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Be Careful With this Exception

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Here’s a letter to frequent and valued Café Hayek commenter Richard Fulmer:

Mr. Fulmer:

Your comments at Café Hayek are always valued. Thank you for them.

In your comment on this post [2] you understandably point to the national-defense exception to the case for free trade. This exception is real, yet one must take care to avoid embracing it too quickly. Politicians and pundits who call for restricting trade in the name of national defense often forget trade’s mutuality.

It’s true that the freer is American trade with the Chinese the more enriched are the Chinese. And this enrichment of the Chinese people indeed makes available to the Chinese government more resources to put to military use. But this trade also enriches us Americans and thus makes available more resources for our military use. Therefore, trade restrictions imposed by our government, while denying some resources to Beijing’s military, denies some resources also to the Pentagon. The same trade obstructions that decrease wealth in China decrease wealth here.

It follows that one cannot say in the abstract that reducing America’s trade with the Chinese will weaken China’s military relative to America’s military. Perhaps a general restriction of trade with the Chinese will have this effect. But perhaps it will have the opposite effect – namely, it might weaken our military relative to China’s. There’s no way to tell in the abstract.

The national-defense exception to free trade becomes downright illogical when offered by the likes of Donald Trump, Peter Navarro, and other vocal protectionists. Such protectionists would have us believe that when foreigners are denied real goods and services by American trade restrictions their countries are economically weakened, but that when Americans are denied real goods and services by American trade restrictions the U.S. is economically strengthened. It’s bizarre.

Sincerely,
Don

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