Who Needs Facts, We've Got Heart-Stirring Anecdotes!

On the CNBC show Kudlow & Company today, Teamsters Union President James P. Hoffa decried the Columbian Free Trade Agreement that is currently stalled by Congress.  Following the usual protectionist playbook, he spoke of jobs "shipped overseas", and followed up his broad-based assertions with heart-moving anecdotes of specific factories that have been shuttered, like a York Peppermint Patty plant in Pennsylvania, somehow because of decreased taxation on American imports and exports.  He accused NAFTA of being an economic detriment, decried the so-called "trade deficit", and pledged to work to stop other free trade agreements in their tracks as well as renegotiating current trade pacts; in short, he advocated a return to the policies of the Herbert Hoover Administration.

Host Larry Kudlow had no wrenching stories of single mothers or unemployed workers, but did have interesting facts at his disposal — the usual recitation of the benefits of trade on the US economy:  25 million jobs created since NAFTA was passed, increases in exports and manufacturing output.  But in addition to the usual litany of free trade benefits, he had a silver bullet especially for Hoffa:  since the passage of NAFTA, trucking volume, a measure in which a Teamsters leader should be highly interested, has skyrocketed.

It is well-established and basically undisputed that exports create jobs and prosperity — exported goods are produced by American workers, shipped on American trucks, and sold overseas.  Of course, rarely is any product exclusively made in any country — "Made in America" products most likely contain components made in other countries from materials mined or produced in yet another locale — but the debate on trade doesn't involve the economic value of exports.  Rather, it is the economic impact of imports around which the debate revolves.  If exports create jobs, the protectionists claim, then it just stands to reason that imports destroy jobs.

Fortunately, this isn't the case.  If a consumer, whether an individual, family, or business, purchases an imported commodity, service, or product, it is because the purchased item was more efficiently made elsewhere.  Whether the advantage is price, quality, or some combination of both, the consumer is making the choice to purchase the imported product based on some advantage it has relative to one domestically produced.  Cheaper toys or food means more money for families to spend on a college fun, retirement, or a vacation.  Of course, there can be localized losses — cheaper steel imports can take business away from domestic steel factories; however, that increased efficiency in the steel market promotes construction, as well as potentially leading to greater innovation in the domestic steel market as a response to the competition.  But Kudlow's trucking numbers illustrate another point about imports:  if people are going to buy imported commodities and products, just like exports, they have to be shipped from the ports to the consumers.  And if families and businesses are spending less on individual items, chances are higher that they'll purchase more total items — thus more items that need to be shipped.  The head of the Teamsters Union, ostensibly worried about maintaining business for the trucking industry, should be advocating more trade, not less.

Of course, phrases like "increased productivity", "market competition", and "trucking index appreciation" don't strike the same chord as images of shuttered factories, hungry children, and dilapidated warehouses.  Who needs to bother with facts, when heart-stirring anecdotes can sway voters in an election?

 

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