'It is the theory of the Protectionist that imports are an evil. He thinks that if you shut out the foreign imported manufactured goods you will make these goods yourselves...'
I used to believe in free trade, but slowly changed my mind over the decades. In a perfect world, we can all applaud the Ricardian benefits of comparative advantage and free trade. However, we live in a society that has embraced minimum wage laws and a regulatory morass that goes far beyond ensuring clean air and water. So it should surprise no one that manufacturers responded rationally to these incentives and gutted the domestic manufacturing industry by moving production to China. It is equally predictable that we would run persistent trade deficits financed by fiscal deficits because the only things we now export are Treasuries. Because the root problem is political, the solution is also political, but no politician dares touch minimum wage laws, regulatory, or fiscal reform. Tariffs are the only politically viable policy tool (the least bad option) to address the despair of the Rust Belt. This tariff knob must be turned up until manufacturers return and trade balances.
Adding more bad policies (tariffs) onto other bad policies (price controls and regulations) is not a sound solution to the problem you describe. Americans are about to get a stringent lesson in this.
I used to believe in free trade, but slowly changed my mind over the decades. In a perfect world, we can all applaud the Ricardian benefits of comparative advantage and free trade. However, we live in a society that has embraced minimum wage laws and a regulatory morass that goes far beyond ensuring clean air and water. So it should surprise no one that manufacturers responded rationally to these incentives and gutted the domestic manufacturing industry by moving production to China. It is equally predictable that we would run persistent trade deficits financed by fiscal deficits because the only things we now export are Treasuries. Because the root problem is political, the solution is also political, but no politician dares touch minimum wage laws, regulatory, or fiscal reform. Tariffs are the only politically viable policy tool (the least bad option) to address the despair of the Rust Belt. This tariff knob must be turned up until manufacturers return and trade balances.
Adding more bad policies (tariffs) onto other bad policies (price controls and regulations) is not a sound solution to the problem you describe. Americans are about to get a stringent lesson in this.