective clothing, shelter, or all three combined. The free trade that is essential for an individual on the way to surging productivity and wealth is by extension essential for country economies.
Thinking about the U.S., imports are largely untaxed here; the average tariff across all foreign goods roughly 1.2%. That's a major reason why Americans are the wealthy envy of the world.
Precisely because we can import so cheaply, "getting" (once again the sole purpose of our work), we have much greater odds of doing the kind of work that maximizes our productivity. And productivity is what the investors who create all jobs prize the most. In that case, it's no surprise that the U.S. attracts more foreign investment than any other country in the world, by far.
If Americans were rendered poorer and perpetually unemployed by import inflow, Chinese exports would go elsewhere.
So if we want to enhance job opportunity in the U.S., the path to the latter isn't tariffs on foreign goods that will slow our path to specialization; rather it's even greater openness to the world's goods and people so that we can increase our odds of doing work that is increasingly unlike work.
Which brings us to China. Those who should know better claim that China's voluminous production of goods and services amounts to an "export strategy" that is crushing opportunity around the world. Sorry, but the Chinese are human. They're not working for nothing in return. To "carry out" is to by definition "carry in." No doubt the average Chinese worker saves more, but that's wholly logical considering how poor China once was, thanks to a lack of economic freedom.
And as evidenced by the inflows of foreign investment into the U.S., the greatest "American jobs" strategy is an openness to foreign production from countries like China.
For one, the fact that they export so much to the U.S. is a certain sign of individual American productivity. If Americans were rendered poorer and perpetually unemployed by import inflow, Chinese exports would go elsewhere. The Chinese aren't working with charity in mind, much as we aren't.
Furthermore, openness to Chinese goods amounts to more than a daily raise for American workers: specifically, it boosts Chinese wealth and savings, and leads to more investment stateside that once again expands American pay, along with the range of work that Americans can perform. If you're an American and you hate your job or hate the work that's available, you want more imports from China, not less.
Lastly, we cannot forget that the Chinese are like the rest of us in the world: they want things in return for their work. More evidence supporting what is basic comes via a recent story about a Chinese expat living in Australia. As Jacqueline Williams and Xiuhzhong Xu explained it in the New York Times,
Zhang Yuan's business started with favors for relatives: an aunt who wanted baby formula, a cousin looking for Ugg boots. She was a college student here in Australia, and every dollar helped, so she mailed the items back to China and charged a bit of a commission."
And as so often happens, what started as a small service morphed into a business. Zhang "now employs two buyers, two packers and two people in customer service, with offices in Melbourne and Hangzhou."
Production and export is merely an expression of a desire to import. As she told the Times, "The Chinese have always had a blind adoration for foreign things," which means that what began as a service in between classes whereby she would "shop for whatever was popular that week: vitamins, brand-name jewelry, fake erectile dysfunction drug called Kangaroo Essence" has become a full-scale company that rewards Zhang to the tune of $300,000/year.
So while anecdote is not fact, what can't be forgotten is that production and export is merely an expression of a desire to import. The Chinese are just like every other living human: they want things. They're producing so that they can get.
All of this speaks to the value of fully opening the U.S. to Chinese imports without regard to what Chinese officials do "in return." It doesn't matter. As the Australian example reminds us, they're not producing in order to live impoverished lives.
Their production is their way of saying they want what we produce. If we reward ourselves with the better prices and better jobs that result from Chinese imports, soon enough those who export to us will reward themselves with what we produce. Again, to "carry in" is the purpose of all work. The Chinese are no different.
Reprinted from Real Clear Markets.