Donald Trump has been vocally critical of American companies who have shipped jobs overseas. His victory in pivotal Rust Belt states cemented his status as a champion of the Reagan Democrats, blue-collar, union-affiliated, working class voters; a demographic normally inclined to vote for the Democrats for economic reasons, but who are open to the seduction by the siren songs of economic populism and nationalism.
Reagan blew Jimmy Carter (1980) and Walter Mondale (1984) away by appealing to this much-romanticized and long-downtrodden demographic. Trump shrewdly targeted large parts of his campaign message and strategy towards such voters, with demonstrable, even shocking, success. Trump won an estimated 42% of union voters: unions are typically one of the most reliably liberal voting blocs. If Trump wins nearly half of union voters, the Democrats are in trouble.
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How did Trump do this? To begin with, blue collar unionized voters are terrified of having their jobs shipped overseas. Last year when the Carrier air conditioning and furnace plant in Indiana announced that it would be relocating manufacturing to Monterrey, Mexico, in a bid to save USD $65 million a year, Trump, in full campaign swing, went on the warpath, using Carrier as a national punching bag to demonstrate the evils of globalization and free trade agreements. It is undeniable that for the hundreds of northeastern Indiana workers who were about to lose their jobs, many of them represented by the United Steelworkers union, this was catastrophic.
Yet, Trump fundamentally fails to view the far more important piece of this equation. For the 320 million Americans who do not work at the Carrier plants, they are going to be paying far less for their heating and air conditioning, thanks to Mexico’s lower labor costs.
Every time that the free trade argument comes up, special interest groups in the United States fight tooth and nail to protect their interests. But this is not beneficial for our democracy or for our economy. National economies should compete in their areas of strength. If Mexico is a more cost effective place to manufacture heating and air conditioning equipment, it should be manufactured in Mexico.
Unfortunately for all Americans, our political system often thrives on putting the interests of special interest groups over the interests of all Americans.
It is easy to see the hurt and the pain and the anger at an Indiana manufacturing plant where hundreds of blue-collar workers are informed that Mexicans are about to take their jobs. That makes for a great cut for the 6 o’clock news, or a soundbite for local radio, or even stump speech material for a presidential candidate.
It is much harder to palpably sense the benefit felt by all Americans, of paying less (most likely considerably less) for their heating and air conditioning: items that virtually every American household needs and uses on a regular basis.
It is hard to imagine, for example, a CNN reporter doing a story on outraged Americans forced to pay 20% more for their air conditioner because Carrier did not take advantage of cheaper Mexican labor costs.
I can picture it now: Anderson Cooper shows up at a local Walmart to interview an outraged consumer: “This air conditioner costs $149.99, but it would have cost only $119.99 if Carrier had relocated those jobs to Mexico. I am outraged that those Carrier executives didn’t ship those manufacturing facilities to Monterrey where labor costs are lower!”
Right…we will never see this story. To the local politician, union organizer, community activist, informed voter, it is very easy to hype isolated examples of the detriments of globalization. Yet, few champion the benefits that all Americans, indeed all the world, have experienced as a result of the free trade that lubricates the engine of the global economy.
When it comes to Mexico, Trump must understand that it is vital to the interests of the United States to have a prosperous, stable, and productive southern neighbor. Free trade agreements are hardly the enemy of the American worker. Even if you buy into the economic populism that seems to have taken the nation by storm, a recent study showed that during the 23 years of NAFTA‘s existence, only 600,000 jobs were “lost” to Mexico. As numerous economists have noted, the real manufacturing job killer is not Mexico, but the micro-chip, which has automated much assembly line work in recent decades.
A war is likely to rage in the coming months within the Trump administration. A war between those who adhere to the traditional classical liberal and/or libertarian economic outlook, and those who have been seduced by the seductive siren song of economic populism and nationalism.
Let’s hope that Trump, who has a degree from the Wharton School of Business, will ditch the foolish populism that seemed to captivate him during the campaign trail, and look at the bigger picture. Free trade is good for America. It is good for Canada. And it is good for Mexico.
Competition is at the very foundation of free trade in the context of a global economy. And that should be a persuasive argument for “the world’s most competitive businessman.”
By Brittany Hunter Milo Yiannopoulos, the controversial and polarizing poster boy of the alt-right, was scheduled to speak at the University of California at Berkeley last week. However, thanks to destructive riots that resulted in almost $100,000 in damages, the event was canceled just hours before it was due to begin. As expected, President Trump had strong opinions about the incident, which he made publicly known on his Twitter account. Threatening to cut almost $500 million in federal funding, Trump chastised the historic California university for canceling the event and accused its administration of obstructing the First Amendment right to free speech. https://twitter.com/realDonaldTrump/status/827112633224544256 But notice: this suggestion comes as a threat, as punishment for failing to control protesters, the withdrawal of a subsidy as a punitive measure. This is not the way to achieve what we desperately need: cutting off all federal funds for universities as a matter of fiscal soundness and the principle of freedom itself. Cut them Off! Whether he realizes it or not—and it is almost certain that he does not—President Trump’s statement provided a compelling case for ending federal funding to all institutions of higher education. One of the many problematic issues with federal funding is the tendency of politicians to use it as a bargaining chip against the opposition. Partisan politics can turn ugly rather quickly, which is why budget cuts are often perceived as punishments rather than sensible economic decisions. As the saying goes, “he who holds the purse strings holds the power.” Unfortunately, federal funding is almost always used as a means to force compliance from those receiving the financial aid. Institutions that choose to accept this money are soon likely to discover that they are required to adhere to certain stipulations that might not otherwise have been agreed to. Read More: Colombia President Santos Allegedly Accepted Odebrecht Bribes During 2014 Campaign Read More: Colombia Officials Search Odebrecht Offices for Evidence of Bribery The Common Core standards, for example, were pushed onto the states through a federal stimulus package. Once this federal money was accepted, the states were required to adopt a curriculum that met certain standards. The only way to really stay autonomous is to simply stop accepting federal funding. Conveniently enough, the government was waiting in the wings with a ready-made plan that accomplished this goal. If states refused to comply, the federal money was retracted. Luckily, private institutions are not subject to the same rules as the public sector. For those organizations that operate solely on private funds, it is much more difficult for the federal government to interfere, although not impossible. If, for example, the student body was opposed to the idea of hosting a speaker they strongly disagreed with, a private university would have every right to deny that speaker access to campus facilities. However, so long as federal funding is given and received by institutions of higher education, campuses have little to no recourse when it comes to censoring certain individuals on campus. While President Trump does not actually have the authority to cut federal funding from U.C. Berkeley, every threat, substantial or not, comes with a hurricane of hysteria and fear over what the new president may do. The only way to really stay autonomous without binding yourself to federal conditions is to simply stop accepting – and stop offering – this money altogether. Brittany Hunter is an associate editor at FEE. This article was originally published on FEE.org. Read the original article.