FLORIDA, June 28, 2012 — No matter how hard the federal government tries to stimulate the economy, the Great Recession always seems to win out in the end.
It has been nearly four years since the global financial crisis began, and we have yet to figure a way out of this mess. Is America doomed to a future that resembles the third world more and more each year? Something serious must be done to turn this trend around, needless to say, but what?
The Ron Paul movement has taken root inside of the Republican Party. Generally speaking, it promotes hardline libertarianism; something which has no use for ideas like trade protectionism. Will this political force permanently reshape the GOP? Should libertarianism be regarded as a viable philosophy for governing? Are abolishing the Federal Reserve and going back to the gold standard really good plans?
In this third and final part of our conversation, Ian Fletcher, the senior economist at the Coalition for a Prosperous America, shares his opinions on these pressing subjects. He also explains what motivated him to become such a strong advocate for fair trade policies.
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Joseph F. Cotto: One of the reasons that the American economy consistently fails to emerge from the Great Recession is that it produces a decreasing number of material goods. What would you say can be done to reinvigorate our manufacturing sector? Honestly, is this even possible now?
Ian Fletcher: The single biggest thing we can do to restore the strength of American manufacturing is cut the trade deficit. And yes, we can restore American manufacturing. Those industries that have survived in this country have shown enormous productivity growth in recent years: it’s a myth that Americans can’t do these things well anymore. And other nations with factory wages even higher than the U.S., like Germany, have booming manufacturing exports—you don’t have to be a cheap-labor economy to win at this game. You do have to have a coherent national economic strategy, which is something the U.S. used to have. Strategy has got to stop being a dirty word, like it’s Soviet-style central planning.
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Read also How far has America’s economy sunk? and What’s so free about free trade? Part one and two of Joseph Cotto’s interview with Ian Flectcher
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Cotto: Illegal immigration poses an astounding threat to America’s economy. Just a short time ago, President Obama signed a mini-DREAM Act of sorts which will allow an estimated 800,000 illegals to avoid deportation. What do you think that the ramifications of this will be?
Fletcher: Immigration isn’t an issue I work on.
Cotto: Many political forecasters are saying that the future of the American center-right belongs to libertarians; specifically those of the Ron Paul variety. Do you share this view? Regardless, from your perspective, would the U.S. economy would fare well under strong libertarian influence?
No, I do not. Libertarians are a noisy minority in the Republican party but not even close to numerous enough to take it over. Love of liberty is very much in the American grain, but libertarianism is something else: a philosophical cult that is superficially attractive on first glance but ends up disappointing most people when they realize all its weird implications, from crank economics to sexual libertinism to this odd “we’re not racists but people should be free to discriminate” position that Ron Paul has come under fire for. Libertarianism is like socialism: it attracts precocious teenagers but most people grow out of it as they get experience in real politics and see that you can’t reduce it all to one thing, not even freedom.
If all you mean by a “strong libertarian influence” is giving free markets and private property their due, then we’re there already and have been for a long time: this country is more free-market and private-property oriented than most other major economies. The results, the pluses and minuses, are all around us: we’re good at things that depend mostly on a strong private sector, but lag other nations in the provision of public goods. If you mean having the U.S. adopt libertarian crank ideas like abolishing the Fed or returning to the gold standard, then we’d be in for a rough ride. The U.S. economy in the late 19th century, when we actually implemented such policies, was considerably poorer, nastier, and more volatile than what we have today. The hard data is out there if you want to look.
Cotto: Now that our discussion is at its end, many readers are probably wondering exactly how it was that you came to be one of America’s foremost advocates for fair trade. Tell us a bit about your life and career.
Fletcher: Well, I studied at the notoriously free-market University of Chicago, but they were actually fairly honest about the limits of free-market thinking, much more honest than some of the ideologues out there. They taught that there were all these anomalies in markets, that you couldn’t just believe in markets as a matter of faith, you had to have empirical evidence. So I was never an outright Kool-Aid drinker of free trade or any other form of free-market extremism. Then I ended up, years later, as an economist in private practice, serving hedge fund operators, private equity guys et cetera, researching quirky outside-the-box stuff that other economists didn’t want to touch. And I eventually got tired—this was before the crash—of helping people with too much money make even more. About this time, I was also getting worried about the trade deficit, so I went looking for a book that would really put the idea of free trade on trial and let me decide if I supported it. And there wasn’t one. So I decided to write it myself, and I found out that free trade really doesn’t stand up to serious scrutiny.
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Very few Americans, from my experience, think highly of free trade fundamentalism.
However, when push comes to shove during election season, the very people who should be speaking about trade deficits and anti-tariff legislation usually choose not to. Instead, we hear about antigay, antiabortion, and pro-creationism rallies.
Aside from the fact that these are all largely judicial issues, which mere congresspersons and senators have little control over, their presence detracts attention from far more practical concerns. Economic policy, along with national security strategies, are what really determine whether a nation succeeds or fails.
Hopefully, enough voters will acknowledge this glaring reality before their jobs, or the jobs of loved ones, are outsourced.
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