Free Trade's Heavy Cost


Free trade and open markets are great ideals. These principles, over the last few centuries, but especially since World War II, have created tremendous wealth, particularly in the developing world. But free markets were made for human society, not the other way around.

Many thinkers on the right, however, have embraced a form of free-market fundamentalism that’s as ideologically brittle, entrenched, and impervious to critique as any Leftist vision of social utopia. These doctrinaire free-marketers believe that if China seeks to capture a huge industry like telecommunications through subsidies and protect their market, that will benefit us all.

“Huawei’s a great example,” says former Duke University chair of political science Mike Munger. “This is just 5G technology! How could it not be great? It benefits consumers!” According to this view, the U.S. and other Western companies should just get out of the way and find another business that Beijing does not care so much about dominating. The problem, however, is that we no longer live in a world where America is monumentally richer or has far greater technological prowess than its rivals. We no longer reliably call the shots.

This reality has been unfolding for a generation. Asian and European nations have long prioritized their export industries, helping them gain dominance in many markets, from steel and cars to semiconductors. By contrast, big American capital, bolstered by cheerleaders in the corporate media, sacrificed our nation’s communities and the personal aspirations of countless workers for the sake of greater profits.

Munger cites imported semiconductors, smartphones, and other American-branded tech as big wins for our economy. This may be true for the investors who own piles of big tech stock. The technology is also cool for consumers, if sometimes very pricey. But what did this system produce for the overall U.S. economy and the health of its workforce? Google, Microsoft, and the other oligarchic firms make virtually nothing here. Apple may be “headquartered” in Cupertino, but more than 90 percent of iPhones, iPads, and MacBooks are made in China, albeit “designed in California.” Despite their endless virtue-signaling, these corporations are indifferent to the national economy. Instead, many have become China’s ultimate cheerleaders and enablers, with venture capital firms raising billions to fund new firms in the Middle Kingdom—in other words, subsidizing the competition.

Apple epitomizes this new corporate mindset. With ever-increasing dependence on Beijing, the company is supporting Xi Jinping‘s promised “China dream” of greater wealth and technological supremacy. In 2016, Apple negotiated a $275 billion deal with China that guarantees the firm’s continued dependence on Beijing, with additional promises to share vital technology with our most important global adversary. The company also recently announced plans to source some of its chips from China. All the while, Apple continues to enable and profit from China’s ever-expanding surveillance state.

Simply put, what has benefited Apple, American investment banks, and China, mirrors a general decline in U.S. economic prowess. Our traders, publicists, and media may be world-beaters, but much of the rest of the country flounders. Between 2000 and 2007 alone, the United States hemorrhaged 3.4 million manufacturing jobs, about 20 percent of its total. It lost a further 1.5 million manufacturing jobs between 2007 and 2016. These rapid losses were unique in American history and without parallel in other major Western countries. Throughout the period between 2004 and 2017, the U.S. share of world manufacturing shrank from 15 to 10 percent, while our reliance on Chinese imports doubled, even as dependence on Japan and Germany shrank. According to the Economic Policy Institute, the trade deficit with China has cost as many as 3.7 million jobs since 2000.

Read the rest of this piece at American Mind.

Joel Kotkin is the author of The Coming of Neo-Feudalism: A Warning to the Global Middle Class. He is the Roger Hobbs Presidential Fellow in Urban Futures at Chapman University and Executive Director for Urban Reform Institute. Learn more at and follow him on Twitter @joelkotkin.

Photo: Don Shall via Flickr under CC 2.0 License.

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'doctrinaire free-marketers'

You are using a straw man. Actual free-traders do not embrace deals with state (let alone Communist) counterparties. The WTO arrangement with China was a political attempt at opening markets--unfortunately, a failed one.