Back when Saturday Night Live was regularly funny, it ran a parody of an ad for a product called Shimmer. Husband and wife (Dan Aykroyd and Gilda Radner) argued over whether new Shimmer was a floor wax or a dessert topping. Zany spokesman Chevy Chase glides into the scene, interjecting, “Hey, hey, hey, calm down, you two. New Shimmer is both a floor wax and a dessert topping!” He sprays some onto Radner’s mop and some onto Aykroyd’s butterscotch pudding, at which point Aykroyd blurts out “Mmm, it tastes terrific!” and Radner, mopping, exalts, “And look at that shine!”
It was a biting commentary on how weird capitalism was in 1970s America—it seemed like an unfortunate time for pretty much everybody—but it also got at the idea of oversell.
Oversell is, and has been, endemic in American politics. As Josh Rovner wrote, riffing on Theodore Lowi’s End of Liberalism,
In the presence of expanding institutions, large numbers of interest groups, and increasingly skeptical voters, it is impossible to have “a proper conspiracy among leaders in pursuit of the national interests of the United States.” In this environment it is foolish to publicly admit that no policy is perfect, that every policy involves value trade-offs, or that total success is an illusion. Because of the need to mobilize so many disparate players, the policymaking process can become an exercise in hyperbole. Threats are oversold, as are policy solutions.
Amid this reality, Samuel Gregg makes a case for what he alternately calls the “modest,” “conservative,” or “realist” case for free trade as contrasted with what he terms the “idealist” (I prefer “utopian”) case made by 19th century liberals like Richard Cobden. Even if trade and interdependence don’t necessarily bring about perpetual peace and prosperity, free exchange is simply a good thing, and free traders should bring arguments for it back down to earth.
Gregg argues that the current era is not only anti-utopian but is inclined toward a transactional politics that privileges the state, the national interest, and relative gains. Accordingly, Gregg urges free-traders to emphasize the benefits of trade to American consumers, particularly the poor; to American companies, in the form of access to overseas markets; to American workers, in the form of increased wages due to increased productivity; and to the state itself, in the form of increased GDP growth, which will make America “stronger and more influential… in world affairs.”
Two bottom lines up front: Trade is good. On first principle grounds, the idea that we would want the government determining who can buy and sell products from and to whom is antithetical to liberty. And from a macroeconomic perspective, the case for trade is quite clear. The resurgence of political support for protectionism has not been accompanied by serious scholarly work overturning the macroeconomic consensus for free trade.
Secondly, I am biased in favor of realist arguments. Any claim that all good things go together sets off screeching sirens in my brain—someone is trying to hustle me. The Iraq War, the Abraham Accords, and permanent normal trade relations with China (more on that later) were all oversold. I see conflict between my own values everywhere and reject oversell arguments always and everywhere. I’d make a bad politician.
So, I’m biased to agree with Gregg, but agreement is boring, so let me lodge two potential objections:
Centering the case for trade on its benefits for American workers could have some unintended consequences. Trade does benefit workers on aggregate, but it provides huge benefits to some, more modest and diffuse benefits to many, and harms others. The politics here could become nasty and divisive, as evidenced in Adam Posen’s 2021 Foreign Affairs essay which blamed “angry, mostly white and male swing voters” for the U.S. failure to liberalize trade further, which he argued harmed the interests of females and nonwhites. Might not a narrower, transactional argument open the country to even more identity politics that we would do well to avoid?
When Gregg writes that trade liberalization benefits the state because “the wealthier a country becomes, the stronger and more influential its place in world affairs,” it raises the question, Who benefits more? The United States has benefited tremendously from China’s opening to the world economy, but China has benefited much more. In 2000, China’s GDP was 12% the size of the U.S. at market exchange rates and its military spending was 7% of U.S. spending. By 2021 its economy was 77% the size of America’s at market exchange rates and by 2020 its military budget was 32% of ours. What should a realist free trader make of this situation?
The China case brings up a broader question from me, pertaining to Cobden’s view of trade as producing “the natural and lasting triumph of… peace.” Gregg frets about this view, and so do I.
One still hears that economic interdependence between the United States and China will act as a firebreak against war. For instance, in one recent essay, Daniel Drezner uses Graham Allison’s work on the “Thucydides trap” to argue that China and the United States not yet having gone to war “might be the most important data point” in defense of the claim that economic interdependence prevents war. What he does not mention is that 14 of Allison’s 16 cases of power transitions happened before the nuclear revolution, and the two that happened after it did not result in wars. (The United States and Soviet Union had almost no economic interaction, but both possessed large nuclear arsenals.) Putting too much stock in economics at the expense of nuclear weapons and geography shows how influential the utopian case remains.
Moreover, the causal mechanism that is supposed to prevent interdependent countries from going to war with one another may not work in all cases. Recent work by Mariya Grinberg, for example, shows that interdependent countries not only regularly go to war with one another, but that they commonly continue trading. If interdependent countries continue trading while at war, then fear of lost trade can only be a limited inhibition on going to war. (As she points out, the same fact serves as an argument against “decoupling.”)
Enduring elite confidence that trade deters conflict, a vestige of the Cobdenite vision, raises a final question: Gregg points out that the utopian vision created “enormous cultural influence” in Great Britain (and, I would add, in America). Utopian visions can exert cultural influence, whereas grubby realist analyses rarely do. And cultural influence can matter quite a lot. So, though Gregg and I prefer it, might not the realist case for free trade be outgunned by the Shimmer Floor Wax case?
Justin Logan is director of defense and foreign policy studies at the Cato Institute.