Free trade doesn't lower prices for American consumers - here's proof!
Our Buy American Mention of the Week!
by Roger Simmermaker
December 24, 2016
Do you think free trade with and reduced import tariffs on other countries like Mexico and China reduces prices for American consumers? Think again! It doesn't. Here's the proof:
Let's say you're in your local supermarket or drug store to purchase body wash - possibly the kind that I use - Irish Spring. There are more than a few options. You could buy the Irish Spring GEAR Skin Hydration Body Wash, which is made in USA and available at my local Winn-Dixie grocery store for $4.99. Or, you could buy the general and lower-quality Irish Spring Original Body Wash for the same price, which is made in Mexico.
Think this is an isolated case? Think again! There are plenty more examples.
How about Softsoap (made by American-owned Colgate-Palmolive)? You could buy the Mexican-made 'Soothing Aloe Vera' variety for 99 cents, or you could buy the U.S.-made 'Milk and Golden Honey' variety for the same price.
If you have cats like I do, you might be interested in (like I am) a lint roller so that your American-made clothes stay lint-free. There is no price difference between the American-made EverCare brand and the Mexican-made Scotch brand. Both brands were $4.99 at my local Target store.
Looking for American-made Christmas cards for the holidays? At my local Hallmark store, I found that many Chinese-made cards were actually more expensive than similar American-made cards. I recently bought more than a few American-made Christmas/Hanukkah/Holiday cards at just $2.99, bypassing many 'made in China' cards for $4.99.
How is this possible? Despite the tired old refrain from multi-national companies that they need to offshore to foreign companies to lower production costs and increase necessary profits, it seems that none of this really matters since reduced labor costs don't always translate into lower prices for American consumers.
Why would they not, especially when wages in Mexico are one-eighth the wages in America? In China, the wage disparity is even more uneven.
This is certainly a not a new phenomenon. Over a decade ago in 1994, when I learned Levi's was closing its last domestic factory, I bolted to my local Levi's outlet to buy the last of the America-made Levi's before they were no longer available. To my surprise, the Levi's jeans made in American and the ones made in Bangladesh - side by side on the shelf - were the same, exact price.
Years before, when Christmas shopping for sweaters in my local Sears store, I found varieties of the same brand made in the USA and imported were exactly the same price.
I could go on and on with many more examples. But the point is that the 'free market' orthodoxy that free trade is beneficial to American consumers because it supposedly lowers prices and bolsters the buying power of consumers is - in many cases - simply untrue.
The typical, opportunistic political argument is that 'free trade' is one of America's founding principles. This argument, however, is simply not founded on facts.
The first major bill signed by George Washington, after approving the Seal of the United States, called for various tariffs on imports and 'the encouragement and protection of manufacturing' in America. This was the Tariff Act of 1789, which President George Washington signed into law on July 4, 1789.
The 'American System,' which was rooted in the philosophies of Alexander Hamilton, was an economic system that dominated U.S. policy in the first half of the 19th century. This plan featured import tariffs to protect and promote American industry.
We have a choice to make as a nation. Our country can embrace a trade policy in the tradition of Abraham Lincoln, who said "I... would continue (trade) where it is necessary, and discontinue it, where it is not. As instance: I would continue commerce so far as it is employed in bringing us coffee, and I would discontinue it so far as it is employed in bringing us cotton goods."
Or, we can continue to embrace a disastrous free trade policy, advocated by Karl Marx (who developed the Communist Manifesto), and said "But, in general, the protective system of our day is conservative, while the free trade system is destructive. It breaks up old nationalities and pushes the antagonism of the proletariat and the bourgeoisie to the extreme point. In a word, the free trade system hastens the social revolution. It is in this revolutionary sense alone, gentlemen, that I vote in favor of free trade."
For America's economy to survive and thrive, we need a return back to the 'American System' or risk producing "want and ruin among our people" through "abandonment of the protective policy by the American government" that Abraham Lincoln warned us about.