The Misselling of Trade

The late New York Senator Daniel Patrick Moynihan had a famous saying that “you are entitled to your own opinions but not to your own facts.” Moynihan’s admonishment played out recently during a U.S. Chamber of Commerce/Public Citizen dust-up on whether our free trade agreements create or destroy American jobs.

The verdict is in… both sides are correct!

International trade creates jobs and international trade eliminates them. However, using job creation or elimination as the yardstick by which to measure a “freer” trade agenda misses the point entirely. 

The hard reality is that fiscal and monetary policies create and destroy more jobs in the United States than does trade policy. In terms of job creation, trade policy is just the handmaiden to how we formulate our tax codes and how we set our interest rates.

If true, why then support a freer trade agenda? Easy. A freer trading system gives people more control over their lives. Freer trade leads to a range of consumer choices – by goods, by price, by quality – which enables the consumer to use the revenue saved for life’s other purposes including education for one’s children, health care for one’s parents or leisure activities for oneself.

No one will ever win the job creation/job destruction trade argument. Creating a rationale for more open trade based on employment alone will reduce the argument to a statistical back and forth. But moving toward a freer trading system is not possible until we focus on the real inherent benefits of trade and not on the plethora of “facts” that would have bedeviled even so great a mind as that of the late New York senator.

Barry Schumacher is senior vice president and director of international policy, APCO Worldwide. This post marks his debut on VVP. Subscribe to VVP today for more of his insights on international trade, government and investment.