In his Inaugural Address, President Donald Trump began with what seemed to be a libertarian statement, “We are transferring power from Washington, D.C. and giving it back to you, the American People.”
His agenda of cutting taxes and deregulating the economy – two topics he emphasized during his campaign but failed to mention in his address – would go a long ways toward that goal.
But then he backed away from this libertarian ideal by insisting that all of us should “buy American and hire American.” He claimed that this policy would make us great again. “Protection will lead us to prosperity and strength,” he proclaimed.
His comments reminded me of the post-World War II era, when some veterans refused to buy German cars or Japanese products. But that War is long over, and those days should be long gone. Trump himself should know better, since his companies routinely buy from foreign sources because it makes good business sense.
Donald Trump’s address reminded me of the Luddites, bands of English workers in the early 19th century who destroyed machinery, especially in cotton and woolen mills, that they believed threatened their jobs. It was the equivalent in some ways of destroying rotary telephone factories because they threatened operator jobs. True, those particular jobs were threatened, but newer, more satisfying jobs were on the horizon –like building those new machines. America will never be great again if she goes down this path of limiting trade and regulating business.
Trump’s “American First” policy could backfire. On net balance, global trade has been a boon to the United States, resulting in lower prices and better products for the American consumer, and a higher standard of living across the globe. Today 30% of the US economy comes from international trade (exports plus imports). The figure is even higher in other countries, averaging 60%. A reversal of this trend cannot be good for foreign relations and economic growth around the world. When our neighbors are struggling economically, we feel the pinch too.
Benjamin Franklin said it best: “Most of the statutes, acts, edicts, and placards of parliaments, princes and states, for regulating, directing, and restraining of trade have either political blunders or jobs obtained by artful men for private advantage under the pretense of public good. In general the more free and unrestrained commerce is, the more it flourishes. No nation was ever ruined by trade.”
Finally, what happened to the right to choose for ourselves? What happened to giving power back to the people? Government regulations in the form of price controls, minimum wage laws, or strong-arming companies into keeping their factories in the United States are clear examples of an overbearing leviathan.
In 1776, the great Adam Smith warned, “To prohibit a great people from making all that they can of every part of their own produce, or from employing their stock and industry in the way that they judge most advantageous to themselves, is a manifest violation of the most sacred rights of mankind.”
Economist Mark Skousen is the producer of FreedomFest and the editor-in-chief of the monthly investment newsletter Forecasts & Strategies. He teaches economics at Chapman University.