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(This article originally appeared in The Wanderer and is reprinted with permission. To subscribe call 651-224-5733.)
Being conservative meant being anti-Communist, a defender of free-market economics, and an adversary of the moral relativists in the government and the academy. A conservative could pick up National Review, Human Events, or Modern Age, and know that he would feel at home.
No more. The old consensus on the economy is gone. Conservative columnists such as Patrick J. Buchanan and Charley Reese regularly attack free-market presumptions once considered central to conservatism. Says Buchanan in a recent column: “Consider what free trade is costing. America’s industrial dynamism is vanishing. Company towns are turning into ghost towns. High paying manufacturing jobs that provided a living wage for one man to raise a large American family on a single income are being shipped to foreign workers” and we now face “deficits in textiles, shoes, and steel…autos, trucks, TVs, VCRs, automatic data processing equipment, office machines, electrical machinery, power-generating machinery, metal-working machinery, industrial machinery and optical goods.”
Buchanan’s analysis is dismissed by powerhouses publications such as National Review, the Weekly Standard, Forbes and the Wall Street Journal, whose editors trot out charts and graphs to make their case. They insist that an economic boom has occurred as a result of free trade. Rush Limbaugh agrees. William F. Buckley agrees. They maintain that Buchanan and those who side with him are modern Luddites caught up in an irrational fear of progress. They tell us that, while the “creative destruction” of capitalism will cause pain in some segments of the economy, it will generate the economic growth upon which our ongoing prosperity depends.
Who is right? Well, Forbes and the Wall Street Journal do not deny that certain industries and regions of the country have been unable to compete with foreign industries, but maintain that we must look at the big picture and that industries that cannot compete should not be protected at the expense of the country as a whole. They point out that the country, as measured by indices such as Gross Domestic Product and National Income, the so-called national accounting measures, has prospered as never before in this era of free trade.
And Forbes and the Wall Street Journal are right – as measured by those indices. They may also be right about what free trade has meant for the average American’s economic wellbeing. I don’t know. I have no way of checking life throughout the country and evaluating whether the average person is doing as well as Buchanan’s adversaries insist.
But I do know this. A higher GDP, higher corporate profits and higher average levels of disposable income can only tell us so much. These measures of our economic wellbeing can paint a false picture. You don’t have to be an economist to see why. It is a matter of common sense. Let us make the point by picturing an imaginary small country.
At the risk of oversimplifying, let us say this country has only two industries: a manufacturer of light bulbs and a manufacturer of automobile tires. Let us assume that both factories have ten workers, earning $20,000 a year and that both factories are earning $100, 000 profit. For many years, both factories have profited. But times have changed and the light bulb manufacturer can no longer compete with foreign light bulb manufacturers. If protective tariffs are not imposed, he will close down operations.
To continue our scenario, let us say that free trade advocates defeat the tariff proposal favored by the light bulb manufacturer. So the light bulb company goes out of business. Consequently, an industry earning $100, 000 profit per year no longer exists. Its ten employees earning $20,000 each are out of a job. Thus the country is poorer by $300, 000: $100,000 of corporate profit and $200,000 in workers salaries are gone.
However, let us also posit that, because of the benefits of free trade, the automobile tire factory now finds its business booming. It’s profits increase by $300,000 because of the tires it ships to overseas markets. Moreover, its employees go on overtime, and now earn an extra $10,000 per year.
No one can deny the facts: as a result of free trade the country is more prosperous. Facts are facts. While $300,000 was lost when the light bulb factory closed, $400,000 was picked up because of the increased business at the tire factory. The country is richer by $100,000. But is it better off economically? That is the question. I’d say no, even though graphs and charts would indicate that it is. The country is richer, but a business – the light bulb factory — has closed and ten workers, half of the country’s workforce, are in dire straits.
Now, admittedly, life is not this simple in the real world. But our allegory illustrates something that we cannot overlook, a point underscored repeatedly by the papal social encyclicals. A country is a made up of human beings, not national accounting measures. We must ask whether booming urban centers, with rents and real estate costs shooting through the roof and driving up the GDP, make up for deserted factory and mining towns populated by unemployed workers who can see no future for themselves and their children? I’d say, no.
Please don’t misread me. I am not saying that the United States resembles my imaginary country with its large percentage of unemployed men and women. Maybe things are not as bad as Pat Buchanan thinks. But I insist that, when someone points to a rising GDP and higher average salaries, he is not giving us a complete picture of the health and vitality of a national economy, and that Pat Buchanan deserves more than a smug reference to the GDP when he makes his case. It is not that simple.
