Does 'free trade' really work?

By Tom Snyder, Ph.D.

There's a battle raging among Republicans, conservatives, libertarians and Trump supporters over free trade and Trump's statements about imposing tariffs on China, Mexico and other countries he claims benefit unfairly from recent trade agreements.

Trump claims other countries have stolen millions of jobs from American workers because of "free trade" agreements like NAFTA and WTO, but other Republicans, conservatives and libertarians have argued that such agreements have had no deleterious effect on the American economy and actually give American consumers access to cheaper products.

Leaving aside the issue of whether Donald Trump's proposed trade policies would do anything positive or not (people disagree, and we can't really know until he gets elected president), The Culture Watch conducted an investigation by asking:

Does free trade really work? Has it really improved the American economy?

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The first thing to do is to look at American history since the founding of the United States in 1787 under the Constitution.

First off, Alexander Hamilton, with the blessing of President George Washington, our greatest president, instituted a series of laws and tariffs to protect American industry and business while lowering tariffs on the raw materials American businesspeople needed to manufacture many goods.

Hamilton had borrowed some of those laws and tariffs from Great Britain, which used them to build the British Empire.

As a result of these policies, the Industrial Revolution was born in both Britain and the United States.

When Britain increasingly started to replace its protectionist policies with "free trade" policies starting in the 1840s, America quickly overtook the British Empire, which began a precipitous economic decline that only increased with the adoption of socialist policies after World War II.

Now, many of Trump's opponents supporting "free trade" claim President Hoover's 1930 Smoot-Hawley Tariff made the Great Depression much worse. However, there's little evidence for that.

In fact, as Will Bahr writes in "The Impact of the Smoot-Hawley Tariff on the Great Depression," "The most damaging aspect of the Great Depression was the 35 percent decline in the money supply." He adds that another major factor was the disappearance of about one-third of the banks in the USA at the time. Hoover also greatly increased spending, which did nothing to ease the Depression and which were probably the thing that made the Great Depression even worse, just as President Obama's 2009 spending increases made America's recovery after the 2008 Great Recession the slowest recovery since World War II.

Bahr and others also point out that the economic boon in the 1920s before the Great Depression occurred after President Harding imposed higher tariffs in 1921 and 1922, tariffs that were bigger than the ones passed under Smoot-Hawley. These 1920s tariffs, coupled with tax and spending cuts by Harding's successor, the great Calvin Coolidge, led to the Roaring '20s.

What about the effects of NAFTA and the WTO, the two biggest "free trade" agreements passed in the last 40 years?

Well, in the first place, it must be noted that the Mises Institute, one of the biggest libertarian/conservative proponents of "free trade" in America, contends that NAFTA is not really a free trade agreement but instead is another example of big government interference in the economy. The Institute also says the Trans-Pacific Partnership has nothing to do with free trade but has everything to do with "centralizing political power."

Despite what the Mises Institute proclaims, anti-Trump critics like Ben Shapiro of the Daily Wire still say NAFTA and the WTO are free trade agreements.

So, what is the economic record of these two trade agreements, which were passed by Congress in 1994 and 1995?

Well, since NAFTA and the WTO bills were passed (and since China was allowed to join the WTO in 2001), America's economic growth has gone from 3.03 percent under President Clinton during 1995-2000, to 2.11 percent under President Bush during 2001-2008, to 1.37 percent under President Obama during 2009-2016!

At the same time, America has lost more than 5 million and perhaps even 6 million or more manufacturing jobs, with most of the job loss coming after China joined the WTO in 2001.

Also, the labor participation rate has been declining since 1997 and especially since 2001 when China entered the WTO.

Finally, median household income in the United States since 1995 has remained relatively flat, going from an inflation-adjusted $52,604 in 1995 to only $53,657 in 2014. In 2000, before China joined the WTO in 2001, it was $57,724.

So, does "free trade" really work? Apparently not!

Being able to buy cheap Chinese goods at Wal-Mart doesn't really help you and your family if you're out of work.

Tom Snyder is a professional journalist and political commentator with more than 25 years of experience. He's the author of "Myth Conceptions: Joseph Campbell and the New Age" (Baker Books, 1995).