Saturday, May 25, 2019

Interview: Richard Ebeling says Donald Trump has inspired "fears of a trade war with our southern neighbor"

Editor's note: This interview was originally published in March 2017.

This is the sixth of seven articles spanning my discussion with Dr. Richard Ebeling. The firstsecondthird, fourth, and fifth pieces are available. 
Story by Joseph Ford Cotto
"Soon after taking the oath of office, President Donald J. Trump signed a series of Presidential Memoranda to fulfill his promise to make America Great Again on trade and other issues," the White House's public relations arm declared shortly after Trump assumed office.
It continued: "The first executive action the President took was to permanently withdraw the United States from the Trans-Pacific Partnership, a multinational trade agreement that is not in the best interest of American workers. 
"This action ushers in a new era of U.S. trade policy in which the Trump Administration will pursue bilateral free trade opportunities with allies around the world, wherever possible, to promote American industry, protect American workers, and raise American wages. It is the policy of the Trump Administration to represent the American people and their financial well-being in all negotiations, particularly the American worker, and to create fair and economically beneficial trade deals that serve their interests."
A few days later, the Donald announced his plan to change the conditions of America's participation in the North American Free Trade Agreement, a trilateral commerce bloc which binds us with Canada and Mexico.    
“I’m deeply concerned by President Trump’s statements today reaffirming his commitment to renegotiate the North American Free Trade Agreement (NAFTA)," John McCain said shortly after. "While renegotiations could help to strengthen and modernize NAFTA to benefit American businesses and consumers, any effort to restrict or impose new barriers on our ability to trade with Mexico and Canada could jeopardize the future of this trade agreement and have serious consequences for Arizona and the country." 
McCain later added: “The free flow of trade has been the foundation of U.S. economic policy for decades, and a major factor in our prosperity and greatness. We should not have to relearn the lessons of history. Retreating from NAFTA and other international trade agreements will harm our ability to compete in today’s global economy, raise costs for consumers, threaten jobs, and undermine our relations with our closest neighbors.”
What is going on here? So many sparring perspectives on trade from such powerful people.
The Trump-McCain spat is but one theater in a battle of ideas between protectionist and laissez faire personalities. This disagreement has come not only to dominate the right, but our country's left -- think of the difference between Bernie Sanders and Hillary Clinton on economic policy.
Few people are so familiar with the limited government perspective as Dr. Richard Ebeling.
As his employer, The Citadel (South Carolina's prestigious military university -- an unlikely site for such a titan of libertarianism), tells, he "is the BB&T Distinguished Professor of Ethics and Free Enterprise Leadership .... Among the courses he offers are "Entrepreneurial Leadership and Capitalist Ethics" and "Ethical Entrepreneurship and Profit-Making."
"Dr. Ebeling is recognized as one of the leading members of the Austrian School of Economics and is the author of Austrian Economics and Public Policy: Restoring Freedom and Prosperity (Future of Freedom Foundation, 2016); Monetary Central Planning and the State (Future of Freedom Foundation, 2015); as well as the author of Political Economy, Public Policy, and Monetary Economics: Ludwig von Mises and the Austrian Tradition (Routledge, 2010) and Austrian Economics and the Political Economy of Freedom (Edward Elgar, 2003)." 
Ebeling recently spoke with me about several issues concerning the American economy. Some of our conversation is included below.
Joseph Ford Cotto: The Donald Trump Administration promises many changes to federal politics. Do you believe that his economic proposals, generally speaking, will bring typical Americans higher wages?

Dr. Richard Ebeling: Donald Trump has only been in office for a short time as president of the United States. But I fear that his promises during the presidential campaign and the policies he has started to implement all point in the direction of a risky road for the average American income-earner and consumer.

His insistence on a “Wall” on the Mexican border and his insistence that Mexico will pay for it, has pushed us, already, into fears of a trade war with our southern neighbor, a neighbor who is our third largest trading partner. If such a trade war were to occur it would negatively affect the prices of the many goods imported into the United States from Mexico, raising the average Americans’ cost of living. In addition, trade is a two-way street.

If the Mexicans sell less in the United States and earn fewer dollars, this diminishes the financial ability of Mexican consumers and manufactures to buy goods from America. This would, then, threaten the profitability of many businesses and the employment of many Americans who work in the export sectors of the U.S. economy.  

Trump has promised a one trillion dollar infrastructure program. If it were to be passed by Congress, an important question would remain – how is it to be paid for?

Either taxes will have to go up, leaving less money in the pockets of American income earners, or the federal government will have to borrow more money in the financial markets, which will mean continuing deficits and growing debt; a debt that is already $20 trillion dollars, and which the Congressional Budget Office estimates will grow by at least another $10 trillion dollars over the next ten years even without such an infrastructure program.

This would all not bode well for the American people.