[Peter Morici| December 1, 2016 |Washington Times]
Economists and foreign policy experts fear Donald Trump’s economic nationalism will disrupt the global institutions that have fostered international economic cooperation and security for seven decades and instigate chaos.
Fortunately for unlettered folk, Mr. Trump’s got it right and the experts are wrong.
Recognizing high tariffs and currency manipulation exacerbated the Great Depression and contributed to the rise of militarism in Germany, Italy and Japan, after World War II, the United States and its allies established the General Agreement on Tariffs and Trade (which later became the World Trade Organization) to lower tariffs and other barriers to trade, the International Monetary Fund to police national exchange rate regimes, and the World Bank to provide assistance to developing countries.
The GATT was intended to link together institutionally similar market economies and encourage international commerce based on comparative advantage. Those were supposed to create better paying jobs in export industries to replace those lost to imports — American workers would move into autos, industrial machinery and high tech as they ceded markets in footwear, textiles and furniture.
Things have not worked out that way.
As GATT membership expanded to include Japan and other Asian nations, arcane forms of protectionism, mercantilism and currency manipulation often replaced high tariffs and more transparent barriers to trade. American industries such as electronics and autos were targeted by foreign governments and cartels and severely damaged. Too few decent paying jobs in services were created to replace employment lost in manufacturing.