Murray falsely claims that:

“The benefits of free trade are many, and accepted by virtually all economists. They include reductions in the cost of living, greater choice and increased quality of goods, higher incomes on both sides, economic growth and, perhaps most important in an increasingly corporatist America, a reduction in the effectiveness of lobbying. Protectionism provides the reverse in all of these cases, and would be just as foolish now as when the Smoot-Hawley law deepened the Depression. (…)

However, that last benefit in the list I just provided has not escaped the eye of special interests. Indeed, most of the free trade agreements which America has negotiated in recent years have been heavily influenced by lobbyists, not only from industry, but also from the environmental and labor organizations. They have consistently insisted on inserting measures into the agreements that maintain protections for their interests and reduce the scope for the full benefits from free trade.”

All of his claims are blatant lies.

There are NO benefits from free trade. None whatsoever. It is protectionism that brings about the benefits he claims, not free trade.

How do we know it? From the facts – from the results of real life, not theoretical theses put forward by Murray and others living in their academic ivory towers.

Increased quality of goods? Don’t make me laugh. The goods that the US imports from China and other “developing” countries are of abysmally low quality, made from weak materials in a poor fashion, breaking down after little time of use, and many of them – including toys and food – are poisoned with lead (toys) or melamine (food). The problem is so grave that one American mother raised that question in a 2007 GOP presidential debate. Virtually anyone who has bought anything made in China will attest to the poor quality of Chinese goods.

Reductions in the cost of living? Rising incomes on both sides? Is that a joke? Since the ratification of the first “free trade” deals in the 1990s, the real wages and real income of low-income and middle-class workers has remained flat in inflation-adjusted dollars. The only Americans who have seen their incomes rise since then have been the wealthy – the CEOs of large corporations who are happy to ship jobs overseas (mostly to China).

Greater choice? China’s price-dumping, flooding of the US with extremely low quality goods, and refusal to implement any environmental or labor standards has undercut and undermined American companies and to the flooding of store shelves with Chinese products, leaving Americans with little choice other than these low-quality products.

Reduction in the effectiveness of lobbyists? Don’t make me laugh. It was precisely lobbyists – and no one else – who wanted and secured the passage of all free trade deals ratified by the US, from the WTO to the GATT to NAFTA, to Most Favored Nation status for China, to the disastrous KORUS FTA.

American workers and voters did not want these disastrous free trade deals. Indeed, they vehemently protested against them and urged their Congressmen and Senators to vote against them (especially against the KORUS FTA).

It was the greedy CEOs of large multinational corporations and their lobbyists on Capitol Hill who campaigned for and secured the passage of these disastrous (for America) deals.

Economic growth? That’s the most idiotic claim Murray has made. Free trade has done nothing but stymie US economic growth. Historically, the US economy has grown fastest when operating under protectionist (economically nationalist) policies: protective tariffs.

Indeed, this is what all history – of all countries – shows. It proves that protectionism is what brings about fast economic growth, while “free trade” (i.e. being a dupe who borrows money to buy foreign products and destroys his own industry) leads to economic stagnation.

Protectionism (economic nationalism) is the trade policy of ascendant economic powers; free trade, the policy of descending, declining ones.

EVERY country which ever became an economic power became one by protecting and nurturing its industrial base – England under the Acts of Navigation, France under Jean-Baptiste Colbert and Napoleon Bonaparte, Britain until the mid-19^th century, Prussia under the Customs Union (1834-1871), unified Germany under Bismarck and his successors, the US from 1861 to the 1960s, postwar Japan, China today.

NO country ever became an economic power by indulging in free trade, which is only for dupes and idiots and leads to economic disaster.

The US became the world’s economic superpower – indeed, was once the economic envy of the world – because from 1861 until at least the 1960s it protected and nurtured its industry with tariffs that effectively barred most foreign products from the US and protected its industrial base while not hampering competition between domestic producers in any way (and antitrust legislation ensured that such competition would stay alive in the US).

Thus, the US became a world producer of everything, an economically fully self-sufficient country, supplying not just its large population but the entire world with all sorts of products, from alloys, to cars, to planes, to everything else. By the 1940s and the early 1950s, it accounted for 50% of the world’s industrial production, partially due to the damage WW2 inflicted on Europe but partially due to the protection of the American industry (which was indispensable in winning that war by producing weapons for the US and its allies).

This was because, from its founding until at least the 1960s, the US followed the preceipts of the Founding Fathers, especially Alexander Hamilton: Trade surpluses are preferrable to trade deficits. It does matter where things are produced. There is no free lunch. Manufacturing, not finance, is the nation’s economic muscle.

But today, the US hardly manufactures anything and has become dependent on foreign countries – especially China – on all sorts of products, including the necessities of life.

“Free trade” has been a total disaster for the US. Since 2000 alone, thanks to free-trade policies, over 55,000 factories across the country have been closed and relocated overseas, mainly to China, and 6 million good, well-paying manufacturing jobs have been shipped – mostly to China. The only reward is the dubious privilege of buying low-quality Chinese goods.

Before NAFTA’s ratification, the US had an annual trade surplus with Mexico; since 1993, however, it has had a trade deficit with that country every year and the 2012 trade deficit was the largest between the two in history. After ratification of the KORUS FTA, America’s trade deficit with South Korea jumped threefold in April 2012 alone. Our trade deficit with Japan is the largest ever between us.

America’s trade deficit with China is the largest ever between any two countries in human history: $300 bn in 2012.

Not just between the US and China, but the largest between any two countries on God’s green Earth in all recorded human history!

And yes, trade deficits do matter. A lot. They decrease the country’s GDP while increasing the GDP of the country you’re buying from. This is not surprising to anyone who knows economics 101: to be able to buy something, you have to earn the money to buy it – or borrow it. If you borrow money, you’re driving yourself deeper into debt. If you buy it with the money you’re already have, you’re transferring your income to the other guy. He earns money and you lose it.

If he sells you more than he buys from you, he makes more money at YOUR expense than YOU do at his expense. In other words, on net, he earns money at YOUR expense: he takes money from you, while you lose money.

Producing goods creates jobs (all goods have to be made by someone). If you buy goods from a foreign country, you’re creating jobs in THAT country rather than yours, and increasing the income of THAT country rather than yours, while you lose money and jobs (or, at minimum, the opportunity to create jobs at home).

That country gains and you lose.

If you buy more from abroad than you export, you’ll have to borrow money to buy those things, thus driving yourself deeper and deeper into debt.

Those “economists” who support free trade clearly don’t even know Economics 101, or the Basic Facts of Life 101.

Free trade has also been a political disaster for Republicans. They’ve been complicit in its making, indeed often leading the campaign for it, and helped destroy most of American industry. Might the wiping out of most factories in the Midwest and the Northeast have had anything to do with Republicans inability to win those states and their foolish advocacy of free trade?

Illinois and Michigan haven’t voted Republican since 1984; Pennsylvania, not since 1988; Ohio, not since 2004.

By contrast, from 1860 to 1924, Republicans – then known as The Party of Protection – put 12 presidents only in the White House. The Democrats put only 2.

In short, the claims of Iain Murray and other free traders – none of whom have ever built a great nation – are blatant lies.

But they are wrong. Protectionism, not free trade, has traditionally been the policy of conservatives and Republicans, and it is the policy on which nations ascend economically; they descend on free trade.

Every nation which ever became a great power – from England under the Acts of Navigation, to Colbert’s France, to the US from 1861 to 1945, to postwar Japan, to China today – became such because it protected its economy (especially its industry).

Unlike Hamilton, Clay, and Lincoln, the free trade ideologues at the forementioned organizations never built a great nation.

Republicans won their first presidential election in 1860 (while also capturing the Senate) running on a pledge to institute tariffs to protect the industry. And they did. This nearly insulated America’s (or rather, the North’s) growing industry, allowing it to become the envy of the world. Successive Republican Presidents and Congresses continued these policies, shielding American industries with protective tariffs, thus allowing these industries to grow and leading America to overtake Britain (and the rest of the world) by all measures of industrial production (including coal mining and steel production) by the 1890s.

Protectionist tariffs on foreign products also allowed Congress to keep the books balanced and pay Civil War debts quickly while keeping taxes on Americans and American companies low. Before 1913, there wasn’t even any federal income tax.

America thus became the greatest industrial power on Earth, the envy of the world.

I said “successive Republican Presidents and Congresses”, because a protectionist economic policy proved itself to be not only economically successful, but also politically popular. From 1860 to 1924, the GOP – then known as the Party of Protection – put 12 presidents in the White House, versus only 2 Democrats.

By 1945, America, partially thanks to its protectionist policies and partially due to the destruction that WW2 inflicted on Europe and Asia, accounted for 42% of the world’s industrial production.

But then, something happened.

American political elites (including, increasingly, Republicans) caught the free trade virus and indulged in suicidal “free trade” economic policies.

The US joined the WTO organization, where it doesn’t have a vote, signed the GATT, and signed free trade agreements with many countries, opening its markets to their products while they kept their markets firmly closed to American goods and services.

Thus, the US stopped posting trade surpluses and, starting in 1971, began to run trade deficits which, since 1971, have been growing almost nonstop.

Big corporations, always greedily lusting for more profits and bigger salaries for their CEOs, began shipping jobs overseas.

By the 1980s, the situation was so dire that Ronald Reagan recognized the problem and asked the Congress to institute protective tariffs.

Yet, America’s slide towards the abyss on the skis greased by free traders was only slowed down, not stopped. In 1992, the US, at President Bush’s behest, suicidally signed NAFTA, opening its market to cheap Mexican products. In 1993, Republicans saved NAFTA from defeat by voting for it together with the pro-free-trade wing of the Democratic Party. Republicans literally rescued NAFTA from the dustbin of history (where it belongs) by voting for it – and thus own it.

The result? Millions of good-paying industrial jobs were lost, as factories were shipped to Mexico. Before 1993, the US had a trade surplus with Mexico. Since 1993, it has had a trade deficit with that country every single year.

In 1994, China began, on a large scale, its campaign to maximize its exports while closing its market to imports, and thus to steal Western industries, by devaluing its currency by 45%. Simoultaneously, tariffs on foreign products were hiked, and export rebates to Chinese exporters began to be provided, similarly to how they are provided in Japan.

(Japan has a 15% VAT rate on products sold on its soil, but it provides a rebate to its exporters for every product they sell abroad. So cars exported to the US face no American tariffs and are even rebated by the Japanese government, while American cars exported to Japan are taxed 15% as soon as they arrive at the Yokohama docks).

Yet, despite Chinese cheating on trade, the Congress – dominated by Republicans – gave China Most Favored Nation trade status, thus absolving Chinese products of most tariffs (while China did not reciprocate). In 2001, the Congress gave China that status permanently. In 2002, a Republican President allowed China to join the WTO. Thus, Chinese products enter America almost free of any tariffs or duties, but American products shipped to China are subject to steep tariffs.

Yet, Republicans, instead of learning from their mistakes, doubled down on their “free trade” policies. They gave Vietnam Most Favored Nation status in 2007. They gave President Bush an unconstitutional unilateral “expedited” negotiation authority to negotiate even more one-sided, unfair free trade agreements for dupes. They supported the FTAs Bush signed with Panama, Colombia, and South Korea late in his term.

In the 2008 election, all leading Republican candidates – McCain, Romney, and Giuliani – ran on free trade platforms.

The eventual Republican nominee, John McCain, even scaremongered people about “the siren song of protectionism” and went to a closed Ohio factory (which was closed because its owner shifted production overseas).

It didn’t endear him any voters, however. In the 2008 election, proud free trader John McCain was crushed 373-165, by the biggest margin of any Republican candidate since Barry Goldwater, losing even longtime Republican states like North Carolina, Indiana, and Virginia.

The election of Barack Obama probably gave some Americans hope that he would uphold his campaign promise to withdraw the US from NAFTA and to protect the US industry. He didn’t. He has barely been willing to impose tariffs on imported tires to save the tire industry.

With their own free trade mistakes costing them politically and the country economically, Republicans should have had, by 2012, learned that they were wrong and should have proposed a better policy, right? Wrong. Most Republicans continued to cling to their free trade ideology, as did the 2012 Republican nominee, Mitt Romney, who lambasted Obama for not signing any new FTAs for dupes (as if that were a bad thing), pledged to negotiate new FTAs, and firmly embraced free trade ideology. And although he pledged to designate China a currency manipulator if elected, and to enforce intellectual property laws, he wasn’t willing to do anything more than that, and even these half-measures earned him the ire of free trade ideologues such as the think-tanks and organizations listed above.

So, as the year 2012 begins to draw to an end, let us take inventory of 67 years of “free trade policies”.

They have destroyed the greatest industrial base the world has ever seen.

They have caused 55,000 factories to be closed and production to be shifted to countries where people work for slave wages and where there are no real environmental protection laws.

They have caused tens of millions of Americans to lose their well-paying manufacturing jobs and middle class worker wages to stagnate, in real terms, for over 2 decades.

They have brought about disastrous consequences for national security, as America is now dependent on foreign countries for essential things, even things essential for defense, such as Rare Earth Elements and the products made from them.

They have cost the Republican Party successive Congressional and Presidential elections, as former industrial powerhouses such as Ohio, Michigan, North Carolina, and Virginia – formerly red states – have turned against the GOP and become blue or purple states. Republicans have not win Michigan since 1984 and have lost both Ohio and Virginia in both of the last 2 presidential elections.

The GOP’s reputation as the Party of Protection has been tarnished and replaced by the reputation of a party that kowtows to big businesses and outsources jobs overseas.

America, formerly self-sufficient and producing everything in the world, now imports virtually everything it needs, from textiles and simple products to cars and Advanced Technology Products like computers and cell phones.

America lost her crown as the biggest exporter in the world to Germany in 2003, which itself was overtaken by China around 2010.

America’s trade deficits with Mexico, Japan, the EU, and the world at large are the highest they have ever been.

America’s trade deficit with China is the highest ever between any two countries.

And what were these trade deficits paid for with? Borrowed money. America is now the largest debtor in world history.

And to pay for lost revenue from abolished tariffs on foreign products, taxes are being hiked on Americans and American companies.

Can America be rescued? Yes, it still can, but there isn’t much time, and it will require a complete break with the free trade ideology and policies of the free trade ideologues running the CATO Institute, the Heritage Foundation, the Mercatus Center, and the Club for Corporate CEOs’ Greed. The US should:

• Immediately implement the Export-Import Certificates proposed by Raymond, Howard, and Jesse Richman. This means that no country would be allowed to export more to the US than it imports from America.
• Immediately impose a 25% tariff on all Chinese products imported into the US. China will then have a choice between letting American products into its market or financing the US Pacific Fleet.
• Strictly enforce intellectual property laws.
• Write, and strictly enforce, product quality standards on all imported products.
• Terminate the useless Export-Import Bank.
• Withdraw from NAFTA, the WTO, and the GATT.
• Abolish all loopholes in the taxcode and use the resulting revenue (as well as the revenue coming from tariffs on Chinese products) to cut taxes across the board for all Americans and all American companies. The corporate income tax rate should be no higher than 12.5% (it’s 35% today).
• Designate China as a currency manipulator.

Tens of millions of jobs will then be created and production will be shipped back to the US – because then, in order to sell products in the huge American market, you will have to produce things in the US. And foreign countries wishing to export to the US will have to open their own markets to American products on the basis of reciprocity.