Story by Joseph Ford Cotto
In the American political scene of today, few would dare argue that unfettered free trade is something worth aspiring to. Untold numbers of Make America Great Again-ers and Bernie Bros would pitch a fit should someone merely theorize such a policy.
Nonetheless, a band of dedicated advocates for laissez-faire capitalism are not backing down. Far from it, in fact.
Don Watkins is one of these people. An Ayn Rand Institute fellow who, in the words of his employer, "studies inequality, Social Security reform, the welfare state and the moral foundations of capitalism", Watkins formerly wrote a column at Forbes.com. He co-authored of two books: Free Market Revolution: How Ayn Rand's Ideas Can End Big Government -- a bestseller -- and Equal is Unfair: America's Misguided FightAgainst Income Inequality. On his own, he penned Rooseveltcare: How Social Security is Sabotaging the Land of Self-Reliance.
As the title of each of book makes clear, Watkins's limited government philosophy is delivered with no holds barred. For more insight, this publication featured a review of Free Market Revolution which can be read here.
Watkins spoke with me about American trade policy, our national monetary program, and the Donald Trump presidency. Some of our conversation is included below.
Joseph Ford Cotto: Prominent economists and politicians often say that free trade will benefit America in the long run. Many Americans disagree strongly. What is your take on this situation?
Don Watkins: That’s a loaded question. It implies that the government gets to restrict your freedom whenever it decides that it will “benefit America.” The central idea of America is that the government’s job is to protect your freedom, and that you get to decide how best to pursue your own happiness—including by buying, selling, or producing goods outside of the country.
Cotto: Libertarian economic theorists tend to believe that trade deficits are of minimal importance. Do these deficits really have a great impact on America's economy?
Watkins: We need to make a clear distinction between two things that often get confused: trade deficits and government budget deficits. Government budget deficits are a problem insofar as they signify out of control government spending (and a higher tax burden in the future). And they are a problem regardless of whether the government’s debt is held by foreigners or by Americans.
But a trade deficit is something totally different. You have a trade deficit with anyone you buy stuff from and don’t sell stuff to. Now, when we think about international trade, it does get complex, but the complexity doesn’t change the essential issue. Just as voluntary trade between you and your grocer benefits both of you, even though there’s a “trade deficit,” so trade between Americans and foreigners is good for all the parties involved, even if there’s a trade deficit.
Cotto: Since it went into effect during late 1995, the North American Free Trade Agreement has formed a trilateral commerce bloc between Canada, the United States, and Mexico. From your research, has this proven to be of benefit to our country?
Watkins: What benefits our country is freedom—meaning each individuals right to act without coercive interference from others. NAFTA was a step in the direction of freedom, and although it didn’t establish perfectly free trade, it dramatically increased our standard of living and the standard of living of our neighbors in Mexico and Canada.
A huge portion of U.S. jobs and businesses depend on trade with those two countries and placing barriers in the way of free trade would destroy businesses, destroy jobs, and force us to substantially higher prices for many of the things we buy.