Let’s review, shall we, where wealth comes from.
When two people get together and decide it is in their mutual self-interest to trade, the both walk away with something of greater value than what they started with.
In other words, when you go to the store and but something you want more than the money you have, you get a little richer. The store is more than happy to give you the item for the money because they would rather have the money, and so they get a little richer.
Free trade, free markets, freedom in general, creates wealth.
See, wealth is not having a lot of stuff. Wealth is having the things you want. The only way to get the things you want is to make it for yourself, or to trade. When we are allowed to freely trade with each other, we all find our comparative advantage, the thing that we are better at more than anything else we can do. And when we all work at our comparative advantage and trade for everything else, everyone benefits the most.
With this lesson in mind, let’s review what our foreign policy should be, to maximize our profits here at home.
First, we should remove any and all trade barriers that we erect. Whether another country decides to do the same is entirely irrelevant. Any tariff we charge should cover the cost of doing the sorts of things government is wont to do in the name of security and such, such as inspecting cargo, making sure people are who they claim to be, etc…
With low or almost absent tariffs, the end result is that everyone will want to sell their stuff to the US. When they sell it, they have to bring something away of comparative value. That’s where we win. By keeping our costs (tariffs and trade barriers) low, we both profit.
Second, we should allow any and all people who want to come to our country for peaceful purposes to come and go as they please, and do whatever they want while here. If you’re like Trump, then you’re probably concerned about unemployment.
In order to dispel your fears, let’s imagine a scenario. Two countries are competing with each other. One has an open borders policy: people can come and go as they wish, and do what they like, as long as it is legal. The other country will not allow foreigners to come and go easily, nor will they allow them to work without special permission.
Question: Where would you build your company? In the first country, you can rest assured that if you need to hire someone, you can hire from any country. In the other country, you’d better make double sure that you don’t need anyone from the first country, or else you’ll be in trouble.
If you decide it’s best to build your company in the first country, then that should be your answer to unemployment. If people decide to build their companies in the US, then unemployment will drop.
It’s also important to understand the cause of unemployment. Simply put, no one is willing to work for the wages they are offered. This could be for several reasons, but usually it has to do with government setting restrictions one way or the other on who can do what and for how much. Right now, if you’re a poor black kid growing up in the projects, you are pretty much denied the chance of ever getting a job thanks to minimum wage. What businessman would think it wise to hire you at ridiculous rates that you simply aren’t worth? With no job, you can’t get experience, you can’t prove your worth, and you can never show the world you are worth more than what you are paid and you can never get practical experience. Similarly, there are people in your community who have an entrepreneurial spirit but who are denied the ability to act on it thanks to arbitrary government restrictions. They could’ve hired you, but they aren’t even in business.
Remove the barriers, unemployment disappears.
Is it any wonder that the Smoot-Hawley tariffs, combined with the new tax-and-spend-and-regulate federal government brought our economy to its knees in the late ’30s?
Remember, when two people are allowed to get together and freely trade, they both come away richer. We should be encouraging people to freely trade with each other, leaping over arbitrary obstacles, like immigration policies and trade barriers.
Trump is wrong on this. I think he knows it. I hope he is wise enough to listen to economists who will be more than happy to explain this all to him.