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RESOLVED: In matters of international trade,

globalization ought to be valued above protectionism.

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The Forensics File

The LD File Globalization v Protectionism

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2

Index

Topic Overview 3-11 Definitions 12-15

First Affirmative 16-20

Second Affirmative 21-25 First Negative 26-28

Second Negative 29-32

Affirmative Extensions 33-49 Globalization brings consumers abundant choices while saving them money. 33

Benefits to consumers are the most important benefit of globalization. 33

Higher prices deflate the value of paychecks and other earning. 34

Globalization helps to keep inflation low. 34

Globalization means more choices for consumers. 35

Globalization does not mean abandoning quality controls. 35 Globalization is a life line to low income families. 36

Trade barriers in other countries is no reason for us to use them too. 36

Globalization does not reduce jobs because eliminated jobs are quickly replaced. 37

Globalization does not reduce jobs because it enhances our competitive edge in our best industries. 37

Globalization does not reduce jobs because of counterbalancing economic forces. 38

Empirical evidence over decades refutes the claim that globalization reduces jobs. 38

Alternate causality, technology destroys far more jobs than does globalization. 39

Globalization lifts wages at every level of the economy. 39 The real wage standard is a flawed measure of income. 40

Since the 1990s when globalization began, the US economy has added millions more jobs than it lost. 40

The American middle class is shrinking because people are moving into the upper class. 41

Globalization cannot be blamed for cyclical downturns in the economy. 41

Globalization is not killing manufacturing jobs. Manufacturing has been thriving in the USA. 42

Globalization has led the US to lead the world in high tech manufacturing. 43

Imports from China are not a major source of competition with US manufacturing. 43

Reducing imports through protectionist policies is a nightmare for manufacturing. 44 Globalization is not a threat to national security. Protectionism is the real threat. 44

The theory that America cannot be great when most of her workers are in the service industry is simply wrong. 45

The trade deficit does not destroy jobs. 46

A decline in imports typically precedes recessions. 46

Encouraging savings is preferable to trade barriers. 47

Foreign investment benefits millions of Americans. 47

Foreign companies create some of the best jobs in the USA. 47 Foreign investment is not a threat to national sovereignty. 48

Negative Extensions 49-65 Negating is not a rejection of free trade, just the absolutist position on free trade. 49

Protectionism helped grow the USA and establish it as an independent country. 49

The USA had protectionist policies during its greatest period of industrial growth. 50

Smoot-Hawley was not responsible for The Great Depression. 50 Globalization has expanded the trade deficit. 50

Globalization is destroying American jobs. 51

Protectionism protects our freedom from foreign economic and political manipulation. 51

Globalization surrenders jobs and industry in a new trade Cold War. 52

Globalization is resulting in the lowering of wages. 52

Globalization has failed to even deliver the free trade it promises. 52

Imports are not essential to our standard of living. The benefits are exaggerated. 53

The idea that globalization opens up massive markets to US companies is a myth. 53 Globalization sacrifices the future economy for the present economy. 54

The globalization theory of free trade is a myth as most other countries are not engaging in free trade. 54

The threat of trade wars is very overblown by globalists. 55

The theory of comparative advantage is flawed. 55

Free market economics is of little use in understanding the way trade actually works. 56

Industries tend to improve when one other industry upgrades. 57

If a nation does not protect some industries, it risks going nowhere economically. 57

Free traders ignore the real distinction between the long and short term economic issues. 58 Short term focus on economic advantage is very flawed and threatens the health of the economy. 58

Underlying many free market success stories are many protectionist policies. 59

Proper use of sticks and carrots can ensure industries and economies thrive. 59

The key to move from Third to First world economies is the exact opposite of free market theories. 60

It is a myth that U.S. industries succeeded without protectionist assistance. 61

When nations lose industries, they can also lose the skills those industries support. 62

The affirmative misunderstands the role protectionism plays in supporting industries and the economy. 62 Nations must seek to develop and protect industries they believe they will have a comparative advantage in. 63

Embracing protectionism does not mean nations want to impoverish trading partners. 63

Free trade is undermining our national security. 64

Blocks 65-76

Rebuttal Overviews 77-80 Pre-Flows 81-84

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3

Topic Overview Part I: Introduction

The current topic could hardly be more perfectly timed considering the election of

Donald Trump and recent controversies over trade agreements such as The Trans-Pacific

Partnership (TPP). During the 2016 presidential campaign then candidate and now president

elect Trump promised to tear up existing trade agreements and renegotiate them to favor the

interests of the United States. Since arguably the modern era of globalization began in 1994

when then President Bill Clinton signed the North American Free Trade Agreement, many now

worry that Trump’s new approach will reverse more than three decades of expanding trade and

ever growing trade. The concern is that Trump’s new approach will represent a return to

protectionist policies of the past and even potentially spark trade wars with other nations as

nations seek to retaliate for new trade barriers placed on imports from their countries into the

United States. Of course, those who favor less globalization argue these countries already have

trade barriers of their own placed on US imports into their countries. So, this topic is likely to be

huge in the next four to eight years as a Trump administration seeks to renegotiate trade deals or

as new trade deals are negotiated. (Brexit probably helped inspire the topic as well.)

The comparative terms in the resolution are both very broad and therefore could cause

some confusion as to their precise meaning. As the context of the resolution is trade, Wikipedia

has a solid definition of economic globalization. Wikipedia defines such globalization as,

“Economic globalization comprises the globalization of production, markets, competition,

technology, and corporations and industries.[53] Current globalization trends can be largely

accounted for by developed economies integrating with less developed economies by means of

foreign direct investment, the reduction of trade barriers as well as other economic reforms, and,

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4

in many cases, immigration.”1 The key phrase for our purposes in this description is “the

reduction of trade barriers.” In other words, globalization represents an increase in free trade

between countries. The same source describes types of trade barriers as tariffs and non-tariff

barriers such as import and export licenses, quotas, subsidies (where a government helps support

a business), embargos, currency devaluation, and trade restrictions.2 So globalization represents

removing or reducing those policies in order to ensure a freer flow of products and labor across

borders. Wikipedia defines protectionism as “the economic policy of restraining trade between

states (countries) through methods such as tariffs on imported goods, restrictive quotas, and a

variety of other government regulations.”3 So the negative on this topic is defending the use of

the trade barriers listed above in order either protect some domestic industries or to perhaps

punish a bad actor nation.

The challenge on this topic comes from the fact that rarely can the status quo of a given

country be described as completely free trade or completely protectionist. The US is currently an

example of a country that leans heavily toward free and open trade. North Korea is probably the

most glaring example of a protectionist country. Most countries, including the US, use a mixture

of both free trade policies and protectionist policies. For example, the US had free trade

(NAFTA) at the same time it had an embargo with the nation of Cuba. So, questions of causality

come in to play. If a country’s economy is booming, and it has a mixture of both types of

policies, which of the two policies deserves credit for the boom? The same question arises if a

countries economy is stagnant or shrinking. Both sides of the debate provide studies and data to

1 Wikipedia contributors. "Globalization." Wikipedia, The Free Encyclopedia. Wikipedia, The Free Encyclopedia, 10 Dec. 2016. Web. 10 Dec. 2016. 2 Wikipedia contributors, 'Trade barrier', Wikipedia, The Free Encyclopedia, 9 December 2016, 08:25 UTC, <https://en.wikipedia.org/w/index.php?title=Trade_barrier&oldid=753806233> [accessed 9 December 2016] 3 Wikipedia contributors. "Protectionism." Wikipedia, The Free Encyclopedia. Wikipedia, The Free Encyclopedia, 25 Nov. 2016. Web. 25 Nov. 2016.

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support that free trade or protectionism is better for jobs, wages, consumers, prices, industry,

growth, etc. It can be difficult to sort out or identify causes. Might be time to search out

economic teachers on campus and discuss the issues with them.

Before concluding the introduction, there are two more considerations that must be

mentioned. The first is that the resolution is not specific to the USA. This could demand a

global perspective on the effects of globalization. So, to affirm or negate might require

economic analysis of free trade policies versus protectionist policies on a global scale and their

global effect. This would be pretty difficult to do in the time allotted for debate speeches. It is

likely unnecessary as the logic of the argument for and against both of the competing terms in

the resolution would apply fairly universally as they are grounded in the laws of economics.

Thus, a focus on the effect of these policies in the USA is probably sufficient in addition to more

compelling to people in the USA. The major theory that debaters must familiarize themselves

with in order to debate this topic is David Ricardo’s theory of comparative advantage. There is

not time in this file to go deeply into the theory but it is the idea that supports the affirmative side

of this topic. To sum, this theory holds, “that under free trade, an agent will produce more of and

consume less of a good for which they have a comparative advantage.”4 This matters because a

country will have an abundance of what it is good at producing and a shortage of what it is not

good at producing. So, that country must trade what it is good at producing for what it is not

good at producing and thus countries meet their needs, the economy grows more efficient, and

allegedly, everyone benefits. Even if this theory is not explicit in an AC, it is very likely to be

the underlying theory behind their evidence. It is crucial to understand this theory.

Part II: The Affirmative

4 Wikipedia contributors. "Comparative advantage." Wikipedia, The Free Encyclopedia. Wikipedia, The Free Encyclopedia, 4 Dec. 2016. Web. 4 Dec. 2016.

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On this topic, the affirmative is on the side of defending the status quo, or at least the

overriding theory of US economics for the past few decades. The affirmative is defending

freedom, non-interference, and cosmopolitanism. This is not a bad position to be in as generally

people see free trade as superior to obstructions to trade. Americans like their stuff and they like

it cheap. Americans also want to sell their products abroad to as many consumers as they can

sell them to. Of course, this is not universally true, Donald Trump did win promising to upend

this system, Brexit passed in Britain which was a win for nationalism over globalism, and there

are signs in other countries that the politicians in favor of globalization might have overreached.

Still, the affirmative gets to defend what almost seems like economic dogma, that trade is good,

that freer trade is better, and free trade is best. Even protectionists do not oversell their position

and defend continuing trade. Trump sold his brand of protectionism, if that is what it turns out to

be, not as pure protectionism just “smarter” deals for “better” trade. This matters because judges

will simply be more likely to intuit the affirmative position. The negative will need to do more

work to explain their position meaning their position will be harder to sell.

All of the cases we offer defend the value of morality because the language of the

resolution frames the question as one of morality because of the use of the word ‘ought’ in the

resolution and Merriam Webster defines ought to mean moral obligation. This is the

contextually correct meaning of ought to use because 1) we are debating values and morality is a

value 2) moral debate is inherently a debate over competing conceptions of the good or values.

Our cases vary then on the criterion level and we have four different criteria for these cases. The

first case uses the most obvious criterion for an economic topic, utilitarianism. This case uses an

excellent card that provides four reasons as to why utilitarianism is the best moral policy for

policy makers and clearly the resolution applies to policy makers. So, we think this is very good

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card. The first point in this case argues that protectionism would be equivalent to a direct tax on

American families. This would be why protectionism is bad. The second point and third points

both defend freer trade providing a litany of the benefits of free trade such as improving incomes

while ensuring high quality and environmentally friendly goods and services.

The second case we offer argues that the way to achieve the value of morality is through

the criterion of meeting our obligation to assist the poor. This case provides many reasons why

we have this obligation such as, “effects of poverty are so drastic upon the lives of those who

live in poverty. People who live in poverty are more likely to suffer from illness and inadequate

medical care. People in poverty are more likely to live in areas where they are susceptible to

crime or to turn to crime as the only option to take care of their basic needs. People who live in

poverty are often condemned to remain in poverty because they are under educated and thus do

not have the means to find their way out of poverty.” The first point in this case preempts a

common protectionist argument that globalization creates a race to the bottom (where companies

seek out cheaper and cheaper labor so the poor are exploited while first world economies

benefit.) This point argues that the race to the bottom is a myth. The second and third points in

this case work together as the former shows that protectionism drives up prices for the poor and

the latter point explains how globalization helps keep the prices low. The last point is probably

the most crucial of all as it goes to prove that globalization is reducing poverty and there seems

no more effective way of helping the poor then to help them out of it.

A few more notes on affirming (and on this topic), affirming need not mean there can be

no protectionist policies. The negative is likely to try and argue that they are pro-trade, just want

a few smart, targeted polices. No one wants to defend North Korea. Similarly, the affirmative

world would seem like it can still have some smart protectionist policies in it such as an embargo

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on a terrorist or hostile state actor. If the US traded freely with 150 countries but had

protectionist policies with 3-4 countries, clearly that would be a more globalist than protectionist

approach. So, the affirmative need not defend an extreme type of free trade (though there are

authors who defend such an approach). Other affirmative case approaches on this topic could be

increasing international cooperation, increasing the chances for peace as countries that

economically rely upon each other are less likely to attack each other, greater product diversity,

etc. The affirmative could try defending an increasing immigration case as labor is part of trade

and so such an approach could be very persuasive and bring with it human rights concerns that

are typically very compelling to judges.

Part III: The Negative

The negative is in the more difficult position on this topic (which may be as it should be

considering the negative has the longer speeches). That said, the negative is far from in an

impossible position. The negative does not have to defend full blown protectionism. The USA

has a long history of protectionist policies since its founding. “When the first Congress

convened in 1789, the very second bill it adopted was a tariff act. This act was partly just for

revenue, but it also declared that the tariff was “necessary for... the encouragement and

protection of manufactures.”5 And “Thomas Jefferson, elected President in 1800, also became a

protectionist, at least after the War of 1812, and thus he said in 1816: To be independent, for the

comforts of life, we must fabricate them ourselves. Manufacturers are now as necessary to our

independence as to our comfort.”6 With such policies in place the USA became the economic

superpower that it is today and helped support the USA through the Industrial Revolution.

5 William Shearer (author) & Ian Fletcher (Senior Economist of the Coalition for a Prosperous America), The Conservative Case Against Free Trade, CreateSpace Independent Publishing Platform, 2012 6 IBID

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Protectionism can be used, its advocates argue, to protect infant industries to ensure they can

thrive and give the USA comparative advantage in these economic areas in the future.

Protectionism can also be used to prop up essential industries. It could be argued that President

Obama’s policies of bailing out banks and the auto industry were protectionist policies as there is

foreign competition in these arenas. So, the negative can defend a so called smart and essential

protectionist policies. America, having voted Trump, does not seem as averse to such policies

and so perhaps the burden mentioned in the affirmative section was overblown.

The first negative case we offer argues that to achieve the value of morality the USA

must embrace a policy of self-interest. This is because “Under such a foreign policy,

Washington would not attempt to defend America in fits and starts, futilely trying to straddle the

two roads of self-interest and self-sacrifice, attacking one terror-sponsor today while mollifying

others the next day. Nor would it attempt to uphold self-interest as an amoral expediency… the

designers of a rational foreign policy would understand that self-interest can be successfully

defended only if it is embraced as a consistent, moral principle.”7 In fairness to the author of the

self-interest card, he is likely not a protectionist but as protectionism can be said to be in the self-

interest of the USA, his standard can still be used. The first point in this case argues that

globalizations undermines the capacity of US companies to compete. This card explains that it is

difficult for US companies to compete with the cheap labor abroad where additional costs can be

supplemented by foreign governments. The second point argues that we must embrace

protectionism to restore economic strength and independence as we should not be reliant on

foreign countries for our defense products and manufacturing industry.

7 Peter Schwartz (author), The Foreign Policy of Self-Interest: A Moral Ideal for America, p. 12, 2004

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The second negative case we offer argues that the way to achieve the value of morality is

by ensuring a respect for sovereignty. This is because “Even if we have larger goals than peace,

we are not likely to accomplish them peacefully— which means we are not likely to accomplish

them reliably—without respecting sovereignty as the general norm in international affairs.”8 So

respecting sovereignty is a moral issue because it is essential to help ensure peace. The first

point in this case then argues that free trade sacrifices American sovereignty by placing

bureaucrats in other countries in charge of implementing and regulating our economy. The last

point in this case then argues that we can use protectionism to favor the national interest. This

point argues two different ways we could implement tariffs to help regain our sovereignty and

help our economy.

One of the more interesting potential case areas for the negative would be to argue that

globalization undermines our national security. William Shearer (author) & Ian Fletcher make

this argument writing, “Free trade has also had a terrible impact on our national defense. In

World War II, if we needed to bomb somebody, we would get a bomber produced in 72 hours.

Recently, the Army needed Humvee military vehicles in Iraq. A certain Senator went to the

company in Illinois that makes them and was told that to make 8,000 or 9,000 would take two

years. Free trade strengthens the Chinese military by building up China’s economy and

expanding its access to military technology. This happens through both trade and through

purchases of American technology companies with the money China earns by that trade. Not to

mention the technology China steals outright; they do that all the time. Chinese knock-offs have

already been found in our military supply chains, and it’s only a matter of time before booby-

trapped items work their way in. Chinese-made computer equipment, especially knock-off

8 Jeremy A. Rabkin (Professor of Law at George Mason University School of Law), The Case for Sovereignty: Why the World Should Welcome American Independence, The AEI Press, 2004

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routers and firewalls, also enables the hacking of American civilian companies. China is

establishing a monopoly on strategic minerals, the so-called “rare earths” needed to make

electronic displays, electric motors, and other high-tech products. Don’t doubt for a second that

Beijing is planning all this and thinking through what they will be able to do one day.”9 This

could be a very compelling approach as it could lead to the major impacts we love so much in

this game.

We are presented by the UIL with a very timely and important topic. As the topic focuses

on economics students may at first consider it to be boring, but it really captures the zeitgeist of

the day as an understanding of these issues will help students understand global trends such as

the election of Trump, Brexit, trends in Italy and other countries in the EU, why Trump talks so

much about China, etc. True or not, many workers seem to think that globalization and free

trade is resulting in fewer jobs, less democratic control and accountability, more outsourcing, etc.

This topic captures the major ideas driving global events. It is important debaters approach the

topic with an open mind. Students would probably be wise to have a nice long talk with their

economic teachers and debate coaches to help strategize on this topic. We hope this file is

helpful in getting you started in getting ready to win a ton of rounds. Best of luck from The

Forensics Files!!

9 William Shearer (author) & Ian Fletcher (Senior Economist of the Coalition for a Prosperous America), The Conservative Case Against Free Trade, CreateSpace Independent Publishing Platform, 2012

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Definitions

RESOLVED: In matters of international trade, globalization ought to be valued above

protectionism.

International 1: of, relating to, or affecting two or more nations <international trade>

2: of, relating to, or constituting a group or association having members in

two or more nations <international movement>

3: active, known, or reaching beyond national boundaries <an

international reputation>

Source: Merriam-Webster.com

International 1. Of, relating to, or involving two or more nations: an international

commission; international affairs.

2. Extending across or transcending national boundaries: international

fame.

Source: American Heritage Dictionary of the English Language

International 1. of, concerning, or involving two or more nations or nationalities

2. established by, controlling, or legislating for several nations ⇒ an

international court, ⇒ international fishing rights

3. available for use by all nations ⇒ international waters

Source: Collins English Dictionary

International involving several countries, or existing between countries

Source: Macmillan Dictionary

Trade 1. The business of buying and selling commodities, products, or services;

commerce. See Synonyms at business.

2. A branch or kind of business: the women's clothing trade.

3. The people working in or associated with a business or industry:

writers, editors, and other members of the publishing trade.

4. The activity or volume of buying or selling: The trade in stocks was

brisk all morning.

5. An exchange of one thing for another: baseball teams making a trade of

players.

6. An occupation, especially one requiring skilled labor; craft: the building

trades.


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Trade 1. the act or an instance of buying and selling goods and services either on

the domestic (wholesale and retail) markets or on the international

(import, export, and entrepôt) markets ▶ Related adjective: mercantile

2. a personal occupation, esp a craft requiring skill

3. the people and practices of an industry, craft, or business

4. the exchange of one thing for something else


Trade the activities of buying and selling goods or services


Trade 1. the activity of buying and selling, or exchanging, goods and/or services

between people or countries:

2. business activity

Source: Cambridge Advanced Learner's Dictionary

Globalization the act or process of globalizing: the state of being globalized; especially:

the development of an increasingly integrated global economy marked

especially by free trade, free flow of capital, and the tapping of cheaper

foreign labor markets


Globalization 1. the process enabling financial and investment markets to operate

internationally, largely as a result of deregulation and improved

communications

2. the emergence since the 1980s of a single world market dominated by

multinational companies, leading to a diminishing capacity for national

governments to control their economies

3. the process by which a company, etc, expands to operate internationally


Globalization the idea that the world is developing a single economy and culture as a

result of improved technology and communications and the influence of

very large multinational corporations


Globalization 1. the increase of trade around the world, especially by large companies

producing and trading goods in many different countries:

2. a situation in which available goods and services, or social and cultural

influences, gradually become similar in all parts of the world:


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Ought 1. be morally right: indicates that somebody has a duty or obligation to do

something or that it is morally right to do something

2. be important: indicates that something is important or a good idea

3. be probable: indicates probability or expectation

4. be wished for: indicates a desire or wish.

5. should be case: indicates that something should be the case but may not be

Source: Encarta® World English Dictionary, North American Edition

Ought 1. used to indicate duty or correctness.

2. used to indicate something that is probable.

3. used to indicate a desirable or expected state.

4. used to give or ask advice

Source: Compact Oxford English Dictionary

Ought 1. used to show when it is necessary, desirable or advantageous to perform

2. the activity referred to by the following verb

Source: Cambridge International Dictionary of English

Ought 1. Used to indicate obligation or duty:

2. Used to indicate advisability or prudence:

3. Used to indicate desirability:

4. Used to indicate probability or likelihood:

Source: The American Heritage® Dictionary of the English Language, Fourth Edition

Valued held in high regard, esp in respect of merit


Valued 1 having value of a specified kind

2 held in great esteem for admirable qualities of an intrinsic nature

Source: Vocabulary.com

Valued having a value or values especially of a specified kind or number

Source: Merriam-Webster's Online Dictionary, 11th Edition

Valued useful and important


Protectionism an advocate of government economic protection for domestic producers

through restrictions on foreign competitors


Protectionism The theory or practice of shielding a country's domestic industries from

foreign competition by taxing imports.

Source: Oxford Dictionaries

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Protectionism The advocacy, system, or theory of protecting domestic producers by

impeding or limiting, as by tariffs or quotas, the importation of foreign

goods and services.


Protectionism Protectionism is the policy some countries have of helping their own

industries by putting a large tax on imported goods or by restricting

imports in some other way.


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Affirmative Cases First Affirmative

I affirm the resolution, “RESOLVED: In matters of international trade, globalization ought to be

valued above protectionism.” The value for the round is morality because the language of the





Thus, morality allows a more objective approach as it could lead to either an affirmative or

negative ballot depending on the winning moral philosophy. Hence, morality is the proper value

and any other value must be rejected which would mean rejecting a case that does not conclude

to the value of morality.

Utilitarianism is vital to any policymaking paradigm.

Kristina A., Bentley (MA in political theory from Rhodes University and completed a PhD in the Department of

Government at the University of Manchester in 2001.) “Suggesting a “Separate” Approach to Utility and Rights: Deontological Specification and Teleological Enforcement of

Human Rights, September 2000, http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.581.7674&rep=rep1&type=pdf

Firstly, utilitarianism is an impersonal doctrine leaving no room for subjective considerations

such as loyalty, personal relationships, or commitments - it assumes perfectly “free-

floating” individuals. This is of course completely inappropriate to decisions about

personal morality, as “[p]eople have, and upon reflection we think they should have, principled commitments and personal attachments of various sorts”

(Goodin, 1995: 8). However, quite the reverse may be said of the moral decisions of public officials,

and indeed individuals acting in their public capacity as citizens. Of course, in such instances these individuals are

not “free-floating” but rather have a whole raft of baggage of personal attachments, commitments, principles and prejudices. In their public capacities,

however, we think it only right and proper that they should stow that baggage as best they can

http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.581.7674&rep=rep1&type=pdf

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... [because] ... [i]t is the essence of public service as such that public servants should

serve the public at large. Public servants must not play favourites (Goodin, 1995: 9). The second

vice of utilitarianism that is transformed into a virtue at the level of public policy is that it

is “a coldly calculating doctrine” and once again while this is repugnant in personal ethical matters, the opposite 6 is true of normative matters at

the public level. This is because public officials have responsibilities (voluntarily undertaken and

which are thought to give rise to moral obligations) and those responsibilities imply that

they are obliged “not to let their hearts rule their heads” as “it is the height of

irresponsibility to proceed careless of the consequences” (Goodin, 1995: 9). This especially so

when it is considered that the consequences in such a case will impact on the whole

society which the public official has undertaken to serve. This relates to the third

criticism of utilitarianism as a consequentialist doctrine, which considers that “the effects

of an action are everything” (Goodin, 1995: 9) and that it is outcomes which ought to dictate a particular course of action. However, while

this may run counter to the personal ethics of an individual, it seems that this is the only

way in which decisions of public policy ought to be made, as public officials cannot

possibly (nor should they) take into account all of the personal ethics and beliefs of the

people affected by a particular decision. They should however, in all instances, take heed

of the possible consequences of particular course of action. Finally there is the criticism

that “there is something necessarily crass about whatever utilitarians take as their maxim

and” and consequently it is difficult for utilitarianism to take account of any “‘higher’ concerns” (Goodin, 1995: 10-11). Once again, however, while

this would “diminish private life” quite the reverse is true of the sort of considerations

relevant to public life. Public officials are obliged to inquire into the usefulness of

particular courses of action for the society taken as a whole and make their decisions

accordingly. Furthermore, “it seems transparently wrong for public officials to impose ... sacrifices upon any who refuse to undertake them voluntarily” even though

personal sacrifices are perfectly morally acceptable, and sometimes even may be morally required in so far as personal ethics are concerned (Goodin, 1995: 11).iii

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So, the criterion to achieve morality in the area of public policy is achieving the greatest good for

the greatest number. If I prove that globalization achieves the greater good then you affirm.

I contend that globalization achieves the greatest good for the greatest number.

1. Tariffs would be equivalent to a direct tax on American families.

Daniel Griswold (Director of the Center for Trade Policy Studies at the Cato Institute,) Mad About

Trade Why Main Street America Should Embrace Globalization Mad About Trade Why Main Street America Should Embrace Globalization, Cato Institute, Washington D.C.,

2009

Imposing punitive tariffs on imports from China would be a direct tax on tens of millions

of working families in America. Some members of Congress have proposed that the US. government drastically

raise tariffs on Chinese goods. Sens. Charles Schumer, a New York Democrat, and Lindsey Graham, a South Carolina Republican, offered a bill in 2005 that would have imposed

a 27.5 percent tariff on Chinese goods unless Chinese authorities allowed their currency to rise in value compared to the dollar. Sen. Byron Dorgan, a North Dakota Democrat, has

proposed revoking “normal trade relations” with China, which would expose Chinese

imports to prohibitively high tariff rates. Imposing steep tariffs on imports from China

would, of course, hurt producers and workers in China, but it would also punish millions

of American consumers through higher prices for shoes, clothing, toys, sporting goods,

bicycles, TVs, radios, stereos, and personal and laptop computers. It would disrupt supply

chains throughout East Asia, invite retaliation, and jeopardize sales and profits for

thousands of US. companies now doing business with the people of China. Sanctions of

the kind contemplated in Congress would also Violate the same set of international trade

rules that members of Congress accuse China of Violating.

This means that protectionism hurts the economy, especially families and consumers, and so we

cannot negate.

2. The benefits to consumers of globalization are real and substantial.

Daniel Griswold (Director of the Center for Trade Policy Studies at the Cato Institute,) Mad About Trade Why Main Street America Should Embrace Globalization Mad

About Trade Why Main Street America Should Embrace Globalization, Cato Institute, Washington D.C., 2009

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The consumer benefits of variety can be harder to quantify than a simple drop in price, but they are just as real. Two

economists for the National Bureau of Economic Research calculated the consumer

benefits of increased variety in a 2004 study, and the benefits add up to hundreds of

billions of dollars. Authors Christian Broda and David E. Weinstein built their study on the pioneering insight of the liberal Nobel Prize—Winning economist

and New York Times columnist Paul Krugman that consumers do not care just about the price of imports but also even subtle differences in similar products. As the NBER authors

succinctly put it, “Consumers value variety,” Which free trade delivers in abundance.11 If trade

delivers more brands While keeping prices in check, we are better off. In fact Broda and Weinstein calculate

that the global varieties available to Americans multiplied four- fold between 1972 and

2001. “Roughly half of this increase appears to have been driven by a doubling in the

number of goods and half by a doubling in the number of countries supplying each

good,” the authors found.12 Adjusting for the benefits of increased variety, they calculate that import prices actually fell

1.2 percent faster than official statistics showed. As a result, the real incomes of

American families are about 3 percent higher because of the greater variety that imports

bring.13 That’s not “a few cents”; it’s nearly $400 billion in our current economy. That

figure translates into a real gain of $1,300 per person or more than $5,000 for a family of

four just from the expanding varieties that trade has brought to the marketplace. Trade

with China has done more to expand the variety of imports we enjoy than trade with any

other country, but more on that in a moment.

This means that globalization has vast benefits for countries engaged in freer trade and so we

must affirm.

3. Globalization leads to better quality, more environmentally friendly, consumer

goods.



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A third benefit of free trade for American consumers is higher quality. Nowhere have

Americans witnessed the improved quality from trade more noticeably than in the

automobile market. When I first began to drive in the mid- 1970s, the American market

was dominated by the Big Three American automakers and their unions had grown fat and happy with their exclusive

franchise of making big and powerful cars for the world’s largest domestic car market. Imported Volkswagens and Toyotas were seen back then as rather exotic. Now it

is the boxy, unreliable, and gas-guzzling American cars of that day that seem exotic, like

four-wheeled dinosaurs destined for extinction. Three decades of oil spikes and vigorous

foreign competition have transformed the US. auto market. Today foreign-brand vehicles

account for more than half the cars and light trucks sold in the United States. Along With

the increased competition have come more moderate price increases, greater variety, and,

yes, better quality. Today’s cars are safer, better designed, more loaded with extra

features, and more fuel efficient for their class. It was Japanese automakers Who

introduced crossover utility vehicles, hybrid vehicles, and small light trucks to the

American market. According to an October 2008 poll commissioned by the Japanese Automobile Manufacturers Association, 79 percent of Americans agreed

that competition from Japanese automakers has spurred the Big Three to offer hybrid technologies and more fuel-efficient vehicles.14

This means that globalization is best because it ensures high quality choices for consumers while

protecting their environment and so we must affirm.

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Second Affirmative

I affirm the resolution, “RESOLVED: In matters of international trade, globalization ought to be









to the value of morality. All people have an obligation to aid the poor. This is because the

effects of poverty are so drastic upon the lives of those who live in poverty. People who live in

poverty are more likely to suffer from illness and inadequate medical care. People in poverty are

more likely to live in areas where they are susceptible to crime or to turn to crime as the only

option to take care of their basic needs. People who live in poverty are often condemned to

remain in poverty because they are under educated and thus do not have the means to find their

way out of poverty. Poor people are suffer from hunger and malnutrition which effects the

children of the poor the most, children who do not yet have any choice in their lives. All of this

means that poverty is a threat to the lives of all people who live in poverty and most

fundamentally, people are due their lives. Virtually all theories of justice and morality are

predicated on the idea that human life must be the cornerstone of any theory because life is

necessary for any other values to be possible. Thus, the denial of aid to the poor represents the

potential, and actual, denial of the right to life and so clearly all people have a moral duty to the

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poor. As governments are made up of people, governments cannot exempt themselves from this

duty and so the criterion for the round must be meeting our obligation to the poor.

I contend that globalization is superior to protectionism in protecting the poor.

1. The race to the bottom theory is a complete myth.


Trade Why Main Street America Should Embrace Globalization Mad About Trade Why Main Street America Should Embrace Globalization, Cato Institute, Washington D.C.,

2009

The “race to the bottom” is yet another common myth about free trade and globalization

that is refuted daily by what is actually happening in the world. If the theory were true—

that a major driver of investment decisions for American multinational companies is a

remorseless search for cheap labor and low standards abroad—then we should expect that

most outward foreign investment from the United States would flow to low-wage, low-

standard countries. The reality is quite the opposite. The large majority of US. outward

investment flows to other rich, developed, high-wage, high-standard countries. In the

half decade from 2003 through 2007, of the $45 billion in manufacturing investment that

US. companies sent abroad on average each year, 71 percent flowed to the rich, high-

standard economies of Europe, Canada, Japan, Australia, and New Zealand. If we include

the upper-middle-income economies of Hong Kong, Israel, Singapore, South Korea, and

Taiwan, the share approaches 80 percent. The proportion of nonmanufacturing

investment flowing to other relatively wealthy countries is even higher.26 Far from racing

to the bottom, U.S. multinational companies are racing to invest in the world’s richest

and most expensive places.

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This means that free trade does not hurt the poor because corporations are after much more than

just cheap labor and so the poor are not exploited meaning there is no need for protectionist

policies and so no reason for protectionism.

2. Protectionism can increase inflation.



Raising trade barriers or devaluing the currency cannot “cure” the trade deficit because

neither would do anything to alter our nation’s underlying levels of savings and

investment. If the central bank devalued the US. dollar, the result would be to pump more

dollars into the global exchange markets. As those dollars found their way back to the

US. economy, the overall inflation level would rise. Prices for US. exports would soon

reflect higher domestic costs, offsetting the depreciation of the dollar and leaving US.

exports no more competitive than before the depreciation.

This means protectionism hurts the poor by driving up prices for the goods and services they

need to live their lives and so you cannot negate.

3. Globalization keeps prices for consumers low.



Open markets keep a lid on prices. A domestic producer who tries to raise prices runs the

risk of being undercut by a foreign competitor. An open market makes it more difficult

for domestic producers to “conspire” with one another to raise prices at the public’s

expense. As a result, the prices we pay for goods and services exposed to global

competition tend to rise more slowly or even fall compared to prices paid for goods and

services where competition is limited to the domestic or local market. Table 2.1 shows the change in prices

between 2000 and 2007 for an assortment of products and services. Price changes cover a wide spectrum, from an 81 percent fall in the (quality- adjusted) prices paid for personal

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computers and accessories to the 71 percent jump in what we pay for college tuition and fees. By comparison, the overall price index for all urban consumers during that same

period rose 24 percent.8 With a few exceptions, the unmistakable pattern is this: The prices we pay

for goods most exposed to international competition rise more slowly than overall prices,

and for many categories, the prices actually fall. Meanwhile, the prices we pay for goods

and services that are insulated from global competition tend to rise faster than inflation.

Among the goods globally traded are consumer electronics, toys, clothing, shoes,

household goods, and new cars. Those are the same sorts of goods that have gone up the

least or even fallen in price. This trend is no coincidence. Among the goods and services

least likely to be traded across borders are college tuition, medical care, electric utilities,

cable TV, admission to sporting events, and auto repair. Again, it is no coincidence that those services also lead the list of

steepest price increases. Many of those services are not “protected” by government-imposed trade barriers but rather by the nature of the service, yet the result is the same: less

domestic competition and a greater ability on the part of producers to saddle consumers with higher prices.

This means globalization helps the poor by keeping the prices for the goods and services they

require to live low and affordable and so you can affirm.

4. Globalization is making Americans wealthier, decreasing poverty.



Globalization has helped to boost the net worth of American households in two main

ways: first, by raising household income above what it would be without expanded trade,

and second, by enlarging opportunities to tap into global capital markets directly and

indirectly. As we Will see in more detail in chapter 6, outward foreign investment has boosted returns for US.

companies that invest abroad as well as individual and institutional US. investors who

have added foreign holdings to their portfolios. Inward foreign investment has created

well-paying jobs for American workers while increasing demand for real estate, business,

and financial assets held by American households. The lower interest rates delivered by

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the inflow of foreign capital have boosted asset prices for Americans while lowering their

borrowing costs and debt service payments.

This means that globalization literally decreases the number of people suffering in poverty and

so we must affirm to truly lift the burden of the poor.

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Negative Cases First Negative

I negate the resolution, “RESOLVED: In matters of international trade, globalization ought to be










The US must embrace an all-encompassing foreign policy of self-interest.

Peter Schwartz (author), The Foreign Policy of Self-Interest: A Moral Ideal for America, p. 12, 2004

But there is an alternative to this self-inflicted impotence: a foreign policy based on self-interest. This is a foreign policy that views the

protection of Americans against international threats as its all-encompassing goal. The advocates of such a

policy would reject any duty to sacrifice the wealth and the lives of Americans to the needs of other

nations. And they would not seek the approval of other countries before deciding to use force to

guard America's interests. Under such a foreign policy, Washington would not attempt to

defend America in fits and starts, futilely trying to straddle the two roads of self-interest and self-

sacrifice, attacking one terror-sponsor today while mollifying others the next day. Nor would it

attempt to uphold self-interest as an amoral expediency—as advocated by the impractical pragmatists and their school of realpolitik. Rather, the

designers of a rational foreign policy would understand that self-interest can be successfully defended only

if it is embraced as a consistent, moral principle—a principle in keeping with America's founding values.

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So the criterion for achieving a moral foreign policy is one that advances the interest of the US as this best

advances the lives and interests of the citizens the US government is responsible for protecting. Thus if I prove

affirming undermines the interests of the US you can affirm because selling arms to insurgents is not in the interest

of the US.

I contend protectionism is essential to secure the interests of the United States.

1. Globalization undermines the capacity of US companies to compete.

William Shearer (author) & Ian Fletcher (Senior Economist of the Coalition for a Prosperous

America), The Conservative Case Against Free Trade, CreateSpace Independent Publishing Platform, 2012

Of course, things didn’t stop with NAFTA. Now we are in the World Trade Organization. So we have unconstitutionally transferred control over tariffs, which originally lay with

Congress and which we then gave to the State Department, to an international bureaucracy which has no interest in the working people, small businessmen, and industries of

America. How can we survive free trade when there is such a great difference between the

wages which we pay, and the fringe benefits we add, and those that are paid in foreign

countries? And if you think Mexico’s rates are bad, you should see China’s, or some of

those in other countries. And then we tax our businesses to provide all kinds of

environmental protection and cleanup. Do you think those foreign countries do that?

Then our producers are expected to compete with two-bit an hour labor in China without

any tariff to compensate. Wal-Mart stores, and others like them, are absolutely full of

Chinese junk today, and other foreign-produced goods, and everybody buys them because they are

cheaper. And, of course, what happens is that our own industries and workers go begging. This all doesn’t

happen by accident. Foreign governments subsidize their exports. And they game the

system like crazy: the Congressional Research Service once identified 751 different types

of barriers to American exports worldwide. America’s trade deficit is running now pretty

close to $50 billion a month. Every dollar of that is a dollar we have to borrow from some foreign nation, or a dollar of our existing assets—our

national wealth—that we must sell off. The chart below tells that story clearly enough. And it’s no accident that stimulus after stimulus won’t revive our economy when so much

demand leaks abroad via imports, rather than being recycled in our own economy.

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This means that globalization can undermine our national interests and so we cannot affirm.

2. We must embrace protectionism to restore economic strength and independence.

William Shearer (author) & Ian Fletcher (Senior Economist of the Coalition for a Prosperous America), The Conservative Case Against Free Trade,

CreateSpace Independent Publishing Platform, 2012

If this country is to avoid being dragged into some wretched socialist quagmire by economic decline, free trade must be replaced by some

form of thoughtful protectionism as soon as possible. And the longer we wait, the more

damage we will eventually have to undo. What do we need? We need to be a truly

independent nation again, much closer to being self-sufficient, and above all, master of

our own economic fate again. We need be able to provide for our own national defense,

and we need to restore our manufacturing base. We need to restore high wages to the

working people of this country. Free trade is neither a conservative idea nor good policy. It is a neo-conservative, globalist idea and it is

bad policy. It is the fantasy economics of people who do not really care whether the United

States succeeds.

This means that protectionism can be in the interest of the US and so we must negate.

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Second Negative

I negate the resolution, “RESOLVED: In matters of international trade, globalization ought to be










Respecting and ensuring sovereignty is still our best hope for international peace

which is a moral duty to protect lives.

Jeremy A. Rabkin (Professor of Law at George Mason University School of Law), The Case for

Sovereignty: Why the World Should Welcome American Independence, The AEI Press, 2004

Sovereignty offers its own answer: A sovereign state has the full right to respond to

aggression with countering force. A smaller state might need allies to back up its resistance (or its threat to resist aggression). It might even seek

assistance from other states with which it had no previous treaty but which had reasons of their own to fear the success of the apparent aggressor—even if there were not

complete agreement as to which side actually was the aggressor. It is, to say the least, not obvious that international

bodies with no forces of their own can constrain aggression. Are potential aggressors

more likely to be deterred—or more likely to be resisted—if their intended tar- gets can

act promptly and decisively to repel any threat. or if they must first gain the endorsement

of all other states in the world before attempt- ing a response? To believe that international organization can

substitute for sovereignty, one must believe that international organizations can respond as promptly and reliably as sovereign states. It is, to say the least, a belief that cannot draw

much support from past experience. It is even more questionable whether extending purported international obligations into more and more areas is a reliable way of inducing

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dissident states to go along. To judge. for example, by the actual practice of European governments (in contrast to their intemationalist rhetoric), it is prudent to not insist on

China’s compliance with international human rights standards. Even the United States has sought little more than to promote a “discussion” of China‘s human rights practices in

international forums. Such reticence still has an obvious point. In the early 19905, Samuel Huntington warned that the conflicts of states were giving way to “a clash of

civilizations.”21 Huntington’s assumption that Western Europe and the United States shared a common “Western civilixation” now seems rather optimistic, as it would have

seemed to most American statesmen until after the Second World War.22 His notion that Japan and India each rep- resented a disrinct “civilization” also seems rather superfluous,

when these “civilizations” already correspond to the borders of sovereign States. But no one doubts that the Islamic world is agitated by claims to reawaken a transnational loyalty.

Perhaps there may be threatening counterparts to this phenomenon in the future. Do we improve prospects for peace and stability in the world by insisting that a whole laundry list

of policy claims that contemporary Europeans identify with “human rights” or “environmental security” are now universal claims which all states must honor? If peace

is our priority, we would serve that priority more effectively by focusing on the particular

states that threaten peace, and the particular practices of these states that are most

threatening—such as their sponsor- ship of international terrorism and their attempts to

acquire weapons of mass destruction. It is entirely consistent with sovereignty for one

state to pressure another in the name of security It is not obvious that there is any better

hope, even today, of preserving conditions of peace. Even if we have larger goals than

peace, we are not likely to accomplish them peacefully— which means we are not likely

to accomplish them reliably—without respecting sovereignty as the general norm in

international affairs.

So, the criterion for the round must be ensuring US sovereignty as this sovereignty is our best

hope for instilling and ensuring peace.

1. Free trade sacrifices American sovereignty.



Free-trade agreements are terrible for American sovereignty. They sign away democratic

control over our health, safety, labor law, fiscal policy, financial stability, national

security, environmental policy and other things to foreign judges. What’s the point of

even having a democracy if somebody can just overrule whatever we decide to do?

Especially when that somebody, in large part, represents foreign interests hostile to the

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U.S.? These agreements are administered by distant and unaccountable bureaucrats. (In the

WTO’s case, in Geneva, Switzerland.) They operate largely in secret, with no accountability. And yet their rulings are deemed to be treaty law, which American courts are required

to enforce, and place above domestic laws, under Article VI, Clause 2 of the Constitution. The WTO has engaged in judicial activism aimed at systematically rewriting American

trade laws for foreign benefit. As Robert Lighthizer, a former Deputy U.S. Trade Representative, told a hearing of the House Trade Subcommittee in 2007: Rogue WTO panel and

Appellate Body decisions have consistently undermined U.S. interests by inventing new legal requirements that were never agreed to by the United States....Our trading partners

have been able to obtain through litigation what they could never achieve through negotiation. The result has been a loss of sovereignty for the United States in its ability to enact

and enforce laws for the benefit of the American people and American businesses. The WTO has increasingly seen fit to sit in judgment of almost every kind of sovereign act,

including U.S. tax policy, foreign policy, environmental measures, and public morals, to name a few. WTO bureaucrats continually spew

out new rules, of ever- greater scope, designed to usher in a borderless world economy —

at least on paper. Their ultimate ambition has been described as “writing the constitution

of a single global economy.” This is a possible back door to eventual world government.

This means prioritizing globalization places US national sovereignty at risk and so threatens

peace and so we cannot affirm.

2. Tariffs can be targeted to favor the national interest.



What exact policies could we use? We have some choices here. If we applied a flat tariff—the same rate

on all imports— this would take care of the deficit, if the rate were high enough, and it

would be simple to administer. There wouldn’t be any political mischief about what the

tariff on this or that product or country would be. The other nice thing about a flat tariff

is that it would tend to bring back the kind of industries we want. For example, a 30 percent tariff wouldn’t bring

the t-shirt industry back to the US. That’s a low-wage industry whose production cost is mainly unskilled labor. But it would tend to relocate the capital-intensive high-tech

industries, where unskilled labor isn’t such a big factor. These are the industries with a future and the ones that can support middle-class wages. Of course, the rub with a flat tariff

is that it would force us to treat all nations alike. So we’d have to treat relatively honest players like Canada the same as outright bandits like China. This could cause political

headaches and cut back too much of our trade with the honest players. So maybe we need a tariff varying by country. We

could do that. It’s a bit more political effort, but it’s doable. There just needs to be a

consensus in the US. government to set trade policy in the national interest again. You’d be

surprised what government can do when the special interests that pull its strings really want it done. The exact level at which to set the

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tariff is an open question. Thirty percent was used as an example above because it is in

the historic range of U.S. tariffs.

This means a policy of targeted protectionism can help ensure and restore American sovereignty

and so we must negate.

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Affirmative Extensions

Globalization brings consumers abundant choices while saving them money.

Daniel Griswold (Director of the Center for Trade Policy Studies at the Cato Institute,) Mad

About Trade Why Main Street America Should Embrace Globalization Mad About Trade Why

Main Street America Should Embrace Globalization, Cato Institute, Washington D.C., 2009

Free trade is the American consumer’s best friend. Whereas trade barriers limit competition, free

trade keeps producers honest by forcing them to work hard to offer consumers more and better

products at lower prices. Millions of American families benefit from free trade every day. We

benefit whenever we buy a cart of groceries, a new shirt, a TV, or a car. The receipt doesn’t say,

“You have saved $30 (or $300 or $3,000) because of import competition,” but the sayings add up

to hundreds of billions of dollars every year for American households. Most Americans believe

in competition. We are better off when a dozen restaurants and half a dozen auto repair shops

compete for our business instead of only one or two. By expanding the number of producers

selling goods and services in the domestic market, trade safeguards and intensifies competition.

The result is lower prices, more variety, and better quality for tradable products. We should think

of trade as the market’s trust buster. In a recent annual report for the Dallas Federal Reserve

Bank, Michael Cox and Richard Alm wrote, “Globalization erodes market power. Natural

monopolies that might rise in national economies— airlines, electricity, or telephone service, for

example—don’t exist on a global scale.”1

Benefits to consumers are the most important benefit of globalization.




Consumer benefits are the most important and yet least appreciated payoff of trade. One reason is

that the benefits are largely invisible. They are diffused throughout the economy in millions of daily

transactions that are small and often hidden but collectively deliver a huge boost to our standard of

living. Producers pinched by trade often join together, hire lobbyists, and buy advertisements to get

the attention of Congress. Consumers are simply too numerous to organize and generally unaware of

the stake they have in defending an open and competitive market. The other reason why the

consumer benefits of trade are too often dismissed is that “consumption” has a bad reputation. There

is something ignoble, even grubby, about wanting more and wanting it “cheap.” We liken

consumption to acquisitiveness and greed. Consumption in the minds of many means four cars in the

driveway, a triple-decker cheeseburger, and a 52-inch flat screen TV bought with a credit card at 18

percent annual interest. Consumption can be abused, but it is also life itself. Without consumption,

we would all be starving, naked, homeless, and quickly dead. Consumption is the proper end of all

economic activity. We do not start a business or show up at work every day just to be there but

because we seek to be rewarded in a tangible way. And the paychecks or profits we earn do us no

good unless we can translate them into goods and services with real value—a place to live, a car,

clothes, food, that big-screen TV, tuition for the kids, a donation to church or charity. Production

divorced from consumption is akin to slavery. The founder of modern economics, Adam Smith,

understood clearly that the argument for free trade begins with the consumer. As he wrote in his 1776

book, An Inquiry into the Nature and Causes of the Wealth of Nations:

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Higher prices deflate the value of paychecks and other earning.




Higher prices we that we can buy less with our paychecks and other earnings. A higher

consumer price index translates into lower real wages, compensation, and household incomes.

Erecting barriers to trade may “protect” certain industries and their workers, but they rob

workers in every other sector by diminishing the value of what they earn. Some of the tradable

items in the table do face trade barriers, but the tariffs our government imposes on shoes,

clothing, tableware, and musical instruments have not stifled trade completely but only slowed

its growth. Without tariffs, prices would have fallen even further, to the benefit of American

consumers. And prices have also gone up, sometimes sharply, for such freely tradable

commodities as fruits and vegetables and crude oil. But commodities are more prone to natural

price swings than manufactured goods, and we can be certain that prices would have been even

higher if import competition had been curbed by artificial trade barriers.

Globalization helps to keep inflation low.




Import competition might be one reason that inflation rates are lower than in past decades. As the

late Nobel Prize— Winning economist Milton Friedman explained, inflation is ultimately caused

by the creation of too much money by the central bank, but lower trade barriers can help to

moderate price increases by breaking the power of domestic monopolies and oligopolies to

charge higher prices. As the United States and other major economies have become more

globalized in the past two decades, global inflation fell from 30 percent in the early 1990s to 4

percent by 2003. Inflation ticked up recently during the spike in oil and food prices, but it is

nowhere near where it was 15 or 30 years ago. By making workers more productive and prices

more flexible, open markets have reduced pressure on central banks to inflate the money supply.

Our expanding freedom to trade assets and currencies has given Americans more options to

shield themselves from the impacts of inflation.9

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Globalization means more choices for consumers.




Free trade delivers real benefits for American families not only through lower prices but also by

enriching the variety of products and brand names we can buy. More choices among similar

products increase our satisfaction as consumers. Instead of one-size-or one taste-fits-all, we can

choose the brand or flavor that gives us the greatest satisfaction. Consider imported beer. Even if

imports did not cause the price of a six- pack to drop, consumers are still better off if they can

choose among not only Miller High Life, Old Milwaukee, and Coors but also Heineken, St. Pauli

Girl, and Newcastle Brown Ale. Increased variety can have the same effect on our well-being as

a drop in prices. Free trade means we can buy fresh-cut flowers from Colombia in the middle of

winter along with fresh fruit from Chile and fresh vegetables from Mexico. Free trade means we

are more likely to find the style and size of shirt we want on the shelves at the department store.

A more sophisticated global supply chain has allowed such retailers as J .C. Penney to cut the

time it takes for a junior fashion design to go from concept to the store from 70 weeks a decade

ago to 17 weeks today.10

Globalization does not mean abandoning quality controls.




Trade skeptics have been quick to jump on safety concerns about toys and pet food imported

from China. Those concerns are real, but they spring from breakdowns in quality control, not

from trade itself. US. regulators have every right under international law to impose exactly the

same safety and health standards on imported products as they do on products made

domestically. Poisoned pet food or toys with lead paint are just as much a safety concern

Whether they come from abroad or another state. In the past three years, Americans have been

sickened and even killed by baby spinach from California and ground beef from Nebraska

tainted by E. coli bacteria, chicken from Pennsylvania tainted with listeria, and peanut butter and

peanut products from Georgia tainted with salmonella. The regulatory challenges are no

different. Importing goods from less-developed countries need not lead to any lowering of health

and quality standards.

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Globalization is a life line to low income families.




Those cost savings enabled in part by global sourcing are even more important for low-income

families. In a 2005 study for the US. Department of Agriculture, authors Jerry Hausman and

Ephraim Leibtag found that buying groceries at a supercenter allowed upper-income families to

save the equivalent of 20 percent of their food expenditures, but for low-income families, the

savings approached 30 percent. As the authors concluded, “The spread of supercenters has the

greatest impact on poorer households and minority households. Thus, the spread of supercenters

has favorable distribution effects across the population.”25 The pro-poor impact of the big-box

retailers is one reason Why spending at W al-Marts continued to increase in the depths of the

2008-09 recession as sales plunged at other, more expensive retailers. As one major newspaper

noted in a headline, “Wal-Mart Flourishes as Economy Turns Sour.”26 Affordable, imported

staples have extended a more immediate and effective lifeline to families struggling to stay afloat

during tough economic times than any lumbering government stimulus package.

Trade barriers in other countries is no reason for us to use them too.




Adopting a pro-consumer, pro-middle-class position on trade would transform the debate in

Washington. Lowering our own trade barriers to imports would not be seen as a “concession”

we make to other countries in order to coax them to lower their barriers to our exports. Free trade

is a policy we can adopt right now to make our lives better. When other countries keep their

trade barriers higher than we keep ours, that is not evidence of “unfair trade” but of misguided

trade policies on the part of the other governments, policies that hurt our exporters, to be sure,

but that are just as damaging to the other countries" consumers and overall economies. Just

because other countries pursue trade policies that hurt the large majority of their own citizens is

not an argument for our own government to do the same to us. To insist on a “level playing

field” is to demand that our government adopt or maintain trade policies that are as misguided

and self- damaging as those of other countries. We should insist that our government adopt trade

policies that are best for most Americans, regardless of what other countries do. And that means

pursuing trade policies that spread benefits to the widest possible number of Americans,

especially the poor and middle class who have the most to gain from removing the final

remaining barriers that separate us from the global marketplace.

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37

Globalization does not reduce jobs because eliminated jobs are quickly replaced.




First, if workers, capital, and resources can shift within the domestic economy, jobs eliminated

by import competition will quickly be replaced by jobs created elsewhere. Focusing merely on

jobs lost because of imports ignores the offsetting jobs that trade and globalization create through

other channels. One channel is expanding exports as U.S. producers ramp up production to meet

demand abroad as well as at home. Trade competition also reduces costs for U.S. producers by

allowing them to buy raw materials, intermediate inputs, and capital machinery at lower, more

competitive global prices. Lower producer costs translate into higher profits, attracting more

investment and creating more employment in those sectors that benefit from open markets. Trade

also delivers lower prices on imported and import-competing consumer goods, giving

households more money to spend on domestic goods and services, stimulating further

employment gains. Globalization also means more international investment flowing into the

United States. Inward foreign direct investment creates jobs by establishing foreign-owned

production facilities in the United States, whereas inflows of financial capital create jobs by

reducing long-term interest rates, thus promoting greater investment and job creation by

domestic companies.

Globalization does not reduce jobs because it enhances our competitive edge in our best

industries.




Second, the much misunderstood reality of “comparative advantage” means that our economy

will always be globally competitive in a range of sectors. If we lose our competitive edge in one

sector or industry because of shifting technology and factor prices or the emergence of new

global competitors, the competitive edge of other sectors will be enhanced. The insight of

comparative advantage, first expounded by David Ricardo in 1817, is that a country will tend to

export what it can make more efficiently relative to what else it could produce domestically

given its own endowment of land, labor, capital, and institutions. If the United States loses its

shoe industry to lower-cost global competition, we will likely gain competitiveness and export

share in pharmaceuticals, civil aircraft, financial services, and other sectors where we are

relatively more efficient than making shoes.’ relatively more efficient than making shoes.

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38

Globalization does not reduce jobs because of counterbalancing economic forces.




Third, trade does not tend to affect the overall number of jobs because of other more powerful

and counterbalancing factors in the broader economy such as monetary policy and foreign

exchange rates. If a surge in imports did cause widespread layoffs in certain sectors, the resulting

increase in unemployment would push the Federal Reserve to tilt toward a looser monetary

policy and lower interest rates to stimulate the overall economy. Increased imports would also

have the effect of pumping more dollars into international markets, causing the dollar to

depreciate in foreign currency markets. A weaker dollar, in turn, would make US. exports more

attractive, stimulating employment in export sectors while dampening demand for imports,

offsetting initial job losses. For all those reasons, changes in trade flows have not determined the

overall level of employment in the US. economy.

Empirical evidence over decades refutes the claim that globalization reduces jobs.




Even the most cursory glance at the employment numbers during recent decades should dispel

any fear that trade and globalization threaten overall employment. Across the decades, against a

backdrop of rising levels of trade and repeated business cycles, a central truth has stood out: In

the long run, job growth in the United States tends to keep pace with growth in the labor force.

As new workers have entered the labor market, US. producers have found profitable ways of

employing them. Job growth invariably reverses during recessions, as we have painfully

witnessed during the current downturn, but then catches back up with labor-force growth during

expansions, driving the unemployment rate back down to a level consistent with “full

employment.” In the past four decades, during a time of expanding trade and globalization, the

US. workforce and total employment have each roughly doubled. As Figure 3.1 shows, total

employment has closely followed labor-force growth. Since 1970, the number of people

employed in the US. economy has increased at an average annual rate of 2.22 percent, Virtually

the same as the 2.25 percent average annual growth in the labor force.1 Despite fears of lost jobs

from trade, total employment in the US. economy during the recession year of 2008 was still 8.4

million workers higher than during the 2001 recession, 27.6 million more than during the 1991

recession, and 45.8 million more than the 1981—82 downturn.2 Nor is there any long-term,

upward trend in the unemployment rate. In fact, even counting the recession year of 2008, the

average unemployment rate during the decade of the 20005 has been 5.1 percent. That rate

compares to an average jobless rate of 5.8 percent in the go-go 1990s and 7.3 percent in the

1980s (see Figure 3.2). After decades of demographic upheaval, technological transformations,

rising levels of trade, and recessions and recoveries, the U.S. economy has continued to add jobs,

and the unemployment rate shows no long-term trend upward.3 Obviously, an increasingly

globalized U.S. economy is perfectly compatible with a growing number of jobs and full

employment.

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39

Alternate causality, technology destroys far more jobs than does globalization.




Technology, not trade, accounts for most of the job turnover each year in the United States. The

introduction of the personal computer 30 years ago eliminated hundreds of thousands of jobs for

typists, secretaries, and telephone operators. Kodak, the camera company headquartered in

Rochester, N.Y., has laid off 30,000 workers since 2004—not because of unfair trade by foreign

competitors but because of the proliferation of digital cameras and plunging sales of film. Brick

and mortar record and book stores have closed their doors, not because of imports but because

online retailers such as Amazon.com and iTunes have captured an expanding share of the

market. The daily newspaper business that once supported my family has seen venerable papers

declare bankruptcy or shut down entirely as readers and advertising migrate to the Internet. The

Pew Project on Excellence in Journalism predicted in a recent report that “by the end of 2009, a

quarter of all newsroom jobs that existed in 2001 will be gone.”9

Globalization lifts wages at every level of the economy.




Critics of trade respond that our economy may have been creating jobs in our more globalized

era, but the new jobs pay less than the jobs being destroyed. The result is stagnant or falling real

wages and living standards and a shrinking middle class. The belief that most American workers

are earning less than in years past rests on a faulty understanding of how trade affects the

economy and living standards and a misinterpretation of recent wage and income data. Greater

freedom to trade, in practice as well as in theory, has helped to lift the wages and incomes of

most Americans to levels above what they would be had markets remained less open. Contrary to

the common tale, expanding levels of trade in recent decades have been accompanied by rising

real hourly compensation for American workers and a higher median income for households.

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40

The real wage standard is a flawed measure of income.




The average real wage is a fundamentally flawed measure of the well-being and progress of

American workers, for three reasons: First, the real wage does not include benefits. Second, it

relies on cost-of-living estimates that have tended to systematically overstate inflation in recent

decades and thus understate gains in real earnings. Third, today’s real wage is often compared to

past peaks that were deceptively high. By excluding benefits, the real wage data underplay the

real gains made by American workers. Although money wages remain a majority of total

compensation, benefits have grown as a share of the average worker’s compensation package.

Those benefits help Americans pay for medical care and retirement. More companies than in

decades past are also offering dental and eye care benefits and more generous paid leave and

matching 401(k) contributions. The average real wage numbers fail to capture those real benefits.

A more accurate measure of earnings is “real hourly compensation,” Which includes not only

wages but benefits. The BLS data on wages and benefits combined tell a more accurate and

encouraging story about the well-being of the average American worker. Since 1973, average

real hourly compensation for American workers has increased by 41 percent, and by 2 3 percent

since 1991.11 Figure 3.3 shows that real hourly compensation has not only climbed since 1973,

but its rise began to accelerate in the 1990s along with America’s growing economic openness.

The average American worker has not suffered from “stagnant” earnings in the past three

decades.

Since the 1990s when globalization began, the US economy has added millions more jobs

than it lost.




Since the beginning of the 1990s, the U.S. labor marker has in fact shed a net 3.6 million

manufacturing jobs. But that loss has been overwhelmed by the creation of 18.9 million net new

jobs in mostly service sectors where the average wage is higher than in manufacturing (see Table

3.1). Education and health services alone added 7.4 million jobs between 1991 and 2008.

Another net 7.1 million new jobs were created in the professional and business services sector,

2.4 million in construction, and 1.6 million in financial activities—all sectors where average

wages are significantly higher than in manufacturing.14 Two-thirds of the net new jobs created

in the past two decades of rapid globalization are in sectors where the average wage is higher

than in manufacturing. For every one job lost in manufacturing since 1991, our economy has

created five in better-paying service sectors, three in less well-paying sectors, and one in

government. That pattern was not just a phenomenon of the 19905. During the Bush years of

2001— 2008, two-thirds of the net new jobs were also created in sectors that paid more than

manufacturing.

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41

The American middle class is shrinking because people are moving into the upper class.




The American middle class is not disappearing but moving up. The same government numbers

that show an upward trend in median household income also show a rising share of households

moving up to the middle class and beyond. According to the Census Bureau, just under one-third

of American households earned a middle-class income of between $35,000 and $75,000 in 2007.

That share was indeed down slightly from the 35.8 percent of households that fit that definition

of middle class in 1990 (all incomes again in real, 2007 dollars) (see Figure 3.5). But if the

middle class has been shrinking, it is not because more families have been squeezed by

globalization and other pressures into lower income brackets. The share of households earning

less than $35,000 also shrank during the period, from 38.5 percent to 35.5 percent. Meanwhile,

the share of households earning $75,000 or more jumped from 25.6 percent to 32.1 percent.19

Globalization cannot be blamed for cyclical downturns in the economy.




Those who blame trade for “declining real wages” and a “shrinking middle class” are guilty at

the very least of a lack of perspective. They have confused the passing pain of a cyclical

downturn with the long-term, ongoing, upward trend in US. living standards. Trade cannot be

blamed for causing recessions. Even the best economists have not figured out how to repeal the

business cycle. Trade does, however, boost the overall productivity of the economy and

individual workers, allowing more goods and services to be produced in an average hour of

work, leading to higher real compensation per hour and a higher median household income than

if our economy were not as open to trade. In part because of expanding trade, American workers

and households emerge from each recession and recovery in a better place economically than

they would be without trade.

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42

Globalization is not killing manufacturing jobs. Manufacturing has been thriving in the

USA.




Contrary to the popular picture, US. manufacturing in the past decade has been more than

surviving in a global economy. Although the recession that took hold in 2008 has been brutal for

many US. manufacturers, as recently as 2006, American factories were producing more output,

more sales, more profit, and a higher return on investment than ever before. It’s true that certain

sectors have contracted and factories have closed in the face of global competition, dislocating

workers and impacting real lives. But other sectors of U.S. manufacturing, in fact most sectors,

have found a profitable place serving global and domestic markets. Stories of the demise of U.S.

manufacturing can be found in the popular press, on TV, and in the halls of Congress, but not

when we actually count and measure what we make. As part of its monitoring of the national

economy, the Federal Reserve Board each month estimates the volume of manufacturing

produced by U.S. factories. Volume means the actual quantity of output after adjusting for

quality changes. According to the Fed, the volume of manufacturing output in the United States

in the recession year of 2008 was still 10 percent higher than during the previous recession of

2001. Since the earlier downturn of 1991, the total volume of U.S. manufacturing output has

expanded by two-thirds, and since 1980, output has more than doubled. Although output rises

and falls with the overall economy, as we can see in Figure 4.1, the long-term trend for U.S.

manufacturing output in our more globalized world—like the trends for real hourly

compensation for workers and median income for households-continues to point upward.

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43

Globalization has led the US to lead the world in high tech manufacturing.




Despite the evidence, the myth still lingers that American manufacturing has lost its high-

technology edge. At a congressional hearing in March 2007, the chairman of the House Foreign

Affairs Subcommittee on Terrorism, Nonproliferation, and Trade, Rep. Brad Sherman (D-CA),

unleashed a broadside against the impact of trade on US. manufacturing. Quoting a newspaper

column, the chairman said “[T]he United States ‘has the export profile of a 19th- century Third

World economy.’ . . . Our chief exports are not value-added high-tech goods. They are scrap

metal, waste paper, cigarettes, rice, cotton, coal, meat, wheat, gold, soybeans, and corn.”25 Talk

about misleading. The only sense in which those commodities could be considered “our chief

exports” would be by weight or volume. But that is not how the world measures trade. No

country would trade away a ton of semiconductors for a ton of soybeans, or a container of name-

brand pharmaceuticals for a container of scrap metal. What matters is value—What others are

willing to pay—and by that measure, our chief exports are almost all high-technology

manufactured goods. By Chairman Sherman’s measure, air freight accounts for only a trivial 2

percent of global trade (by weight), but according to Frederick W. Smith, chairman and CEO of

FedEx, air freight now carries 40 percent of the value of international trade, much of it the high-

tech, high-value-added components fueling the information economy.26 In 2007, America’s top

ten exports by total value were, in descending order: semiconductors, civilian aircraft, passenger

car parts and accessories, passenger cars (new and used), industrial machines, pharmaceutical

preparations, telecommunications equipment, organic chemicals, electric apparatus, and

computer accessories (see Table 4.1). Every one of those categories, except perhaps organic

chemicals, would comfortably qualify as high-tech. None of them would typify a commodity-

exporting Third World country from the 19th century. Together, they accounted for more than a

third of total US. exports.27

Imports from China are not a major source of competition with US manufacturing.




Despite their rapid increase, imports from China have not been a major source of competition for

most major sectors of US. manufacturing. Chinese factories specialize in lower-tech, labor-

intensive goods, in contrast to the higher-tech, capital- intensive goods that are the comparative

advantage of US. manufactures. Many of the hard-hit industries, such as apparel, footwear, toys,

games, and sporting goods, have been in decline for decades, long before China became a major

source of imports. Rising imports from China have not so much replaced domestic production in

the United States as they have replaced imports that used to come from South Korea, Taiwan,

and Hong Kong. The biggest job losses in manufacturing during the 2000—2003 downturn,

when many of those 3 million jobs were lost, occurred in export-intensive industries for the

United States where imports from China are only a small presence. (Apparel was the one

exception.)30

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44

Reducing imports through protectionist policies is a nightmare for manufacturing.




The critics of trade are selling an illusion. They suppose that if imports are reduced, through

higher tariffs, a depreciated currency, or other policy tools, Americans will instead buy more

domestically produced goods and create more and better-paying jobs at home. But the reality of

the American economy is closer to the opposite. The protectionist dream is really a nightmare for

US. manufacturers. Slower growth of imports typically means slower growth in domestic output

and Vice versa. Any efforts to restrict the access of Americans to global markets—either through

higher tariffs or an artificially depreciated currency—would cripple rather than protect U.S.

industry. Indeed, for American manufacturers, imports and outputs are a package deal: The

more we prosper, the more we trade; the more we trade, the more we prosper.

Globalization is not a threat to national security. Protectionism is the real threat.




One obvious weak spot in the national defense argument against trade is that America’s

manufacturing and industrial base is not shrinking but in fact has been expanding decade in and

decade out. Our manufacturing output and capacity are greater today than 10, 20, or 30 years

ago. As we saw earlier in the chapter, America remains a formidable manufacturing force in the

world. American workers produce impressive amounts of steel, chemicals, and plastics and huge

numbers of aircraft, motor vehicles, appliances, semiconductors, and computers. With America’s

flexible internal labor and capital markets, production of items needed in wartime could ramp u

quickly. Advocates of the Buy American approach and other restrictions on trade in the name of

national security are fighting an imaginary war detached from today’s global realities. America is

unlikely to face an embargo of shipping routes between us and our major trading partners. No

Iranian, North Korean, or al-Qaeda U-boats are prowling off our shore ready to block access to

global markets. Most of our imports come from a stable and diversified list of friendly countries

such as Canada, Mexico, Japan, South Korea, Australia, and members of the European Union.

The chances are negligible that any of those countries would cut us off commercially in wartime.

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45

The theory that America cannot be great when most of her workers are in the service

industry is simply wrong.




In his 2006 book, Senator Dorgan laments that “America cannot be great if most of its workers

are in the service sector or cashiering at Wal-Mart.”54 That statement is both misleading and, on

a deeper level, simply false. It’s misleading in the way it equates the typical service job with

cashiering at a big-box retailer, when in fact—as we saw in the previous chapter—most of the

new jobs being created in the service sector pay higher wages than the manufacturing jobs being

lost. The statement is simply false because nearly four out of five American workers earn their

living in the service sector today at a time when America remains a great country. Do the

senator and those Americans who agree with him really pine for the days when more than half of

Americans worked outside the service sector? That would take us back to about 1930 when our

incomes and our standard of living were far lower than they are today. Around the world, the

nations with the lowest share of their workforce in services are invariably among the poorest, and

those with the highest share of workers in services are among the richest. Most Americans would

rather be in the latter group than in the former. Expanding trade and globalization are helping to

speed America toward a brighter post-industrial economy, and that future is nothing to fear. It

appears to be a law of human development that, as incomes rise, we spend a smaller share on

goods, such as food and manufactured products, and a higher share on services. At the same

time, we are turning to foreign producers for a larger share (although still a minority) of the

manufactured and agricultural goods we continue to purchase. This one-two effect guarantees

that manufacturing will constitute a declining share of our economic output for as long as our

economy keeps growing. And the faster-than-average productivity growth in manufacturing

means that manufacturing employment as a share of total employment will continue to fall.

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46

The trade deficit does not destroy jobs.




One of the most persistent myths about the trade deficit that it destroys jobs. Critics of trade rely

on a simplistic formula that assumes that imports invariably displace US. jobs and that only

exports create jobs, and therefore a trade deficit by definition Will cause a net loss of

employment. A union- backed organization in Washington called the Economic Policy Institute

has raised this line of analysis to an art. It routinely publishes studies that supposedly show that

our bilateral trade deficits with China, Mexico, and other trading partners have put millions of

Americans out of work. Typical was an October 2007 report with the headline-grabbing title,

“Costly Trade with China: Millions of US. jobs displaced with net job loss in every state."9 A

major flaw of such studies is that they ignore the other channels through which trade and

globalization create economic activity and employment opportunities in the US. economy. They

focus on one column of our international accounts while ignoring the other. Foreign capital

flowing into the United States—the flip side of the trade deficit—creates jobs through direct

investment in US. companies and indirectly by lowering interest rates, which stimulates more

domestic investment. Meanwhile, imports allow U.S. employers to expand production and

consumers to shift their cost savings to buy other goods and services. Even when trade does

displace workers, in a flexible and growing economy, new jobs will be created elsewhere.

A decline in imports typically precedes recessions.




Americans should be wary that the critics of trade might actually get their wish. According to

their story line, we could create millions of new middle-class jobs if only we could find a way to

reduce the inflow of imports. Yet whenever imports really do decline, the news is bad for

American workers. In a 2007 study for the Progressive Policy Institute, author Doug Karmin

found that, “Since 1960, imports have decreased in value only five times—in 1961, 1975, 1982,

1991, and 2001. These years happen to mark the last five major US. recessions —periods when

the economy slowed and unemployment rose.”11 The year 2009 is on course to join that dubious

list. During the economic expansion of the 19905, the Clinton administration’s Council of

Economic Advisers explained that “the trade balance is a deceptive indicator of the Nation’s

economic performance and of the benefit that the United States derives from trade.”12 The state

of the economy exerts a strong influence on demand for imports, the council noted, causing the

trade deficit to increase when the US. economy is growing rapidly and to diminish when the

economy is weak. “An increasing trade deficit is therefore usually the result of a strong

economy, not the cause of a weak one.”13

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47

Encouraging savings is preferable to trade barriers.




If our politicians are determined to do something about the trade deficit, the most constructive

step they could take would be to promote a higher level of national savings. More domestic

savings would reduce the need for foreign funds to finance domestic investment. A larger pool of

domestic savings would cause domestic interest rates to fall, which would make U.S. interest-

bearing assets less attractive to foreign investors, reducing foreign demand for dollars and

causing the dollar to depreciate in the foreign exchange markets. A weaker dollar, in turn, would

make US. exports more competitive and imports less so—shrinking the trade deficit without

resorting to an artificially debased US. dollar, higher trade barriers, or wacky import licensing

schemes.

Foreign investment benefits millions of Americans.




Foreign investment, like trade in goods and services, has brought broad benefits to millions of

Americans—in two fundamental ways. When foreigners invest in the United States, the inflow of

portfolio capital benefits the large majority of Americans with lower interest rates, whereas FDI

injects new competition into the consumer market and creates better- paying jobs by upgrading

our factories and machinery and introducing new technology and ways of doing business. And

when Americans invest abroad, we earn higher returns on our savings, we diversify our

investment portfolio to safeguard the future, and we reach new customers with American-brand

goods and services.

Foreign companies create some of the best jobs in the USA.




Americans who work for foreign-owned affiliates typically have some of the best jobs available.

On average, they earn $63,400 a year compared to the US. average of $48,200.10 And the main

reason why those affiliates pay so well is that they are among the most globally connected,

productive, and innovative enterprises in America. Foreign-owned affiliates account for 19

percent of total US. exports and 26 percent of imports. Together, they spent $34 billion on R&D

in 2006. As the Commerce Department noted, “U.S. affiliates accounted for 14 percent of the

total R&D performed by all US. business, a share notably higher than the affiliate share of US.

private industry value added or employment.”11 Three-quarters of the foreign-affiliate R&D was

concentrated in manufacturing, especially chemicals, motor vehicles, and pharmaceuticals.

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48

Foreign investment is not a threat to national sovereignty.




One, despite the rapid growth of foreign investment in the United States, it remains modest

compared to the total value of US. assets. At the end of the second quarter of 2008, the combined

assets of households, nonprofits, and businesses in the United States was still a whopping $110

trillion.14 Foreign investment is less than 20 percent of that total, and foreign investment

directed by central banks and other foreign government agencies is only 3 percent. Foreign

investment is too diversified to give any one investor much leverage. The central bank of China

is the single biggest foreign holder of US. Treasury bills, with nearly $600 billion in its portfolio

in 2008. But even those holdings represent only about 15 percent of the federal government’s

outstanding public debt and a tiny fraction of total U.S.-based assets. And when one foreign

holder of US. assets sells, another foreign investor may be ready to buy. Two, even if an outside

investor such as the government of China could disrupt the US. economy by dumping US.

Treasury bills, it would not be in the Chinese government’s own interest to do so. An economic

downturn in the United States, such as the one that hit the US. economy full force in 2008, also

exacts a toll on our commercial partners. Countries such as China see their exports to the US.

market slump along with the dollar value of their remaining US. assets. Investment in the United

States gives foreigners a stake in America’s prosperity. Three, SWFs are still a small and

unremarkable slice of global investment. These funds are often established by countries that have

accumulated large foreign currency reserves, such as the oil-exporting countries of the Middle

East. The funds seek higher returns by diversifying out of more conservative government bonds

and into stock funds and real estate. According to testimony in February 2008 by then- Treasury

Undersecretary David McCormick, the 40 SWFs in the world control $3 trillion in assets,

compared to the $190 trillion stock of global financial assets and $62 trillion managed by private

institutional investors.15 SWFs do operate under different rules than private funds: They do not

typically pay domestic taxes, and they can forgo profits for the sake of national objectives. But

SWFs so far have not behaved much differently from other actors in global capital markets.

Their managers want solid returns at low risk. At a time when our domestic credit markets are

reluctant to lend, we should welcome foreign savers who want to put their money to work in

America.

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49

Negative Extensions

Negating is not a rejection of free trade, just the absolutist position on free trade.


America), The Conservative Case Against Free Trade, CreateSpace Independent Publishing

Platform, 2012

Protectionism, and economic nationalism more generally, are usually held up by the supposed

sophisticates today as dumb ideas. Sometimes, of course, they are. Bone-headed protectionism

belongs in the junkyard of history with all the other ideologies rusting there. Nothing in this booklet

is intended to defend it. But it can also be a smart, productive, pro-growth policy—and very much in

the American and conservative traditions—When implemented correctly. The fundamental message

of this booklet is that nations, including the U.S., should seek strategic, not unconditional integration

with the rest of the world economy. Economic openness, like most things in life, is valuable up to a

point—but not beyond it. The Founding Fathers knew that, and wrote our Constitution to reflect it.

Fairly open trade, most of the time, is justified. Absolutely free trade, 100 percent of the time, is an

extremist position and is not. It is not a conservative, but a libertarian and globalist, policy. Don’t

misunderstand: it’s not trade per se that’s the problem. But trade, and free trade, are not the same

thing. Remember that when somebody tries to tell you how wonderful free trade is: they’re probably

just giving arguments in favor of trade. Nobody on the protectionist is suggesting we become North

Korea, but there are very serious reasons why free trade is not sound economics, and the longer

America clings to the free-trade delusion, the higher the price we will pay. Indeed, abandoning it is

almost certainly a necessary, if not sufficient, condition for revitalizing our economy.

Protectionism helped grow the USA and establish it as an independent country.



Platform, 2012

Hamilton set forth his case in his Report on Manufactures, submitted to Congress in 1791. His

policies were not all adopted right away: it took the War of 1812, which created a surge of anti-

British feeling, disrupted normal trade, and drastically increased the government’s need for revenue,

to push America firmly into the protectionist camp. Nonetheless, his points were well taken at the

time. Thus George Washington, in his first Address to Congress, said: A free people... should

promote such manufactories as tend to render them independent of others for essential, particularly

military, supplies. When the first Congress convened in 1789, the very second bill it adopted was a

tariff act. This act was partly just for revenue, but it also declared that the tariff was “necessary for...

the encouragement and protection of manufactures.” The legitimacy of a tariff, aka “duties,” was

explicitly written into the Constitution—Article 1, Section 8 of which reads: The Congress shall

have power to lay and collect taxes, duties, imposts and excises. It was the intention of the Founders

that taxation not go very much beyond that, for Article 1, Section 9 reads: No capitation, or other

direct, tax shall be laid, unless in proportion to the census or enumeration herein before directed to be

taken. So the tariff was meant to be the main peacetime source of Federal revenue. And so it was for

over 100 years, until income tax began in 1913. Thomas Jefferson, elected President in 1800, also

became a protectionist, at least after the War of 1812, and thus he said in 1816: To be independent,

for the comforts of life, we must fabricate them ourselves. Manufacturers are now as necessary to our

independence as to our comfort.

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50

The USA had protectionist policies during its greatest period of industrial growth.



Platform, 2012

The Republican Party had a sensible tariff policy the Civil War to WWII, and there exist a

plethora of statements by Republican Presidents on the subject. But consider just one— from

Calvin Coolidge, an authentic small-government conservative who presided over unprecedented

prosperity from 1923 to 1929: Our tariff enables us to pay American workmen the highest

wages in the world. Before we get carried away with any Visionary expectation of promoting the

public welfare by a general avalanche of cheap goods from foreign sources, imported under a

system, which, whatever it may be called, is in reality free trade, it will be well first to count the

cost and realize just what such a proposal really means. I am for protection because it maintains

American standards of living and business, for agriculture, industry, and labor. That viewpoint

dominated tariff policy most of the time in the late 19th and early 20th century. This was the

golden age of American industry, when America’s economic performance surpassed the rest of

the world by the greatest margin in our history. It was the era in which the US. transformed itself

from a promising mostly agricultural backwater, pupil at the knee of European industry, into the

greatest economic power in the history of the world.

Smoot-Hawley was not responsible for The Great Depression.



Platform, 2012

Smoot-Hawley has been unjustly blamed for the Depression. But trade declined because of the

Depression itself, not because of anything it did. Two-thirds of the drop in trade during the

Depression happened before it even came into effect, and only about one-third of our imports

were even affected by it. (The rest were duty-free.) If tariff rates had caused the decline in trade,

then imports of dutiable goods should have declined more than imports of duty-free goods. But

when Smoot-Hawley went into effect in 1931, duty-free imports dropped 52 percent and dutiable

imports only 51 percent.

Globalization has expanded the trade deficit.



Platform, 2012

NAFTA was sold as something that would reduce America’s trade deficit. But in reality, our

trade balance worsened against both Canada and Mexico. For the four years worsened against

both Canada and Mexico. For the four years prior to NAFTA’s implementation in 1994, our

annual deficit with Canada averaged $8.1 billion. Twelve years later, it was up to $71 billion.

Our trade with Mexico showed a $1.6 billion surplus in 1993, but by 2010, our deficit had

reached $61.6 billion.

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51

Globalization is destroying American jobs.



Platform, 2012

Free trade is inexorably destroying our industrial base, and it is going on every day. This largely

happens behind the scenes, in thousands of plants and companies around the country, so few

people notice. “American” multinational companies don’t care. Their attitude was well put by a

spokesman for the cellular-phone equipment company Qualcomm, who said: At the end of the

day, our obligation is to make Qualcomm as successful as possible. If that means avoiding trade

barriers by building facilities in other countries, then obviously that will dictate our future

actions. Compare that statement with Jefferson’s statement about merchants noted earlier!

Protectionism protects our freedom from foreign economic and political manipulation.



Platform, 2012

Many of the largest American companies are now so dependent on their overseas operations, and

thus so Vulnerable to pressures by foreign governments, that they have become outright Trojan

horses with respect to American trade policy. As former Rep. Duncan Hunter (R-CA), for years

one of the outstanding critics of trade giveaways in Congress, puts it, “For practical purposes,

many of the multinational corporations have become Chinese corporations.” These corporations

have real power on K Street and thus on Capitol Hill. So our government is now, in effect, being

bribed by a hostile foreign power. Chinese central planning is now pulling the strings of the

American economy. Libertarians will tell you protectionism is against freedom, but in reality,

protectionism protects our economic freedom by buffering us against foreign economic

manipulation. Nevertheless, we keep giving subsidies to these “American” multinational

companies for moving production abroad. We give them tax advantages.

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52

Globalization surrenders jobs and industry in a new trade Cold War.



Platform, 2012

Make no mistake: our government knows exactly what it is doing. Clayton Yeutter, Ronald

Reagan’s U.S. Trade Representative, once openly said, “American industries that cannot

compete with imports should be phased out.” Later, in 2004, the ultra-globalist President George

W. Bush sent to Congress a report prepared by economist Gregory Mankiw. It said: The

movement of American factory jobs and white- collar work to other countries is part of a positive

transformation that will enrich the U.S. economy over time... When a good or service is

produced at lower cost in another country, it makes sense to import it rather than produce it

domestically. This is a recipe for, among other things, our being relentlessly stripped of our key

industries by foreign state capitalism. Free traders act as if we are competing in a global free

market, but we are not. We are in a contest with state capitalism just as real as the one we won

against communism, except we don’t yet understand that. And free trade is unilateral surrender

in this new Cold War.

Globalization is resulting in the lowering of wages.



Platform, 2012

The myth persists that America is shifting from low-tech to high-tech employment, but we’re

not. We’re losing jobs in both and shifting to non-tradable services—which are mostly low-paid

jobs. The impact on wages in the United States has been terrible. The Census Bureau reported in

2010 that there were 46.2 million people in poverty in the United States—up 6.4 million from

2008. The jobs the economy is adding are not paying wages like the old industrial jobs used to

pay, so What we have here is poverty on the march in this country. In terms of family values,

when you have an economy like that in the United States today, where both the man and woman

have to work, one to pay the taxes and one to provide the living for the family, don’t think that

this doesn’t have an impact on family values and on the rearing of children in the home.

Globalization has failed to even deliver the free trade it promises.



Platform, 2012

However, the WTO has actually failed to deliver free trade where it might have done some good.

It does virtually nothing, for example, to get our exports through Chinese trade barriers. And it

stacks the deck against America by allowing foreign nations to use value-added tax (VAT),

which we don’t have, as a form of protectionism. In fact, thanks to the many ways governments

manipulate trade, it has been estimated that only about 15 percent of world trade is genuinely

free.

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53

Imports are not essential to our standard of living. The benefits are exaggerated.



Platform, 2012

Free trade is rife with true believers, for whom it is a “beautiful idea,” a secular religion like

Marxism once was. These people are dangerous fanatics, even if they’re really good at sounding

reasonable, even conservative sometimes. They pretend to care about America, but they don’t.

They tell us free trade has all these wonderful benefits, but the hard facts just don’t pan out.

Think back to the economy we had in 1970. Then, imports were just over five percent of GDP,

rather than the 17 percent they are now. Yet we somehow didn’t seem to need very many imports

to have the world’s highest living standard. Imports then were mainly a matter of oil, products

that don’t grow here like bananas, luxury goods like Swiss watches, and a few odds and ends like

Volkswagens. So the benefits of trade are at best a layer of icing on our economic cake, not a

fundamental basis —let alone the fundamental basis, a ridiculous claim made all the time—of

our standard of living. Above all, the U.S. has virtually nothing to gain from pushing even

further in the direction of even more free trade. Our government actually knows this perfectly

well. The U.S. International Trade Commission periodically releases a report, The Economic

Effects of Significant US. Import Restraints, which recently put the gain from eliminating all

remaining American trade barriers at just $3.7 billion dollars. This is just over two one-

hundredths of one percent of GDP—about what Americans spend on Halloween and Easter

candy every year.

The idea that globalization opens up massive markets to US companies is a myth.



Platform, 2012

Many popular arguments for free trade sound persuasive —until one looks at some real numbers.

For example: “Free trade is good for America because it means a billion Chinese ..are now

hungry consumers of American products.” But America is running a huge deficit, not a surplus,

with China. ($245 billion in 2011, about 41 percent of our total). The dream of selling to the

Chinese functions primarily as bait to lure in American companies, which are forced by China to

hand over key technological know-how as the price of entry. They then build facilities which

they discover they can only pay off by producing for export. It’s a racket and China knows it.

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54

Globalization sacrifices the future economy for the present economy.



Platform, 2012

DEINDUSTRIALIZATION BY DEFAULT Free trade is rotting away our economic base,

industry by industry. Let’s take just one example. The famous Boeing aircraft company,

America’s single largest manufacturing exporter, has been relentlessly hollowing itself out of

real manufacturing for decades. Boeing and similar companies call this “systems integration.”

This sounds sophisticated, but it doesn’t change the reality that Boeing has been morphing into a

Lego-brick assembler of European, Japanese, and increasingly Chinese components. Every few

years, there emerges an entire new industry, like hybrid cars, which has no strong American

players— “strong” meaning not dependent on repackaging imported key components or

licensing foreign technology. Over time, the industries of the future become the industries of the

present, so this is a formula for automatic economic decline. When American producers are

pushed out of foreign and domestic markets, it’s not just immediate profits that are lost.

Declining sales undermine these businesses, making them even less competitive. Less profit

means less money to plow into future technology. When an industry shrinks, it ceases to support

the complex web of skills, many of them outside the industry itself, upon which it depends.

These skills often take years to master, so they only survive if the industry and its supporting

industries, several tiers deep into the supply chain, remain in continuous operation. The same

goes for specialized suppliers. Similarly, America starts being invisibly shut out of future

industries which struggling or dying industries would have spawned.

The globalization theory of free trade is a myth as most other countries are not engaging in

free trade.



Platform, 2012

A lot of economists—not all, but a lot—Will tell you they have theories which prove that free

trade is best, and all the rest of us have to defer to them because they have the expertise. They

have doctrines, like the so-called Theory of Comparative Advantage, that supposedly prove this.

Now the first thing to remember about this is that what we have today under the name “free

trade” isn’t free trade at all. It’s free on America’s part, because our market is about 98 percent

open to the world. But in the other direction, it’s not. It’s mostly mercantilism: gaming the

system. So even if the theoretical case for free trade were valid, it wouldn’t apply to our present

circumstances. Free-trade economists will tell you this doesn’t matter, because if other nations

are dumb enough to block their trade, this doesn’t mean we should. But foreign nations are not

dumb to restrict their trade. The nations that are doing so are visibly cleaning our clock. It’s an

effective strategy for them, just like it used to be for us.

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55

The threat of trade wars is very overblown by globalists.



Platform, 2012

Some people say that a tariff would trigger a downward spiral of retaliation and counter-

retaliation with our trading partners, resulting in a collapse of global trade. But this doomsday

scenario is unlikely. Above all, our trading partners know that they are the ones with the huge

trade surpluses to lose, not us. Foreign nations would probably raise their tariffs somewhat, but

there is no reason to expect the process to get out of control. After all, the world has survived

their trade barriers long enough. It is sorely tempting to take the political difficulties as an

excuse to do nothing at all. The dangers of a special-interest takeover are not imaginary. But we

can’t afford to quail at the challenge of making the politics work, as we are competing with rivals

who have already done so. For the U.S. to concede that there exists an area of national policy this

important that our rivals can master and we cannot is a decision in favor of voluntary national

decline. And we got this stuff right before in our history, so we could do it again. The public

seems to be gradually figuring out a lot of this.

The theory of comparative advantage is flawed.

Ian Fletcher (Senior Economist of the Coalition for a Prosperous America), Free Trade Doesn't

Work: What Should Replace It and Why, 2011 Edition, CPA, 2011

Economic history contradicts free-trade economics at a number of points. For example, the all-

important theory of comparative advantage promotes specialization as the path to growth.

Supposedly, a nation’s best move is to concentrate its factors of production on the products in

which it has comparative advantage and import most everything else. (Hewing to this, the World

Bank has repeatedly advised heavily indebted Third World nations to specialize in one or two

crops or raw materials for export.) But if this theory is true, it would imply that economies

should concentrate on fewer industries as they become richer. Instead, the reverse is observed. In

reality, economies starting out from a primitive state tend to expand the range of products they

produce as they grow. They only start reconcentrating when they are well past the middle-

income stage and start building entrenched positions in a few sophisticated high value-added

industries. Narrow specialization is actually a hallmark of impoverished one-crop states, colonies

managed for the benefit of distant rulers, and accidental raw materials-based economies like the

Gulf oil producers.

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56

Free market economics is of little use in understanding the way trade actually works.



Successful nations diversify. This is an important clue that economic growth may actually be less

about comparative advantage and more about something else. Economic history, in fact, suggests

that development doesn’t come from increasing specialization, that is, from focusing ever more

on what one already produces well, but from learning to produce entirely new things. But

something new that a nation learns to produce is, by definition, not something in which it already

had comparative advantage. So Ricardian thinking is not useful here. Even if comparative

advantage applies after the fact, when a nation has mastered a new industry, it cannot tell a

nation today what new industries it should try to break into tomorrow or how. Ireland didn’t have

any comparative advantage in IT in 1970, but this industry has been a big driver of its later

growth. Same for India. There is no way this industry made sense for either nation in advance

based on Ricardo. There is an even larger lesson here: economic growth is, by definition, a

disequilibrium event, in which an old equilibrium level of output is replaced by a new and higher

level. So the economics of equilibria, which means most of free- market economics (whose

supply and demand curves intersect in equilibrium), is of little use for understanding it. That is

why the quote at the beginning of this chapter cuts so extremely deep. Among other things,

equilibrium economics cannot explain entrepreneurship, whose profits represent the value of

creatively upsetting the existing equilibrium in an industry. Equilibrium is a useful concept for

examining how things stand once the dust has settled and the economy has reached a new stable

state, but it is intrinsically weak at analyzing change. This is why, when confronted with

entrepreneurship and innovation, mainstream economics tends to quietly give up and reach for

concepts, such as the Austrian economist Joseph Schumpeter’s (1883-1950) idea of creative

destruction, that are genuinely illuminating but lie outside the formal mathematical structures of

mainstream economics. And as the logic of classic equilibrium-based economics still inescapably

leads to Ricardo, this ad hoc patching doesn’t lead mainstream economics to the right

conclusions about trade.

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57

Industries tend to improve when one other industry upgrades.



But if specialization according to comparative advantage isn’t the key to growth, what is? What

is that “something else” mentioned above? Let’s start with the common observation that real-

world economic growth often seems to involve a virtuous cycle, in which the upgrading of one

industry causes others to upgrade and so on. This has been seen time and again in nation after

nation, industry after industry. For example, as one industry becomes a more sophisticated

consumer of inputs, it may demand that its supplier industries become more sophisticated.

Conversely, it may enable its downstream industries to increase the sophistication of their

outputs. This process then ripples through the economy and repeats. Crucially, some industries

are better at starting this process (or keeping it going if it has already started) than others. And

the free market, and thus free trade, won’t optimize this process automatically. Why? Because

the value of an industry for the next step in industrial growth is often an externality, from the

point-of-view of today. We met externalities before, in dubious assumption #2 (there are no

externalities) of Chapter Five. They occur when the profits of an industry do not reflect its full

economic value. In this case, this means that the industry’ 5 present owners will not see profits

that reflect its long-term ability to help the economy upgrade or break into other industries. As a

result, the industry will remain underdeveloped, relative to its long-term value to the national

economy, and the free market will not give the optimal answer for how much of this industry the

economy should contain.

If a nation does not protect some industries, it risks going nowhere economically.



One consequence of this is that economic growth is path-dependent. To grow, an economy must

continually break into new industries. But to do this, it needs strong existing positions in the light

industries. So a national economy that doesn’t get onto the right path (and stay on it) risks being

sidelined into industries which lead nowhere in the long run. We noted this problem before in

Chapter Five: 18th- century Portugal derived no other industries from winemaking, while Britain

derived many from textiles because the construction of textile machinery spawned a machine-

tool industry that could produce innovative machinery for other industries. Similarly, electric

cars may be the wave of the future today, but without a strong position in conventional cars, a

nation is unlikely to have the know-how or supplier industries to build them. Path dependence

applies to economies at all levels of development, not just those starting to industrialize. Infant-

industry protection is, of course, one of the best- known cases for protectionism and industrial

policy. (It is often the one case grudgingly conceded even by free traders.) But it is, in fact, only

the most obvious case of the more general phenomenon of the path dependence of economic

growth. Infant industries are merely the first rungs of the ladder.

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58

Free traders ignore the real distinction between the long and short term economic issues.



Free market, free-trade economics systematically maintains the opposite of all this. It maintains

that any industry can drive an economy upwards, just so long as it enjoys comparative advantage

right now. And because free trade economics holds that free trade automatically steers an

economy into those industries where it enjoys comparative advantage, it holds that free trade will

therefore maximize economic growth '4’ For free-trade economics, there is, in fact, no important

distinction between the long and the short term: comparative advantage is always right, period.

Free-trade economics holds that it is profoundly impossible for one industry to be “better” than

another. This is the cause of an infamous (subsequently denied) c01mnent by Michael J. Boskin,

George H. W. Bush’s chairman of the Council of Economic Advisers: It doesn’t matter whether

America exports computer chips, potato chips, or poker chips! They’re all just chips! Why

would Boskin make a statement so brazenly contrary to common sense with such confidence?

Because free-trade economics holds that markets are so efficient that no industry can be special.

In its view, there can be no ladder externalities because there can be no industry externalities at

all—certainly none that are big enough and evident enough to understand and manipulate. Every

industry’ 5 profits today must accurately reflect its value in both the short and the long term.

Why? Because if any industry did have superior value for future growth, its expected

profitability today would reflect this, that superior profitability would draw new firms into the

industry, and the superior profits would be competed away.

Short term focus on economic advantage is very flawed and threatens the health of the

economy.



If every industry’s short-term profitability were indeed a correct measure of its long-term value,

this would indeed be the case. But when long-term returns may well accrue to another company,

even another industry, and someone else may capture them, short-term profitability is not a

reliable metric of long-term value. So any strategy that relies on short-term profitability alone to

steer an economy will necessarily underperform. (As noted in Chapter Two, short-termism is a

crucial hidden part of America’s trade and industrial problems.) “Just chips” economics is

wrong because industries are very much not alike in their long-term consequences. In the words

of Laura D’Andrea Tyson, Bill Clinton’s chairperson of the Council of Economic Advisors (who

never got to apply her valuable theoretical insights in office): The composition of our production

and trade does influence our economic well-being. Technology-intensive industries, in particular,

make special contributions to the long-term health of the American economy. A dollar’s worth of

shoes may have the same effect on the trade balance as a dollar’s worth of computers. But...the

two do not have the same effect on employment, wages, labor skills, productivity, and

research—all major determinants of our economic health.

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59

Underlying many free market success stories are many protectionist policies.



If free markets and free trade aren’t always best, this necessarily opens up the possibility that

some other policy might be better, if properly designed and implemented. This, at bottom, is

what makes successful protectionism and industrial policy possible. It is no accident that when

reviewing purported free-trade success stories around the world, one often finds protectionism

and industrial policy right under the surface. In Brazil, for example, the steel and aircraft

industries are legacies of past import-substitution policies in Mexico, motor vehicles are; in

Chile, grapes, forest products, and salmon. In fact, of the top 20 exporting corporations in Chile

in 1993, at least 13 were creations of a single government agency, the Corporacién de Fomento

de la Produccion (CORFO). Over the last 40 years, there have been two key laboratories of

protectionism and industrial policy: East Asia and Latin America. As recently as the early 1970s,

both regions were at similar levels economically, and Latin America was actually much richer at

the end of WWII. And yet East Asia has succeeded economically, while Latin America has

stagnated since about 1975. (The above examples are happy exceptions.) Protectionism and

industrial policy clearly come in both effective and ineffective varieties, and neither concept

deserves an uncritical endorsement.

Proper use of sticks and carrots can ensure industries and economies thrive.



We are now in a position to understand why some kinds of each work and some don’t.”” In the

words of Dani Rodrik, both regions employed the “carrot,” that is, tariffs, industrial subsidies, et

cetera, to help their industries. But only East Asian governments were politically disciplined

enough to employ some needed “stick” as well, i.e., measures to prevent their industries from

merely converting this help into immediate profits, not long-term upgrading of their capabilities.

An export requirement is one example of a “stick.” This improves the nation’s balance of

payments and forces domestic producers to meet global standards for quality and cost. This

policy can be implemented in a wide variety of ways, some not immediately obvious as such,

like giving companies import quotas for raw materials based on their export performance.

Another method is a so-called “rolling” local content requirement, where a company importing

goods is required to produce a gradually increasing percentage of the final value of the product

domestically. This creates a pressure to produce locally without getting so far ahead of market

outcomes as to be hopelessly inefficient. Other patterns of successful industrial policy emerge. It

has tended to maintain domestic rivalry within industries, rather than concentrating resources on

a single superficially-strong national champion. It has tended to involve local ownership and

understanding of core technologies, rather than the “Lego brick” manipulation of sophisticated

inputs in an unsophisticated way. It has tended to combine investment in education with

investment in industries that can actually absorb educated workers. It has tended to use access to

the national market as leverage to get foreign corporations to locate a share of production there,

not merely as a shield for domestic producers or as a source of tariff revenue to be wasted on

political pork. (Pulling in state-of-the-art foreign producers also keeps domestic producers on

their competitive toes without subjecting the economy to an uncontrolled flood of imports.)

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60

The key to move from Third to First world economies is the exact opposite of free market

theories.



What does the most successful industrial policy look like? As economies try to make the jump

from the Third World to Newly Industrialized Country status and finally to the First World, the

real key to growth turns out to be proactively anti- Ricardian, namely getting away from their

immediate comparative advantage. This key is therefore profoundly contrary to free trade. Above

all, this means getting away from advantage based merely on given factors of production and

transitioning towards advantage based on created factors of production. Ultimately, it means

transitioning from so-called lower-order sources of advantage to higher-order sources. As

Michael Porter explains it: Lower-order advantages, such as low-cost labor or cheap raw

materials, are relatively easy to imitate. Competitors can often readily duplicate such advantages

by finding another low-cost location or source of supply, or nullify them by producing or

sourcing in the same place... Also at the lower end of the hierarchy of advantage are cost

advantages due solely to economies of scale using technology, equipment, or methods sourced

from or also available to competitors.... Higher-order advantages, such as proprietary process

technology, product differentiation based on cumulative marketing efforts, and customer

relationships protected by high customer costs of switching vendors, are more durable. Higher-

order advantages are marked by a number of characteristics. The first is that achieving them

requires more advanced skills and capabilities such as specialized and highly trained personnel,

internal technical capability, and, often, close relationships with leading customers. Second,

higher-order advantages usually depend on a history of sustained and cumulative investment in

physical facilities and specialized and often risky learning, research and development, or

marketing (Emphasis in the original.)

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61

It is a myth that U.S. industries succeeded without protectionist assistance.



For contemporary Americans, one common roadblock to understanding industrial policy and

protectionism is the myth that our most successful industries have made it on their own, without

government help. We tend to see industrial policy (if we accept it at all) as perhaps suitable for

up-and-coming nations, but not for nations like ourselves that have already arrived. But in

reality, the fingerprints of industrial policy are easy to find in our own economy, even in the

post-WII era of increasingly free trade (and increasingly strident laissez faire rhetoric after about

1980). Let’s look at two of America’s most touted industries, semiconductors and aircraft, to see

how they really became so strong—and thus why the purely free market model of economic

growth is so wrong. Silicon Valley is a famous success story of free enterprise, and to a large

extent it deserves this reputation. Nevertheless, its rise was shot through with government

support, without which it would probably never have existed. In fact, every place in the world

where a semiconductor industry has developed, it has been the explicit target of state industrial

policy. The entire semiconductor industry is based upon the transistor, which was invented by

Bell Laboratories in 1947. Bell Labs, however, was no product of free- market capitalism, but

was the research wing of the old American Telephone and Telegraph (AT&T), a government-

sanctioned monopoly. This company could only afford to support an expensive laboratory full of

Nobel-caliber scientists precisely because it was a monopoly: protected from competitive pricing

pressures, assured that no competitor would capture the commercial value of what it invented,

and dedicated to the long term. It is Exhibit “A” against the canard that large, bureaucratic,

government- subsidized companies protected from foreign competition can’t innovate. (This is

not to say that these characteristics are positive goods in their own right, but it does rather

suggest that the true determinants of industrial dynamism often lie outside laissez faire cliches.)

The semiconductor industry was a massive beneficiary of infant-industry subsidies from the

start. As it hatched and grew in the late 19505 and early 196os, close to 100 percent of its output

was bought by the military, which needed expensive high-performance semiconductors for uses

like missile guidance systems at a time when most consumer electronics still ran on vacuum

tubes. Even as late as 1968, the Pentagon bought nearly 40 percent of the semiconductors

produced in the U.S. Military demand enabled companies to stake their risky investments at a

time when nobody else would buy their expensive cutting-edge technology. It enabled them to

build the expertise that was later applied to civilian markets and achieve scale economies needed

to bring costs down into the range affordable for mass consumption.

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62

When nations lose industries, they can also lose the skills those industries support.



Deindustrialization thanks to bad trade policy is a more complex process than is usually realized.

It is not just layoffs and crumbling buildings. It is, in fact, industrial policy in reverse. As a

result, understanding industrial policy helps illuminate how industries die. When American

producers are pushed out of foreign and domestic markets, it is not just immediate profits that are

lost. Declining sales undermine their scale economies, driving up their costs and making them

even less competitive. Less profit means less money to plow into future technology

development. Less access to sophisticated foreign markets means less exposure to sophisticated

foreign technology and diverse foreign buyer needs. When an industry shrinks, it ceases to

support the complex web of skills, many of them outside the industry itself, upon which it

depends. These skills often take years to master, so they only survive if the industry (and its

supporting industries, several tiers deep into the supply chain) remain in continuous operation.

The same goes for specialized suppliers. Thus, for example, in the words of the Financial

Times’s James Kynge: The more Boeing outsourced, the quicker the machine-tool companies

that supplied it went bust, providing opportunities for Chinese competitors to buy the technology

they needed, better to supply companies like Boeing ‘4

The affirmative misunderstands the role protectionism plays in supporting industries and

the economy.



Free trade and the absence of deliberate industrial policy are not neutral choices, free of

government interference; they are positive strategic bets in their own right, which will only pay

off if their key underlying economic assumption is true: pure free markets, at home and abroad,

are always best. Taking an ideological stand against “central planning” misses the point, because

the central planning that has rightly disgraced itself is socialist central planning, something

entirely different. Similarly, ideological fulmination against “government picking winners”

misunderstands the role that federal support plays. As Michael Borrus, founding general partner

of the Silicon Valley venture capital firm X/ Seed Capital, explains, referring to the National

Institute of Science and Technology’ 5 Advanced Technology Program: ATP is sometimes

labeled with the profoundly misleading and profoundly misinformed characterization of ‘picking

winners and losers.’ That is, frankly, flat wrong. No investor, private or public, picks winners

and losers in technology innovation. Rather, it is the market (customers) that does the picking.

By contrast, with ATP and other federal technology programs, the government is really helping

to plant long-term technology seeds in areas of private market failure or acute public need. Some

of those technology seeds will sprout, others will not. But the planting, the activity as a whole,

must go forward if long-term economic gains are to be effectively harvested.

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63

Nations must seek to develop and protect industries they believe they will have a

comparative advantage in.



What are the policy implications of Gornory and Baumol’s work'.‘ Basically that a wise nation

will willingly let other nations have their share of the world’s industrial base, but will try to grab

the best industries for itself. Then it will sit back (here’s where laissez faire plays its legitimate

role) and let the rest of the world compete— head to head, driving the price down through the

perfect competition in free markets it seeks to avoid for itself—to produce for it the things it

doesn’t want to produce at home. Here Ricardo’s ghost rears its head yet again: comparative

advantage remains a valid principle, but a nation’s best move is not simply to trade according to

the comparative advantage it already has. It is to seek comparative advantage in the best

industries. Ricardianism is about finding the best use for the comparative advantage one already

has (mistaking this for the entire question); Gornory and Baumol are about what kind of

comparative advantage it is best to have.

Embracing protectionism does not mean nations want to impoverish trading partners.



But this doesn’t mean a shrewd nation wants its trading partners to be destitute. Then they would

have few tradable industries of any kind and low productivity in those they did have. This would

make it impossible to realize significant gains by trading with them. Nobody gets rich trading

with Kalahari Bushmen, no matter how shrewd, efficient, or even downright exploitive they are,

because Bushmen just don’t have that much stuff in the first place. Instead, the ideal trading

partner is one that perfectly complements a nation’s own more sophisticated economy. The ideal

trading partner is less like a slave (the colonial exploitation model) than like the perfect

employee. He skillfully performs all the tasks his employer doesn’t want to perform, freeing that

employer to perform more-valuable tasks. But he isn’t so skillful that he threatens his employer’s

entrenched position doing the tasks he wishes to reserve to himself. Every lawyer wants an

efficient paralegal; no lawyer wants one so skilled that she sets up a competing legal practice!

The ideal trading partner thus has the highest possible productivity in the industries that a nation

doesn’t want to compete in, but low productivity in those it does want to compete in. For

example, because Japan is a net importer of oil, Japan should want all oil exporting nations to be

the most efficient possible oil producers, as this will provide Japan the cheapest possible oil. But

Japan should not want Kuwait to become an efficient producer of cars!

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Free trade is undermining our national security.



Platform, 2012

Free trade has also had a terrible impact on our national defense. In World War II, if we needed

to bomb somebody, we would get a bomber produced in 72 hours. Recently, the Army needed

Humvee military vehicles in Iraq. A certain Senator went to the company in Illinois that makes

them and was told that to make 8,000 or 9,000 would take two years. Free trade strengthens the

Chinese military by building up China’s economy and expanding its access to military

technology. This happens through both trade and through purchases of American technology

companies with the money China earns by that trade. Not to mention the technology China steals

outright; they do that all the time. Chinese knock-offs have already been found in our military

supply chains, and it’s only a matter of time before booby-trapped items work their way in.

Chinese-made computer equipment, especially knock-off routers and firewalls, also enables the

hacking of American civilian companies. China is establishing a monopoly on strategic minerals,

the so-called “rare earths” needed to make electronic displays, electric motors, and other high-

tech products. Don’t doubt for a second that Beijing is planning all this and thinking through

what they will be able to do one day.

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Blocks

Affirmative Blocks

Affirmative A/T (Answers To) common negative arguments

A/T Globalization hurts consumers.

1. Globalization brings consumers abundant choices while saving them money.


Trade Why Main Street America Should Embrace Globalization Mad About Trade Why Main Street America Should Embrace Globalization, Cato Institute, Washington D.C., 2009

Free trade is the American consumer’s best friend. Whereas trade barriers limit

competition, free trade keeps producers honest by forcing them to work hard to offer

consumers more and better products at lower prices. Millions of American families

benefit from free trade every day. We benefit whenever we buy a cart of groceries, a new

shirt, a TV, or a car. The receipt doesn’t say, “You have saved $30 (or $300 or $3,000)

because of import competition,” but the sayings add up to hundreds of billions of dollars

every year for American households. Most Americans believe in competition. We are better off when a dozen restaurants and half a dozen

auto repair shops compete for our business instead of only one or two. By expanding the number of producers selling goods and services in the domestic market, trade safeguards

and intensifies competition. The result is lower prices, more variety, and better quality for tradable products. We should think of trade as the market’s trust buster. In a recent

annual report for the Dallas Federal Reserve Bank, Michael Cox and Richard Alm wrote, “Globalization erodes market power. Natural monopolies that might rise in national

economies— airlines, electricity, or telephone service, for example—don’t exist on a global scale.”1 2. Benefits to consumers are the most important benefit of globalization.



Consumer benefits are the most important and yet least appreciated payoff of trade. One

reason is that the benefits are largely invisible. They are diffused throughout the economy

in millions of daily transactions that are small and often hidden but collectively deliver a

huge boost to our standard of living. Producers pinched by trade often join together, hire lobbyists, and buy advertisements to get the attention

of Congress. Consumers are simply too numerous to organize and generally unaware of the stake they have in defending an open and competitive market. The other reason why

the consumer benefits of trade are too often dismissed is that “consumption” has a bad reputation. There is something ignoble, even grubby, about wanting more and wanting it

“cheap.” We liken consumption to acquisitiveness and greed. Consumption in the minds of many means four cars in the driveway, a triple-decker cheeseburger, and a 52-inch flat

screen TV bought with a credit card at 18 percent annual interest. Consumption can be abused, but it is also life itself. Without consumption, we would all be starving, naked,

homeless, and quickly dead. Consumption is the proper end of all economic activity. We do not start a business or show up at work every day just to be there but because we seek

to be rewarded in a tangible way. And the paychecks or profits we earn do us no good unless we can

translate them into goods and services with real value—a place to live, a car, clothes,

food, that big-screen TV, tuition for the kids, a donation to church or charity. Production

divorced from consumption is akin to slavery. The founder of modern economics, Adam

Smith, understood clearly that the argument for free trade begins with the consumer. As he

wrote in his 1776 book, An Inquiry into the Nature and Causes of the Wealth of Nations:

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A/T Globalization destroys manufacturing jobs.

1. Since the 1990s when globalization began, the US economy has added millions more

jobs than it lost.



Since the beginning of the 1990s, the U.S. labor marker has in fact shed a net 3.6 million

manufacturing jobs. But that loss has been overwhelmed by the creation of 18.9 million

net new jobs in mostly service sectors where the average wage is higher than in

manufacturing (see Table 3.1). Education and health services alone added 7.4 million jobs between 1991 and 2008. Another net 7.1 million new jobs were created

in the professional and business services sector, 2.4 million in construction, and 1.6 million in financial activities—all sectors where average wages are significantly higher than in

manufacturing.14 Two-thirds of the net new jobs created in the past two decades of rapid

globalization are in sectors where the average wage is higher than in manufacturing. For

every one job lost in manufacturing since 1991, our economy has created five in better-

paying service sectors, three in less well-paying sectors, and one in government. That pattern was not just a phenomenon of the 19905. During the Bush

years of 2001— 2008, two-thirds of the net new jobs were also created in sectors that paid more than manufacturing. 2. Globalization is not killing manufacturing jobs. Manufacturing has been thriving in

the USA.



Contrary to the popular picture, US. manufacturing in the past decade has been more than surviving in a

global economy. Although the recession that took hold in 2008 has been brutal for many US. manufacturers, as recently as 2006,

American factories were producing more output, more sales, more profit, and a higher

return on investment than ever before. It’s true that certain sectors have contracted and

factories have closed in the face of global competition, dislocating workers and impacting

real lives. But other sectors of U.S. manufacturing, in fact most sectors, have found a

profitable place serving global and domestic markets. Stories of the demise of U.S. manufacturing can be found in the

popular press, on TV, and in the halls of Congress, but not when we actually count and measure what we make. As part of its monitoring of the national economy, the Federal

Reserve Board each month estimates the volume of manufacturing produced by U.S. factories. Volume means the actual quantity of output after adjusting for quality changes.

According to the Fed, the volume of manufacturing output in the United States in the recession year of 2008 was still 10 percent higher than during the previous recession of 2001. Since the earlier downturn of 1991, the total volume of U.S. manufacturing output has

expanded by two-thirds, and since 1980, output has more than doubled. Although output rises and falls

with the overall economy, as we can see in Figure 4.1, the long-term trend for U.S. manufacturing output in our more globalized world—like the trends for real hourly

compensation for workers and median income for households-continues to point upward.

3. Globalization has led the US to lead the world in high tech manufacturing.



Despite the evidence, the myth still lingers that American manufacturing has lost its high-technology edge. At a congressional hearing in March 2007, the chairman of the House

Foreign Affairs Subcommittee on Terrorism, Nonproliferation, and Trade, Rep. Brad Sherman (D-CA), unleashed a broadside against the impact of trade on US. manufacturing.

Quoting a newspaper column, the chairman said “[T]he United States ‘has the export profile of a 19th- century Third World economy.’ . . . Our chief exports are not value-added

high-tech goods. They are scrap metal, waste paper, cigarettes, rice, cotton, coal, meat, wheat, gold, soybeans, and corn.”25 Talk about misleading. The only sense in which those

commodities could be considered “our chief exports” would be by weight or volume. But that is not how the world measures trade. No country would trade away a ton of

semiconductors for a ton of soybeans, or a container of name-brand pharmaceuticals for a container of scrap metal. What matters is value—What others are willing to pay—and by

that measure, our chief exports are almost all high-technology manufactured goods. By Chairman Sherman’s measure, air freight accounts for only a trivial 2 percent of global

trade (by weight), but according to Frederick W. Smith, chairman and CEO of FedEx, air freight now carries 40 percent of the value of international trade, much of it the high-tech,

high-value-added components fueling the information economy.26 In 2007, America’s top ten exports by total value were,

in descending order: semiconductors, civilian aircraft, passenger car parts and

accessories, passenger cars (new and used), industrial machines, pharmaceutical

preparations, telecommunications equipment, organic chemicals, electric apparatus, and

computer accessories (see Table 4.1). Every one of those categories, except perhaps organic chemicals, would comfortably qualify as high-tech. None of

them would typify a commodity-exporting Third World country from the 19th century. Together, they accounted for more than a

third of total US. exports.27

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A/T Globalization is a threat to our sovereignty.

1. Foreign investment is not a threat to national sovereignty.



One, despite the rapid growth of foreign investment in the United States, it remains

modest compared to the total value of US. assets. At the end of the second quarter of 2008, the combined assets of households,

nonprofits, and businesses in the United States was still a whopping $110 trillion.14 Foreign investment is less than 20 percent of

that total, and foreign investment directed by central banks and other foreign government

agencies is only 3 percent. Foreign investment is too diversified to give any one investor

much leverage. The central bank of China is the single biggest foreign holder of US.

Treasury bills, with nearly $600 billion in its portfolio in 2008. But even those holdings

represent only about 15 percent of the federal government’s outstanding public debt and a

tiny fraction of total U.S.-based assets. And when one foreign holder of US. assets sells, another foreign investor may be ready to buy.

Two, even if an outside investor such as the government of China could disrupt the US.

economy by dumping US. Treasury bills, it would not be in the Chinese government’s

own interest to do so. An economic downturn in the United States, such as the one that

hit the US. economy full force in 2008, also exacts a toll on our commercial partners.

Countries such as China see their exports to the US. market slump along with the dollar

value of their remaining US. assets. Investment in the United States gives foreigners a stake in America’s prosperity. Three, SWFs are still a

small and unremarkable slice of global investment. These funds are often established by countries that have accumulated large foreign currency reserves, such as the oil-exporting

countries of the Middle East. The funds seek higher returns by diversifying out of more conservative government bonds and into stock funds and real estate. According to

testimony in February 2008 by then- Treasury Undersecretary David McCormick, the 40 SWFs in the world control $3 trillion in assets, compared to the $190 trillion stock of

global financial assets and $62 trillion managed by private institutional investors.15 SWFs do operate under different rules than private funds: They do not typically pay domestic

taxes, and they can forgo profits for the sake of national objectives. But SWFs so far have not behaved much differently from other actors in global capital markets. Their

managers want solid returns at low risk. At a time when our domestic credit markets are

reluctant to lend, we should welcome foreign savers who want to put their money to work

in America.

2. Foreign investment benefits millions of Americans.



Foreign investment, like trade in goods and services, has brought broad benefits to

millions of Americans—in two fundamental ways. When foreigners invest in the United

States, the inflow of portfolio capital benefits the large majority of Americans with lower

interest rates, whereas FDI injects new competition into the consumer market and creates

better- paying jobs by upgrading our factories and machinery and introducing new

technology and ways of doing business. And when Americans invest abroad, we earn higher returns on our savings, we diversify our

investment portfolio to safeguard the future, and we reach new customers with American-brand goods and services. 3. Foreign companies create some of the best jobs in the USA.



Americans who work for foreign-owned affiliates typically have some of the best jobs

available. On average, they earn $63,400 a year compared to the US. average of

$48,200.10 And the main reason why those affiliates pay so well is that they are among

the most globally connected, productive, and innovative enterprises in America. Foreign-owned

affiliates account for 19 percent of total US. exports and 26 percent of imports. Together, they spent $34 billion on R&D in 2006. As the Commerce Department noted, “U.S.

affiliates accounted for 14 percent of the total R&D performed by all US. business, a share notably higher than the affiliate share of US. private industry value added or

employment.”11 Three-quarters of the foreign-affiliate R&D was concentrated in manufacturing, especially chemicals, motor vehicles, and pharmaceuticals.

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A/T Globalization undermines quality control and environmental standards.

1. Globalization does not hurt the environment.



The expanding freedom of Americans to invest abroad has not compromised in any way

our ability to maintain Whatever environmental, safety, and labor regulations we choose.

U.S. environmental regulations today are among the strictest in the world, and US. air

and water standards have improved accordingly. As we saw in chapter 3, US. incomes and living

standards have been rising decade after decade in the era of globalization—not racing to

the bottom as the critics wrongly tell us. In developing countries, the spread of

globalization has lifted living standards and reduced poverty and child labor, as we will see in chapter

8.

2. Globalization does not mean abandoning quality controls.



Trade skeptics have been quick to jump on safety concerns about toys and pet food

imported from China. Those concerns are real, but they spring from breakdowns in

quality control, not from trade itself. US. regulators have every right under international

law to impose exactly the same safety and health standards on imported products as they

do on products made domestically. Poisoned pet food or toys with lead paint are just as

much a safety concern Whether they come from abroad or another state. In the past three

years, Americans have been sickened and even killed by baby spinach from California

and ground beef from Nebraska tainted by E. coli bacteria, chicken from Pennsylvania

tainted with listeria, and peanut butter and peanut products from Georgia tainted with

salmonella. The regulatory challenges are no different. Importing goods from less-

developed countries need not lead to any lowering of health and quality standards.

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A/T Other countries do not engage in free trade.

1. Trade barriers in other countries is no reason for us to use them too.



Adopting a pro-consumer, pro-middle-class position on trade would transform the debate in Washington. Lowering our own trade barriers to imports would not be seen as a

“concession” we make to other countries in order to coax them to lower their barriers to our exports. Free trade is a policy we can adopt right now to make our lives better. When other countries keep their trade barriers higher than we keep ours, that is not

evidence of “unfair trade” but of misguided trade policies on the part of the other

governments, policies that hurt our exporters, to be sure, but that are just as damaging to

the other countries" consumers and overall economies. Just because other countries

pursue trade policies that hurt the large majority of their own citizens is not an argument

for our own government to do the same to us. To insist on a “level playing field” is to

demand that our government adopt or maintain trade policies that are as misguided and

self- damaging as those of other countries. We should insist that our government adopt

trade policies that are best for most Americans, regardless of what other countries do.

And that means pursuing trade policies that spread benefits to the widest possible number

of Americans, especially the poor and middle class who have the most to gain from

removing the final remaining barriers that separate us from the global marketplace.

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A/T Globalization undermines wages for American workers.

1. Globalization lifts wages at every level of the economy.



Critics of trade respond that our economy may have been creating jobs in our more globalized era, but the new jobs pay less than the jobs being destroyed. The result is stagnant or

falling real wages and living standards and a shrinking middle class. The belief that most American workers are earning

less than in years past rests on a faulty understanding of how trade affects the economy

and living standards and a misinterpretation of recent wage and income data. Greater

freedom to trade, in practice as well as in theory, has helped to lift the wages and incomes

of most Americans to levels above what they would be had markets remained less open.

Contrary to the common tale, expanding levels of trade in recent decades have been

accompanied by rising real hourly compensation for American workers and a higher

median income for households.

2. The real wage standard is a flawed measure of income.



The average real wage is a fundamentally flawed measure of the well-being and progress of American workers, for three reasons: First, the real wage does

not include benefits. Second, it relies on cost-of-living estimates that have tended to

systematically overstate inflation in recent decades and thus understate gains in real

earnings. Third, today’s real wage is often compared to past peaks that were deceptively

high. By excluding benefits, the real wage data underplay the real gains made by

American workers. Although money wages remain a majority of total compensation,

benefits have grown as a share of the average worker’s compensation package. Those

benefits help Americans pay for medical care and retirement. More companies than in

decades past are also offering dental and eye care benefits and more generous paid leave

and matching 401(k) contributions. The average real wage numbers fail to capture those

real benefits. A more accurate measure of earnings is “real hourly compensation,” Which

includes not only wages but benefits. The BLS data on wages and benefits combined tell a more accurate and encouraging story about the

well-being of the average American worker. Since 1973, average real hourly compensation for American workers has increased by 41 percent, and by 2 3 percent since 1991.11

Figure 3.3 shows that real hourly compensation has not only climbed since 1973, but its rise began to accelerate in the 1990s along with America’s growing economic openness.

The average American worker has not suffered from “stagnant” earnings in the past three decades. 3. Globalization cannot be blamed for cyclical downturns in the economy.



Those who blame trade for “declining real wages” and a “shrinking middle class” are

guilty at the very least of a lack of perspective. They have confused the passing pain of a

cyclical downturn with the long-term, ongoing, upward trend in US. living standards.

Trade cannot be blamed for causing recessions. Even the best economists have not

figured out how to repeal the business cycle. Trade does, however, boost the overall

productivity of the economy and individual workers, allowing more goods and services to

be produced in an average hour of work, leading to higher real compensation per hour

and a higher median household income than if our economy were not as open to trade. In

part because of expanding trade, American workers and households emerge from each recession and recovery in a better place economically than they would be without trade.

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Negative Blocks

Negative A/T (Answers To) common affirmative arguments

A/T Negating represents a rejection of free trade.

1. Negating is not a rejection of free trade, just the absolutist position on free trade.



Protectionism, and economic nationalism more generally, are usually held up by the supposed sophisticates today as dumb ideas. Sometimes, of course, they are. Bone-headed

protectionism belongs in the junkyard of history with all the other ideologies rusting there. Nothing in this booklet is intended to defend it. But it can also be a smart, productive,

pro-growth policy—and very much in the American and conservative traditions—When implemented correctly. The fundamental message of this booklet is that nations, including

the U.S., should seek strategic, not unconditional integration with the rest of the world economy. Economic openness, like most things in

life, is valuable up to a point—but not beyond it. The Founding Fathers knew that, and

wrote our Constitution to reflect it. Fairly open trade, most of the time, is justified.

Absolutely free trade, 100 percent of the time, is an extremist position and is not. It is not a

conservative, but a libertarian and globalist, policy. Don’t misunderstand: it’s not trade per se that’s the problem.

But trade, and free trade, are not the same thing. Remember that when somebody tries to

tell you how wonderful free trade is: they’re probably just giving arguments in favor of

trade. Nobody on the protectionist is suggesting we become North Korea, but there are

very serious reasons why free trade is not sound economics, and the longer America

clings to the free-trade delusion, the higher the price we will pay. Indeed, abandoning it

is almost certainly a necessary, if not sufficient, condition for revitalizing our economy.

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A/T Protectionism can only result in economic downturns and recessions.

1. Protectionism helped grow the USA and establish it as an independent country.



Hamilton set forth his case in his Report on Manufactures, submitted to Congress in 1791. His policies were not all adopted right away: it took the War of 1812, which created a

surge of anti-British feeling, disrupted normal trade, and drastically increased the government’s need for revenue, to push America firmly into the protectionist camp. Nonetheless,

his points were well taken at the time. Thus George Washington, in his first Address to Congress, said: A

free people... should promote such manufactories as tend to render them independent of

others for essential, particularly military, supplies. When the first Congress convened in

1789, the very second bill it adopted was a tariff act. This act was partly just for revenue, but it also declared that the tariff was

“necessary for... the encouragement and protection of manufactures.” The legitimacy of a tariff, aka “duties,” was explicitly written into the Constitution—Article 1, Section 8 of

which reads: The Congress shall have power to lay and collect taxes, duties, imposts and excises. It was the intention of the Founders that taxation not go very much beyond that,

for Article 1, Section 9 reads: No capitation, or other direct, tax shall be laid, unless in proportion to the census or enumeration herein before directed to be taken. So the

tariff was meant to be the main peacetime source of Federal revenue. And so it was for

over 100 years, until income tax began in 1913. Thomas Jefferson, elected President in

1800, also became a protectionist, at least after the War of 1812, and thus he said in 1816:

To be independent, for the comforts of life, we must fabricate them ourselves.

Manufacturers are now as necessary to our independence as to our comfort.

2. The USA had protectionist policies during its greatest period of industrial growth.



The Republican Party had a sensible tariff policy the Civil War to WWII, and there exist a plethora of statements by Republican

Presidents on the subject. But consider just one— from Calvin Coolidge, an authentic

small-government conservative who presided over unprecedented prosperity from 1923

to 1929: Our tariff enables us to pay American workmen the highest wages in the world.

Before we get carried away with any Visionary expectation of promoting the public

welfare by a general avalanche of cheap goods from foreign sources, imported under a

system, which, whatever it may be called, is in reality free trade, it will be well first to

count the cost and realize just what such a proposal really means. I am for protection

because it maintains American standards of living and business, for agriculture, industry,

and labor. That viewpoint dominated tariff policy most of the time in the late 19th and

early 20th century. This was the golden age of American industry, when America’s

economic performance surpassed the rest of the world by the greatest margin in our

history. It was the era in which the US. transformed itself from a promising mostly agricultural backwater, pupil at the knee of European industry, into the greatest

economic power in the history of the world.

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A/T Globalization is good for American jobs.

1. Globalization is destroying American jobs.



Free trade is inexorably destroying our industrial base, and it is going on every day. This

largely happens behind the scenes, in thousands of plants and companies around the

country, so few people notice. “American” multinational companies don’t care. Their

attitude was well put by a spokesman for the cellular-phone equipment company

Qualcomm, who said: At the end of the day, our obligation is to make Qualcomm as

successful as possible. If that means avoiding trade barriers by building facilities in other

countries, then obviously that will dictate our future actions. Compare that statement with Jefferson’s statement about

merchants noted earlier!

2. Globalization surrenders jobs and industry in a new trade Cold War.



Make no mistake: our government knows exactly what it is doing. Clayton Yeutter, Ronald Reagan’s U.S. Trade

Representative, once openly said, “American industries that cannot compete with imports

should be phased out.” Later, in 2004, the ultra-globalist President George W. Bush sent

to Congress a report prepared by economist Gregory Mankiw. It said: The movement of

American factory jobs and white- collar work to other countries is part of a positive

transformation that will enrich the U.S. economy over time... When a good or service is produced at lower cost in

another country, it makes sense to import it rather than produce it domestically. This is a recipe for, among other things, our

being relentlessly stripped of our key industries by foreign state capitalism. Free traders

act as if we are competing in a global free market, but we are not. We are in a contest

with state capitalism just as real as the one we won against communism, except we don’t

yet understand that. And free trade is unilateral surrender in this new Cold War.

3. Offshoring will undermine millions of jobs.



“Offshoring is a tiny phenomenon.” Offshoring, of course, is just trade in services. But

it’s just getting started and Will be big soon enough, thanks to 15 percent per year

compound growth. Economist Alan Blinder, a former Vice-Chairman of the Federal

Reserve, estimated that offshoring will ultimately affect up to 40 million American jobs.

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A/T Globalization raises wages for American workers.

1. Globalization is resulting in the lowering of wages.



The myth persists that America is shifting from low-tech to high-tech employment, but we’re not. We’re losing jobs in both and shifting to non-tradable services—which are

mostly low-paid jobs. The impact on wages in the United States has been terrible. The Census

Bureau reported in 2010 that there were 46.2 million people in poverty in the United

States—up 6.4 million from 2008. The jobs the economy is adding are not paying wages

like the old industrial jobs used to pay, so What we have here is poverty on the march in

this country. In terms of family values, when you have an economy like that in the

United States today, where both the man and woman have to work, one to pay the taxes

and one to provide the living for the family, don’t think that this doesn’t have an impact

on family values and on the rearing of children in the home.

2. Other nations wage levels are not catching up to our wage levels.



A related myth is this: “Other nations are rapidly catching up to American wage levels.

India, for example, has a middle class of 250 million people.” But middle class in India

means the middle of India’s class system, not ours. That means a family income about a

tenth of what it would take here. India’s average income is only about $1,500 a year.

This myth is calculated to soothe American anxieties:

3. Globalization is a threat to American labor.



Here’s a hopeful dream some people console themselves with: “Cheap foreign labor is not a threat to American wages

because .increasing prosperity will drive up wages overseas.” While this may be true in

the long run, at currently observed rates of income growth it Will take decades at best.

Can we wait that long? Now here is a sophisticated-sounding analysis that seems to take

the drawbacks of free trade seriously:

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A/T Globalization opens up markets to American companies.

1. The idea that globalization opens up massive markets to US companies is a myth.



Many popular arguments for free trade sound persuasive —until one looks at some real numbers. For example: “Free trade is good for America because it means a billion Chinese

..are now hungry consumers of American products.” But America is running a huge deficit, not a surplus, with China.

($245 billion in 2011, about 41 percent of our total). The dream of selling to the Chinese

functions primarily as bait to lure in American companies, which are forced by China to

hand over key technological know-how as the price of entry. They then build facilities

which they discover they can only pay off by producing for export. It’s a racket and

China knows it.

2. The globalization theory of free trade is a myth as most other countries are not

engaging in free trade.



A lot of economists—not all, but a lot—Will tell you they have theories which prove that free trade is best, and all the rest of us have to defer to them because they have the

expertise. They have doctrines, like the so-called Theory of Comparative Advantage, that supposedly prove this. Now the first thing to remember

about this is that what we have today under the name “free trade” isn’t free trade at all.

It’s free on America’s part, because our market is about 98 percent open to the world. But

in the other direction, it’s not. It’s mostly mercantilism: gaming the system. So even if the

theoretical case for free trade were valid, it wouldn’t apply to our present circumstances.

Free-trade economists will tell you this doesn’t matter, because if other nations are dumb

enough to block their trade, this doesn’t mean we should. But foreign nations are not

dumb to restrict their trade. The nations that are doing so are visibly cleaning our clock.

It’s an effective strategy for them, just like it used to be for us.

3. If a nation does not protect some industries, it risks going nowhere economically.

Ian Fletcher (Senior Economist of the Coalition for a Prosperous America), Free Trade Doesn't Work: What Should Replace It and Why, 2011 Edition, CPA, 2011

One consequence of this is that economic growth is path-dependent. To grow, an economy must continually break into new

industries. But to do this, it needs strong existing positions in the light industries. So a

national economy that doesn’t get onto the right path (and stay on it) risks being sidelined

into industries which lead nowhere in the long run. We noted this problem before in Chapter Five: 18th- century Portugal

derived no other industries from winemaking, while Britain derived many from textiles because the construction of textile machinery spawned a machine-tool industry that could

produce innovative machinery for other industries. Similarly, electric cars may be the wave of the future today, but without a strong position in conventional cars, a nation is

unlikely to have the know-how or supplier industries to build them. Path dependence applies to economies at all levels of development, not just those starting to industrialize.

Infant-industry protection is, of course, one of the best- known cases for protectionism

and industrial policy. (It is often the one case grudgingly conceded even by free traders.)

But it is, in fact, only the most obvious case of the more general phenomenon of the path

dependence of economic growth. Infant industries are merely the first rungs of the ladder.

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A/T The law of comparative advantage proves free trade provides the most benefits.

1. The globalization theory of free trade is a myth as most other countries are not

engaging in free trade.



A lot of economists—not all, but a lot—Will tell you they have theories which prove that free trade is best, and all the rest of us have to defer to them because they have the

expertise. They have doctrines, like the so-called Theory of Comparative Advantage, that supposedly prove this. Now the first thing to remember

about this is that what we have today under the name “free trade” isn’t free trade at all.

It’s free on America’s part, because our market is about 98 percent open to the world. But

in the other direction, it’s not. It’s mostly mercantilism: gaming the system. So even if the

theoretical case for free trade were valid, it wouldn’t apply to our present circumstances.

Free-trade economists will tell you this doesn’t matter, because if other nations are dumb

enough to block their trade, this doesn’t mean we should. But foreign nations are not

dumb to restrict their trade. The nations that are doing so are visibly cleaning our clock.

It’s an effective strategy for them, just like it used to be for us.

2. The theory of comparative advantage is flawed.


Economic history contradicts free-trade economics at a number of points. For example,

the all-important theory of comparative advantage promotes specialization as the path to

growth. Supposedly, a nation’s best move is to concentrate its factors of production on

the products in which it has comparative advantage and import most everything else. (Hewing

to this, the World Bank has repeatedly advised heavily indebted Third World nations to specialize in one or two crops or raw materials for export.) But if this theory is true, it

would imply that economies should concentrate on fewer industries as they become richer. Instead, the reverse is observed. In reality, economies

starting out from a primitive state tend to expand the range of products they produce as

they grow. They only start reconcentrating when they are well past the middle-income

stage and start building entrenched positions in a few sophisticated high value-added

industries. Narrow specialization is actually a hallmark of impoverished one-crop states, colonies managed for the benefit of distant rulers, and accidental raw materials-based economies like the Gulf oil producers.

3. Free market economics is of little use in understanding the way trade actually

works.


Successful nations diversify. This is an important clue that economic growth may actually be less about comparative advantage and more about something else. Economic history,

in fact, suggests that development doesn’t come from increasing specialization, that is, from focusing ever more on what one already produces well, but from learning to produce

entirely new things. But something new that a nation learns to produce is, by definition, not something in which it already had comparative advantage. So Ricardian thinking is not

useful here. Even if comparative advantage applies after the fact, when a nation has mastered a

new industry, it cannot tell a nation today what new industries it should try to break into

tomorrow or how. Ireland didn’t have any comparative advantage in IT in 1970, but this

industry has been a big driver of its later growth. Same for India. There is no way this

industry made sense for either nation in advance based on Ricardo. There is an even

larger lesson here: economic growth is, by definition, a disequilibrium event, in which an

old equilibrium level of output is replaced by a new and higher level. So the economics

of equilibria, which means most of free- market economics (whose supply and demand

curves intersect in equilibrium), is of little use for understanding it. That is why the quote at the beginning of

this chapter cuts so extremely deep. Among other things, equilibrium economics cannot explain entrepreneurship, whose profits represent the value of creatively upsetting the

existing equilibrium in an industry. Equilibrium is a useful concept for examining how things stand once the dust has settled and the economy has reached a new stable state, but it

is intrinsically weak at analyzing change. This is why, when confronted with entrepreneurship and innovation, mainstream economics tends to quietly give up and reach for

concepts, such as the Austrian economist Joseph Schumpeter’s (1883-1950) idea of creative destruction, that are genuinely illuminating but lie outside the formal mathematical

structures of mainstream economics. And as the logic of classic equilibrium-based economics still inescapably leads to Ricardo, this ad hoc patching doesn’t lead mainstream

economics to the right conclusions about trade.

The Forensics File


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77

Rebuttal Overviews First Affirmative

Extend that the value for the round is morality. Extend the warrant for this which was, “the

language of the resolution frames the question as one of morality because of the use of the word

‘ought’ in the resolution and Merriam Webster defines ought to mean moral obligation. This is

the contextually correct meaning of ought to use because 1) we are debating values and morality

is a value 2) moral debate is inherently a debate over competing conceptions of the good or

values. Thus, morality allows a more objective approach as it could lead to either an affirmative

or negative ballot depending on the winning moral philosophy.” <My opponent argued

but this is wrong because .> Hence,

morality is the proper value and any other value must be rejected which would mean rejecting a

case that does not conclude to the value of morality. Now extend that the criterion for the round

is achieving the greatest good for the greatest number. Extend Bentley who explains, “this is the

only way in which decisions of public policy ought to be made, as public officials cannot

possibly (nor should they) take into account all of the personal ethics and beliefs of the people

affected by a particular decision. They should however, in all instances, take heed of the possible

consequences of particular course of action.” <My opponent argued

but this is wrong because .> So the criterion to achieve

morality in the area of public policy is achieving the greatest good for the greatest number. If I

prove that globalization achieves the greatest good then you affirm. Now extend my first point

where Griswold proves tariffs would be equivalent to a direct tax on American families writing,

“Imposing punitive tariffs on imports from China would be a direct tax on tens of millions of

working families in America.” <My opponent argued but

this is wrong because .> This means that protectionism hurts the

economy, especially families and consumers, and so we cannot negate. Now extend my second

point where Griswold proves that the benefits to consumers of globalization are real and

substantial writing, “the real incomes of American families are about 3 percent higher because of

the greater variety that imports bring.13 That’s not “a few cents”; it’s nearly $400 billion in our

current economy. That figure translates into a real gain of $1,300 per person or more than $5,000

for a family of four just from the expanding varieties that trade has brought to the marketplace.

Trade with China has done more to expand the variety of imports we enjoy than trade with any

other country, but more on that in a moment.” <My opponent argued

but this is wrong because .> This means that

globalization has vast benefits for countries engaged in freer trade and so we must affirm. Now

extend my last point where Griswold concludes that globalization leads to better quality, more

environmentally friendly, consumer goods writing, “Today’s cars are safer, better designed,

more loaded with extra features, and more fuel efficient for their class. It was Japanese

automakers Who introduced crossover utility vehicles, hybrid vehicles, and small light trucks to

the American market.” <My opponent argued but this is

wrong because .> This means that globalization is best

because it ensures high quality choices for consumers while protecting their environment and so

we must affirm.

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78

Second Affirmative

Extend that the value for the round is morality. Extend the warrant for this which was, “the language of

the resolution frames the question as one of morality because of the use of the word ‘ought’ in the

resolution and Merriam Webster defines ought to mean moral obligation. This is the contextually correct

meaning of ought to use because 1) we are debating values and morality is a value 2) moral debate is

inherently a debate over competing conceptions of the good or values. Thus, morality allows a more

objective approach as it could lead to either an affirmative or negative ballot depending on the winning

moral philosophy.” <My opponent argued but this is wrong

because .> Hence, morality is the proper value and any other

value must be rejected which would mean rejecting a case that does not conclude to the value of morality.

Now extend that the criterion for the round is meeting our obligation to the poor. Extend the warrants for

this which were, “the effects of poverty are so drastic upon the lives of those who live in poverty. People

who live in poverty are more likely to suffer from illness and inadequate medical care. People in poverty

are more likely to live in areas where they are susceptible to crime or to turn to crime as the only option to

take care of their basic needs. People who live in poverty are often condemned to remain in poverty

because they are under educated and thus do not have the means to find their way out of poverty. Poor

people are suffer from hunger and malnutrition which effects the children of the poor the most, children

who do not yet have any choice in their lives. All of this means that poverty is a threat to the lives of all

people who live in poverty and most fundamentally, people are due their lives.” <My opponent argued

but this is wrong because .> So

the criterion for the round must be meeting our obligation to the poor. Now extend my first point where

Griswold proves that the race to the bottom is a myth writing, “US. companies sent abroad on average

each year, 71 percent flowed to the rich, high-standard economies of Europe, Canada, Japan, Australia,

and New Zealand. If we include the upper-middle-income economies of Hong Kong, Israel, Singapore,

South Korea, and Taiwan, the share approaches 80 percent. The proportion of nonmanufacturing

investment flowing to other relatively wealthy countries is even higher.26 Far from racing to the bottom,

U.S. multinational companies are racing to invest in the world’s richest and most expensive places.” <My

opponent argued but this is wrong because

.> This means that free trade does not hurt the poor because corporations are after much

more than just cheap labor and so the poor are not exploited meaning there is no need for protectionist

policies and so no reason for protectionism. Now extend my second point where I prove that

protectionism can increase inflation. Griswold writes, “Prices for US. exports would soon reflect higher

domestic costs, offsetting the depreciation of the dollar and leaving US. exports no more competitive than

before the depreciation.” <My opponent argued but this is wrong

because .> This means protectionism hurts the poor by driving up

prices for the goods and services they need to live their lives and so you cannot negate. Now extend my

third point where Griswold proves that globalization keeps prices low for consumers writing, “An open

market makes it more difficult for domestic producers to “conspire” with one another to raise prices at the

public’s expense. As a result, the prices we pay for goods and services exposed to global competition tend

to rise more slowly or even fall compared to prices paid for goods and services where competition is

limited to the domestic or local market.” <My opponent argued but this

is wrong because .> This means globalization helps the poor by

keeping the prices for the goods and services they require to live low and affordable and so you can

affirm. Now extend my last point where Griswold concludes that globalization is making Americans

wealthier, decreasing poverty writing, “Globalization has helped to boost the net worth of American

households in two main ways: first, by raising household income above what it would be without

expanded trade, and second, by enlarging opportunities to tap into global capital markets directly and

indirectly.” <My opponent argued but this is wrong because

.> This means that globalization literally decreases the number of people

suffering in poverty and so we must affirm to truly lift the burden of the poor.

The Forensics File


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79

First Negative










Now extend that the criterion for the round is achieving a foreign policy of self-interest. Extend Schwartz

who writes, “Under such a foreign policy, Washington would not attempt to defend America in fits and

starts, futilely trying to straddle the two roads of self-interest and self-sacrifice, attacking one terror-

sponsor today while mollifying others the next day. Nor would it attempt to uphold self-interest as an

amoral expediency… the designers of a rational foreign policy would understand that self-interest can be

successfully defended only if it is embraced as a consistent, moral principle.” <My opponent argued

but this is wrong because .> So

the criterion for achieving a moral foreign policy is one that advances the interest of the US as this best advances

the lives and interests of the citizens the US government is responsible for protecting. Thus, if I prove affirming

undermines the interests of the US you can affirm because selling arms to insurgents is not in the interest of the US.

Now extend my first point where Shearer and Fletcher prove that globalization undermines the capacity of US

companies to compete writing, “How can we survive free trade when there is such a great difference between the

wages which we pay, and the fringe benefits we add, and those that are paid in foreign countries? And if you think

Mexico’s rates are bad, you should see China’s, or some of those in other countries. And then we tax our

businesses to provide all kinds of environmental protection and cleanup. Do you think those foreign countries do

that?” <My opponent argued but this is wrong because

.> This means that globalization can undermine our national interests and so we

cannot affirm. Now extend my second point where Shearer and Fletcher prove that we must embrace

protectionism to restore economic strength and independence writing, “free trade must be replaced by

some form of thoughtful protectionism as soon as possible. And the longer we wait, the more damage we

will eventually have to undo. What do we need? We need to be a truly independent nation again, much

closer to being self-sufficient, and above all, master of our own economic fate again. We need be able to

provide for our own national defense, and we need to restore our manufacturing base. We need to restore

high wages to the working people of this country.” <My opponent argued

but this is wrong because .> This means that

protectionism can be in the interest of the US and so we must negate.

The Forensics File


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80

Second Negative










Now extend that the criterion for the round is ensuring sovereignty. Extend Rabkin who explains that,

“Even if we have larger goals than peace, we are not likely to accomplish them peacefully— which means

we are not likely to accomplish them reliably—without respecting sovereignty as the general norm in

international affairs.” <My opponent argued but this is wrong

because .> So the criterion for the round must be ensuring

US sovereignty as this sovereignty is our best hope for instilling and ensuring peace. Now

extend my first point where Shearer and Fletcher prove that free trade sacrifices American

sovereignty writing, “Free-trade agreements are terrible for American sovereignty. They sign

away democratic control over our health, safety, labor law, fiscal policy, financial stability,

national security, environmental policy and other things to foreign judges. What’s the point of

even having a democracy if somebody can just overrule whatever we decide to do? Especially

when that somebody, in large part, represents foreign interests hostile to the U.S.? These

agreements are administered by distant and unaccountable bureaucrats.” <My opponent argued

but this is wrong because .> This

means prioritizing globalization places US national sovereignty at risk and so threatens peace

and so we cannot affirm. Now extend my last point where Shearer and Fletcher prove that tariffs

can be targeted to favor the national interest writing, “We have some choices here. If we applied

a flat tariff—the same rate on all imports— this would take care of the deficit, if the rate were

high enough, and it would be simple to administer. There wouldn’t be any political mischief

about what the tariff on this or that product or country would be. The other nice thing about a

flat tariff is that it would tend to bring back the kind of industries we want…maybe we need a

tariff varying by country. We could do that. It’s a bit more political effort, but it’s doable. There

just needs to be a consensus in the US. government to set trade policy in the national interest

again.” <My opponent argued but this is wrong because

.> This means a policy of targeted protectionism can help ensure and

restore American sovereignty and so we must negate.

The Forensics File


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81

Preflows

V = Morality

the language of the resolution

frames the question as one of

morality because of the use of

the word ‘ought’ in the resolution

and Merriam Webster defines

ought to mean moral obligation.

This is the contextually correct

meaning of ought to use because

1) we are debating values and

morality is a value 2) moral

debate is inherently a debate

over competing conceptions

of the good or values

Cr = Achieving greatest good for

the greatest number

this is the only way in which decisions

of public policy ought to be made, as

public officials cannot possibly (nor

should they) take into account all of the

personal ethics and beliefs of the people

affected by a particular decision. They

should however, in all instances, take

heed of the possible consequences of

particular course of action

1 tariffs would be equivalent to a direct

tax on American families

x-Griswold

Imposing punitive tariffs on imports from

China would be a direct tax on tens of millions

of working families in America

2 the benefits to consumers of globalization

are real and substantial

x-Griswold

the real incomes of American families are about

3 percent higher because of the greater variety

that imports bring.13 That’s not “a few cents

3 globalization leads to better quality, more

environmentally friendly, consumer goods

x-Griswold

Today’s cars are safer, better designed, more

loaded with extra features, and more fuel efficient

for their class. It was Japanese automakers Who

introduced crossover utility vehicles, hybrid

vehicles, and small light trucks to the

American market

The Forensics File


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82

V = Morality














Cr = meeting our obligation to

the poor

the effects of poverty are so drastic

upon the lives of those who live in

poverty. People who live in poverty

are more likely to suffer from illness

and inadequate medical care. People

in poverty are more likely to live in

areas where they are susceptible to

crime or to turn to crime as the only

option to take care of their basic needs.

People who live in poverty are often

condemned to remain in poverty because

they are under educated and thus do not

have the means to find their way out of

poverty. Poor people are suffer from

hunger and malnutrition which effects

the children of the poor the most,

children who do not yet have any choice

in their lives. All of this means that

poverty is a a threat to the lives of all

people who live in poverty and most

fundamentally, people are due their

lives

1 The race to the bottom is a myth

x-Griswold

US. companies sent abroad on average each

year, 71 percent flowed to the rich, high-

standard economies of Europe, Canada, Japan,

Australia, and New Zealand. If we include the

upper-middle-income economies of Hong

Kong, Israel, Singapore, South Korea, and

Taiwan, the share approaches 80 percent.

The proportion of nonmanufacturing

investment flowing to other relatively wealthy

countries is even higher.26 Far from racing to

the bottom, U.S. multinational companies are

racing to invest in the world’s richest and

most expensive places

2 Protectionism can increase inflation

x-Griswold

Prices for US. exports would soon reflect higher

domestic costs, offsetting the depreciation of the

dollar and leaving US. exports no more

competitive than before the depreciation

3 globalization keeps prices low for consumers

x-Griswold

An open market makes it more difficult for

domestic producers to “conspire” with one

another to raise prices at the public’s expense.

As a result, the prices we pay for goods and

services exposed to global competition tend to

rise more slowly or even fall compared to prices

paid for goods and services where competition

is limited to the domestic or local market

4 globalization is making Americans wealthier,

decreasing poverty

x-Griswold

Globalization has helped to boost the net worth

of American households in two main ways: first,

by raising household income above what it would

be without expanded trade, and second, by

enlarging opportunities to tap into global capital

markets directly and indirectly

The Forensics File


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83

V = Morality














Cr = foreign policy of self interest

Under such a foreign policy, Washington

would not attempt to defend America in

fits and starts, futilely trying to straddle

the two roads of self-interest and self-

sacrifice, attacking one terror-sponsor

today while mollifying others the next

day. Nor would it attempt to uphold self-

interest as an amoral expediency… the

designers of a rational foreign policy

would understand that self-interest can

be successfully defended only if it is

embraced as a consistent, moral

principle

1 globalization undermines the capacity

of US companies to compete

x- Shearer and Fletcher

How can we survive free trade when there

is such a great difference between the wages

which we pay, and the fringe benefits we add,

and those that are paid in foreign countries?

And if you think Mexico’s rates are bad, you

should see China’s, or some of those in other

countries. And then we tax our businesses to

provide all kinds of environmental protection

and cleanup. Do you think those foreign

countries do that?

2 we must embrace protectionism to restore

economic strength and independence

x-Shearer and Fletcher

free trade must be replaced by some form of

thoughtful protectionism as soon as possible.

And the longer we wait, the more damage we

will eventually have to undo. What do we

need? We need to be a truly independent

nation again, much closer to being self-

sufficient, and above all, master of our own

economic fate again. We need be able to

provide for our own national defense, and

we need to restore our manufacturing base.

We need to restore high wages to the

working people of this country

The Forensics File


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84

V = Morality








meaning of ought to use beca use






Cr = Ensuring sovereignty

Even if we have larger goals than peace,

we are not likely to accomplish them

peacefully— which means we are not

likely to accomplish them reliably—

without respecting sovereignty as the

general norm in international affairs

1 free trade sacrifices American

Sovereignty


Free-trade agreements are terrible for

American sovereignty. They sign away

democratic control over our health, safety,

labor law, fiscal policy, financial stability,

national security, environmental policy

and other things to foreign judges. What’s

the point of even having a democracy if

somebody can just overrule whatever we

decide to do? Especially when that

somebody, in large part, represents foreign

interests hostile to the U.S.? These

agreements are administered by distant

and unaccountable bureaucrats

2 tariffs can be targeted to favor the

national interest


We have some choices here. If we applied a

flat tariff—the same rate on all imports— this

would take care of the deficit, if the rate were

high enough, and it would be simple to

administer. There wouldn’t be any political

mischief about what the tariff on this or that

product or country would be. The other nice

thing about a flat tariff is that it would tend to

bring back the kind of industries we want…

maybe we need a tariff varying by country.

We could do that. It’s a bit more political

effort, but it’s doable. There just needs to be

a consensus in the US. government to set

trade policy in the national interest again

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