Whitman's Anti-Trade Tirade Points In the Wrong Direction

Ah, what's that they say about learning a little economics being more dangerous than knowing none? I refer to "Reassessing America's Free Trade Policies" (March 13) by Bradley Whitman. With such a delightful list of dressed-up economic half-truths, one would surely be remiss not to take a bite! Or maybe, just a few.

Mr. Whitman writes that "the restraint of competition stifles innovation and also contributes to lower levels of productivity and standards of living." Yet he later advocates the subsidizing of American companies in foreign markets "until all foreign companies go bankrupt" after which "American companies could then assume control of the market...and the United States would be free to extract economic rents indefinitely." This is a clear contradiction; the benefits of competition are presumably the same, whether in the US computer industry or the Japanese kimono market.

As an instance of a successful champion which has benefited from government subsidies, he happily cites Airbus Industries. That choice would be hilarious, if it were not quite so bizarre: most Europeans are hardly bursting with pride over the alleged success of Airbus. It is the classic case of the "infant industry" that refuses to grow up, constantly sucking in subsidies which have promoted gross inefficiency and stifled innovation.

More importantly, Airbus is not unique. Just ask any of the harassed managers at Credit Lyonnais or Air France. Pundits, eager to promote government intervention, would do well to remember that one of the most important economic lessons from the post-War era is that, except in textbooks, government failure is more wide-ranging and much more damaging in economic terms than market failure.

Mr. Whitman adds that the U.S. should employ its considerable economic and political clout to "pry open the markets of other nations for our benefit and the benefit of the world economy." Global liberalization is indeed a worthy cause, but only if promoted within a multilateral framework, such as that offered by the much-maligned World Trade Organization.

(And, no, contrary to Patrick J. Buchanan, the WTO, the UN and the International Court of Justice--ha, ha, seriously--do not intend to rule the U.S.)

The sort of unilateral school-yard bullying Mr. Whitman recommends is precisely the sort of tactic most inimical to a liberal free-trading order; the assorted euphemisms of "fair trade" "reciprocity" and "objective targets" often mask crude attempts at protectionism and managed trade.

There are already signs that America's partners are increasingly less willing to submit to this reckless bullying: look no further than the phony triumph of the 1995 car agreement with Japan, when the Japanese (rightly) refused to offer the guarantee of any numerical targets.

It may well be true that foreign markets are less open than those of the U.S. The U.S. can and should seek greater liberalization through the existing multilateral institutions. Indeed, the WTO already offers the means by which the U.S. can attack the discriminatory practices of its trading partners.

Aggressive unilateralism, while tempting, will only destroy the current liberal system of trade. Mr. Whitman should reconsider before suggesting that the crude protectionism and anti-free trade tirades of Pat Buchanan "do point in the right direction." They do not. --Chuanfei Chin '99