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Trump is a novice protectionist

By George F. Will Opinion writer August 25, 2017

The Washington Post

Sooner or later, and the later the better, the presidents wandering attention will flit, however
briefly, to the subject of trade. So, let us try to think about the problem as he seems to: Wily
cosmopolitans beyond our borders are insinuating across our borders goods that Americans,
perhaps misled by British economist David Ricardo, persist in purchasing.

Exactly 200 years ago, Ricardo published On the Principles of Political Economy and
Taxation, explaining the doctrine of comparative advantage. Paul Samuelson, a leading 20th-
century economist, cited this doctrine when challenged to name a social-science proposition that
is both true and not obvious. British journalist Matt Ridley calls Ricardos insight a thoroughly
counterintuitive idea that takes Adam Smiths division of labour one step further. It explains
why free trade benefits every country, even relatively advanced England trading cloth for wine
from relatively undeveloped Portugal, which has a comparative advantage making that product.

Seven years after Ricardos book appeared, Thomas Babington Macaulay wrote, Free trade, one
of the greatest blessings which a government can confer on a people, is in almost every country
unpopular. It certainly is with the Trump administration, which bristles with chest-thumping
anti-cosmopolitans who are too flinty to be bamboozled by foreigners such as Ricardo and others
who deny that trade is a zero-sum game.

Foreigners, however, have their uses. After the president boasted that the Dow surpassing the
22,000 mark was evidence of Americas resurgent greatness, the Wall Street Journal rather
impertinently noted this: Boeing, whose shares have gained 50 percent this year and which
accounted for 563 of the more than 2,000 points the Dow had gained this year en route to 22,000,
makes about 60 percent of its sales overseas. Boeing has a backlog of orders for 5,705 planes, 75
percent going outside North America. For Apple, the second-biggest contributor (283 points) to
this years Dow gain at that point, foreign sales are two-thirds of its total sales. Foreign sales are
also two-thirds of the sales of McDonalds, the third-biggest contributor (239 points).

Mark Perry of the American Enterprise Institute says that in the past 20years the inflation-
adjusted value of U.S. manufacturing output has increased 40 percent even though actually,
partly because U.S. factory employment decreased 5.1 million jobs (29percent).
Manufacturings share of gross domestic product is almost unchanged since 1960. US
manufacturing output was near a record high last year at $1.91trillion, just slightly below the
2007 level of $1.92 trillion, and will likely reach a new record high later this year, Perry writes.
That record will be reached with about the same level of factory workers (fewer than
12.5 million) as in the early 1940s, when the U.S. population was about 135 million. Increased
productivity is the reason there can be quadrupled output from the same number of workers.
According to one study, 88 percent of manufacturing job losses are the result of improved
productivity, not rapacious Chinese.

But those Democrats who think government should fine-tune everything are natural
protectionists (Sen. Charles E. Schumer (N.Y.): Theyre rapacious, the Chinese) and probably
think President Trump is too fainthearted because he is not protecting Americans from
competition from Americans. This neglect might be changing, thanks to West Virginias Gov.
Jim Justice.

It was beguilingly transactional no nonsense about principles when Justice recently had his
road-to-Damascus moment. Elected as a Democrat nine months ago, Justice, a billionaire from
the coal industry, announced at a Trump rally that he had discovered that he is a Republican.
Almost simultaneously, he asked for a $4.5 billion subsidy for the coal industry: Taxpayers
everywhere should pay eastern utilities $15 for every ton of central or northern Appalachian coal
they burn. Naturally, Justice said this is necessary for national security, the hitherto neglected
menace being this:

Competition from more productive American mines and, even worse, from U.S. fracking (too
much inexpensive oil and natural gas) is endangering America by threatening the survivability
of its eastern coal fields, potentially putting the country at risk beyond belief. Suppose, Justice
says, terrorists disrupted the eastern power grid and there were no abundant supplies of eastern
coal? (He did not explain how the coal would fix the grid.) So, channeling George Orwell,
Justice says the subsidy is not a subsidy, it is a homeland security incentive.

Trump surely will make a similar claim when he proposes to tax Americans (they will pay all
tariffs) who jeopardize U.S. security by buying American refrigerators made with steel imports
that delight the United States circling enemies by putting domestic steel mills at risk. Anyone
who cannot make a similar argument against imports of Greek yogurt food security equals
national security is a novice protectionist.