In 2019, the Center for Freedom and Prosperity released this video documenting the benefits of free trade.
The case for free trade between nations is the same as the case for free trade between states. Or between cities. Or between households.
Economists from the right and left agree that we all become richer when there’s more competition and more specialization.
Sadly, this common-sense understanding of trade is not very popular in Washington. Both Biden and Trump are protectionists, either because they don’t understand economics or because they want to get votes and money from special interests.
The authors, Gary Clyde Hufbauer and Megan Hogan, calculated what global trade has meant for American prosperity. Here are just a few of the highlights.
This Policy Brief updates previous estimates of the payoff from globalization to the American economy… The bottom line, argued here, is that post-World War II engagement with the world economy by the United States generated cumulative gains over several decades that, in the year 2022, lifted annual US GDP by 10 percent in that year, about $2.6 trillion… The $2.6 trillion in gains in 2022 work out, on average, to about $7,800 per person and $19,500 per household.18 Average gains in 2022 would have been considerably larger but for political headwinds that have slowed trade expansion.
For wonky readers, here’s Table 1 from the report.
As you can see, every bit of economic analysis concludes that free trade leads to a bigger economic pie, while protectionism produces the opposite result.
Dan Mitchell is co-founder of the Center for Freedom and Prosperity and Chairman of the Board. He is an expert in international tax competition and supply-side tax policy.
