America Is Paying The Hefty Social Cost Of ‘Free’ Trade

In our halcyon college days, the Wall Street Journal/New York Times class inhaled and believed David Ricardo’s economic theory of “comparative advantage” — that free trade makes all nations richer. More, we took it as prescriptive for wise policy. This has been elite consensus, left and right.

But human affairs are more complex than economics. The four decades since my own graduation have not made me doubt the economic theory, but they have made me doubt the wisdom of the policy.

I well remember the glib assurances as manufacturing moved to lower-wage countries, and as China was admitted to the low-tariff WTO regime in 2001: “Not to worry: America has a comparative advantage in innovation; let the lower-wage nations do the dirty work of actually making things. Prices will drop and we’ll all be better off.”

Prices did drop; the nation as a whole may well be richer. But we’re not better off. And there’s more trouble to come.

At the outset, the “We innovate, you manufacture” scenario forgets one big fact: Intellectual property is easily stolen, and it will be. In my decades as an intellectual property lawyer, my clients were among the most innovation-intensive companies in America. Every single one faced serious and continuing problems of theft of their intellectual property by companies associated with China.

I won’t claim a moral high ground here; it is well documented that in the early 1800s, this country’s nascent industrialists worked diligently, and with success, to lure across the Atlantic English and Scottish engineers who knew the world-leading technology trade secrets that were powering the manufacturing dominance of Manchester and other British cities. My point is not a moral but a practical one: “You help yourselves to our innovation for free, we pay for your manufactured products” is not a path to long-term national prosperity. Indeed, we now see China seizing pole position in even the most cutting-edge technologies, including chips, green energy, automobiles, and AI.

But even if a trade regime based on the theory of comparative advantage does make the nation as a whole richer, it ignores unpriced — but priceless — human and social goods. As free trade shuttered American factories step by step, from the bottom up — first textiles, then steel, then heavy equipment, and increasingly automobiles — it threw Americans, and predominately men, out of work or into lower-paid work.

The statistics are clear: In less than a decade following the admission of China to the low-tariff WTO club, the United States lost 25 percent of its manufacturing workforce, or more than 4 million relatively high-wage jobs, triggering untold downstream losses of non-manufacturing jobs in our former manufacturing communities.

Yes, our leading high-tech companies flourished and hugely enriched entrepreneurs, retirement accounts, and university endowments. Yes, Americans may be richer on average. But blue-collar men who lost the dignity of well-paid work, or their sons who have never experienced that dignity, are the losers. As are we all, as the destabilization of blue-collar America has ricocheted out into an epidemic of family breakdown and drug addiction.

We have attempted to reduce the pain and soothe our consciences with an ever-increasing array of government handouts and subsidies. But handouts are no substitute for the priceless goods of self-respect and purpose in life. A nation in which we are modestly less wealthy on average, but in which those without college degrees have a better shot at well-paying manufacturing jobs, would be a better nation.

It would also be a more stable nation. More than 200 years ago, contemplating the disastrous French Revolution, Edmund Burke highlighted the intrinsic social dangers of too-abrupt change. He warned that even where the end goal of change is the public good, “by the sudden alteration of [the] state, condition, and habits” of men, “multitudes may be rendered miserable.” He urged “circumspection and caution” before overturning social structures “where they have cast their roots wide and deep, and where, by long habit, things more valuable than themselves”— which surely includes families and communities—“are [ ] adapted to them.” 

Democrats and Republicans alike have ignored Burke’s warning. By adopting unfettered free trade based on abstract economic theory, in less than one working lifetime we have uprooted “multitudes” of  honest jobs, irreplaceable families, and beloved communities across America. Is it any wonder that, across this great nation, “the songs of angry men” have swelled behind an angry man?

The anger is justified, and President Trump is doing much that needs to be done. But the spirit of anger cannot be the foundation of a healthy nation. Once the dust from the initial house-cleaning of the Trump revolution begins to settle, wise leaders — Republican and Democratic — will look to rebuild a healthy society based not on the economic efficiency of pure free trade, nor on “equalizing” handouts that debase the dignity of man, but on economic policy that makes space for the working man and woman.

Technologies and markets change; we cannot expect, much less force, the manufacturing jobs of 2030 to look like those of 1980. But we as a nation can and must make a plan to manufacture much more of what we consume. As we are learning, cheap textiles, electronics, and avocados can be very expensive.

Roger Brooks is Senior Counsel with Alliance Defending Freedom. Prior to joining ADF, he litigated technology-related cases as a partner in the Cravath, Swaine & Moore law firm.