Thursday, June 13, 2019

Interview: William Shughart says zero "doubt exists that NAFTA has benefited" America, Canada, and Mexico

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

Story by Joseph Ford Cotto

Libertarianism has seen better days.

A few years ago, certain political forecasters claimed that the future of America's center-right belongs to libertarians. Since the 2012 presidential election, however, protectionism surged -- not only in the GOP, but among Democratic ranks as well. Now, amid the age of Donald Trump, libertarianism's once-ascendant nature seems a distant memory.

"I fear that the classical liberal/libertarian idea and ideal will be seriously tarnished by the policies and politics of the Trump Administration," Dr. Richard Ebeling, one of our time's greatest Austrian School thinkers, recently told me.

He continued: "Virtually all of Trump’s proposed policies involve a continuation or an intensification of government involvement in social and economic life. He acts as the all-knowing government central planner when he calls in business executives and tells them where to invest and what products they should make to 'create jobs.' He undermines respect for and protection of essential civil liberties when he ridicules the freedom of the press and their way of reporting on his administration’s actions and his words."

Ebeling went on to state his worry "that with the assistance of the mainstream media the Trump Administration’s anti-freedom policies will tarnish the real case for a free society and a free market. That is, people who want lower taxes and fewer regulations on business will be identified as the people who also believe in torture, discrimination against immigrants, violations of civil liberties, and the instigation of trade wars because of aggressive nationalist attitudes."

The economics, let alone social and national security aspects, of personal liberty are an intricate matter. Fortunately, Dr. William F. Shughart knows the ins and outs of this oft-misrepresented subject.

He "is Research Director and Senior Fellow at the Independent Institute, the J. Fish Smith Professor in Public Choice in the Jon M. Huntsman School of Business at Utah State University, and past President of the Southern Economic Association," the Doctor's Institute biography explains. "A former economist at the Federal Trade Commission, Professor Shughart received his Ph.D. in economics from Texas A & M University, and he has taught at George Mason University, Clemson University, University of Mississippi, and the University of Arizona.

"Professor Shughart is Editor-in-Chief of Public Choice and his books include Taxing Choice: The Predatory Politics of Fiscal Discrimination .... A contributor to numerous other books, Professor Shughart is the author of more than 100 articles for scholarly journals and his popular articles have also appeared in the Wall Street Journal, Los Angeles Times, Oklahoman, San Francisco Chronicle, Investor’s Business Daily, San Jose Mercury News, Philadelphia Inquirer, San Francisco Examiner, Kansas City Star, Pittsburgh Post-Gazette, Washington Times, Detroit Free Press, Clarion-Ledger, Vision Hispana, National Post, Providence Journal, and many other publications."

Shughart recently spoke with me about many issues relative to America's economic situation. The first half of our discussion 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? 

Dr. William F. Shughart: Free trade indeed benefits America in the long run. If we lower barriers to trade (imports) and subsidies for exports unilaterally, American consumers will enjoy lower prices and increases in economic wellbeing no matter what the rest of the world does. It’s important to remember than every producer also is a consumer, so that consumers vastly outnumber producers. Any attempt to “protect” American producers from international competition imposes losses on consumers that exceed the gains captured by producers (and their employees).

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?

Shughart: Trade deficits don’t matter at all. Moreover, goods imported into the US provide the wherewithal (dollars) that allow consumers and producers overseas to buy American goods (exports). Imagine that a border was drawn between your own home and the nearest Wal-Mart Superstore. The balance of trade between you and Wal-Mart would then be in chronic deficit. Would you be worse off? Far from it.

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? 

Shughart: No doubt exists that NAFTA has benefited all three nations overall. Sure, some sectors of the three domestic economies have been hurt, but the gains in other sectors exceed those losses by wide margins.

Cotto: One reason the American economy fails to meet standards set by its postwar halcyon era is that it produces a decreasing number of material goods. What would you say could be done to reinvigorate our manufacturing sector? 

Shughart: US businesses, both large and small, labor under tax rates that exceed those in much of the western world. Manufacturing and other sectors will prosper if tax rates are cut dramatically and the state and federal regulatory burden is lightened. A meat axe should be taken to the so-called administrative state.

Cotto: China is notorious for its currency manipulation schemes. Beyond this, however, it not only owns a tremendous amount of America's national debt, but accounts for much of our trade deficit as well. How do you suppose that the U.S. could level the playing field in the near future? 

Shughart: If the balance of trade overall is irrelevant, so, too, is the bilateral balance with any one nation, including China. Reduce our internationally uncompetitive corporate tax rate (to zero, ideally), reduce government spending and taxes, and apply scissors to regulatory red tape.