If some foreign country decided to give us free shoes, does that harm our economy? Would you ban them?This runs in strong accord with my basic views.
The deeper point is this: "Free markets" cannot operate without distortion when they exchange markets that are not distorted.
Our trade with China is grossly distorted, primarily because of their slave labor market. It is further distorted by the official government policy of limiting American imports. This results in an artificially imbalanced trade relationship between the American and Chinese markets. As with other aspects of human relations, the phenomenon of lowest denominator rules the day. For instance, the moment the first American shoe manufacturer went offshore to $0.50/hr labor, the rest of the American footwear industry had little choice but to follow suit, lest the lone manufacturer eat all their lunches. "Lower denominator" is a euphemism for "material advantage". It's not always wrong, but it often is. It is deleterious when the advantage is artificially brought into an environment and maintained. Without such artifice, markets such as those for Chinese labor would rapidly lose much of their cost advantages, though likely not all. But if the natural rate of the Chinese market were to rise to $10/hr in the absence of governmental threats and violence, the $18/hr American labor market suddenly looks more appealing in the grander scheme of business operations.
Therefore, a free market nation (America does not really qualify either, though we are closer to it in some respects), if it is to do business with those that are not similarly free, stands well will within good reason to undertake policies that preserve their home market from the distortions they would otherwise incur as the result of trade with deviant partner nations. The sticky wicket, of course, lies in the formulation of those policies, which are anything but trivial to establish. If you will tariff Chinese goods, by how much? By what measure does one mark-up the value of Chinese labor in the form of tariffing such that trade remains a fair representation of the free?
Protectionism is not necessarily evil. As with so many things, its value predicates upon context.
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