Republican leaders such as House Speaker Paul D. Ryan have explained that their core rationale in supporting Donald Trump is that only he can ensure the success of conservative, free-market ideas. The alternative, Ryan notes, is Hillary Clinton, who would simply continue Barack Obama’s policies. One wonders how Ryan will continue to justify his support now that Trump has made clear that he will run for the presidency as the most protectionist candidate since the 1920s. On the central issue of trade, Trump is in broad agreement with Bernie Sanders and significantly to the left of Obama and Clinton.
Free trade is at the heart of free markets. Adam Smith’s “The Wealth of Nations” was in large part a critique of government’s regulation, manipulation and taxation of trade, all of which, Smith argued, undermine growth and prosperity. Ryan understands this well, which is why he has voted in favor of every free-trade agreement presented to him while in Congress: with Peru, South Korea, Central America, Australia, Singapore and Chile. Ryan also aggressively supported granting the Obama administration “trade promotion authority,” so that it could complete a trade deal with Asian countries.
Trump, on the other hand, regards free trade as the cause of American decline. He has criticized virtually all of the United States’ recent trade deals. For him, China’s entry into the World Trade Organization has been “disastrous.” On these trade matters, U.S. manufacturing, and now Brexit, Trump’s positions are largely indistinguishable from Sanders’s. Yet Republicans continue to call Sanders a socialist and Trump a conservative.
The appeal of both Trump and Sanders has many politicians mouthing cliches about the deep problems with globalization. It is true that two gifted populists have been able to give voice to people’s fears about a fast-changing world. But this does not alter the truth. Their central charge is false. Free trade has not caused the hollowing out of U.S. manufacturing.
Manufacturing as a share of all U.S. jobs has been declining for 70 years, as part of a transition experienced by every advanced industrial economy. All other developed countries from Australia to Britain to Germany — which is often seen as a manufacturing powerhouse — have seen similar declines over the past several decades. Even South Korea, which has tried many kinds of protectionism, has experienced a drop in manufacturing as it has become a more advanced economy. This shift is partly a result of free trade, but serious studies show that the much larger cause is technology. One steelworker today makes five times as much steel per hour as he or she did in 1980.
Technology is transforming the global economy in ways that are not employment-friendly. At its height, Kodak, the leading image company of its day, employed more than 140,000 people, as Jaron Lanier has noted. Its equivalent today, Instagram, had a payroll of just 13 when it was bought by Facebook. That’s not because of trade with China or Mexico.
I grew up in a country — India in the 1960s and ’70s — that followed economic policies premised on the idea that free trade was disastrous and that domestic manufacturing had to be protected. Those policies of “import substitution” only ensured that India ended up with utterly inefficient, sclerotic industries that cost the taxpayers vast sums of money and kept the country poor and stagnant. The historical record is clear. Over the past 50 years, the countries that have grown the most are those that have opened themselves up to global markets.
It is not surprising that Sanders embraces the policies of failed socialist and quasi-socialist governments from decades past. Nor is it that surprising that Trump, whose views on everything are a strange mishmash of gut reactions, prejudice and emotion, finds them appealing. But it is stunning that serious conservative Republicans who are devoted to free-market ideas are backing Trump, looking the other way and crossing their fingers. The cost of doing so is now clear: Trump will transform the GOP into a protectionist, nationalist party. The logical choice for this new party’s vice president is obvious — Bernie Sanders.