I see that trade has emerged as an issue in the presidential campaign. How droll. It’s an issue I’ve been following ever since the mid-1980s. We Americans seem to have these spasms of consciousness when we arouse ourselves and confront a serious issue.
What I don’t see mentioned in any of the current crop of articles or speeches is this–what is the purpose of international trade? America had a geopolitical purpose in launching the current world order by attempting to build Western Europe and Japan, and now much of the world, into a more integrated and prosperous trading system.
But since the days of Ronald Reagan and others who have promoted trade, the other goal has been to create wealth for Americans. We assumed in the early days that we would shed some lower value-added industries such as footwear and furniture but that we would be able to keep moving up the technological food chain and remain dominant in key sectors. Thus one purpose of trade has been for America to win by creating broadly distributed wealth here at home. We assumed our skills sets would keep improving and as a society we would rise faster and farther than anyone else.
That worked for a long time. But we were surprised by how fast other countries have emerged to challenge us in advanced industries. The Chinese government, for example, has just announced it is going to spend $24 billion to create a semiconductor industry to compete with ours.
What we have forgotten is that we need to create strategies to keep moving ahead and to encourage our companies to create successful global strategies that produce wealth for employees, shareholders, supplier and other constituencies. It’s ridiculous to talk about tariffs and closing our borders to trade. What we need to be focused on is winning. That means commercializing new technologies, raising the skills of our workforce, encouraging smaller companies to export and go global, getting smarter about energy, and the like. If you’re still reading and want more, I lay out all these arguments in The Next American Economy.
