"Free Trade Has Destroyed American Manufacturing."

This criticism of free trade is wrong.

To understand why it is wrong, first consider this chart of the per capita output of American manufacturing. It is not a chart that most Americans have ever seen. Economist Mark Perry has provided it.

He also provides another chart that shows manufacturing output in the five major manufacturing nations.

 

American manufacturing is a remarkable success. Yet it flourishes within a low-tariff/sales tax framework. It gets more efficient. Firms hire fewer workers to maintain their productivity. That is what efficiency is all about: a reduction in the the price of inputs for any level of output. The Wealth of Nations:... Smith, Adam Best Price: $9.98 Buy New $1.99 (as of 03:35 EST - Details)

Nevertheless, there are never-ending demands from protectionists, who want the federal government to impose sales taxes on imported goods. These demands go back to 17th-century mercantilism. They believe that higher taxes promote economic prosperity. Politically conservative protectionists know that their call for higher taxes will be resisted by other political conservatives, so they do not call these sales taxes “sales taxes”. They call them tariffs. By concealing the economic growth-reducing nature of these sales taxes behind a politically and traditionally acceptable word, they gain support from conservatives who have never studied free market economics, beginning with their complete ignorance about Adam Smith’s anti-mercantilist book, Wealth of Nations (1776).

Here is what protectionists focus on: only about 10% of the American economy is based on manufacturing.

To understand the importance — meaning unimportance — of this statistic, look at this chart. It is posted here.

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