How to Create Reasonable Trade Policy

Noah Millman presents some entirely sensible thoughts on American trade and industrial policy.

The goal, it seems to me, should be free and balanced trade. A persistent and large trade deficit or surplus is a sign of serious economic imbalances. Whether the deficit or the surplus country benefits most is a matter of dispute – I suspect it depends on the totality of the circumstances – but both stand to lose badly when the imbalance reaches a crisis of unsustainability. In any event, I don’t think the efficient solution is simply to make such imbalances illegal, as Warren Buffett has suggested, but that doesn’t mean we shouldn’t be seeking policy levers to restore balance to trade. An industrial policy that aims to help the country keep moving the country up the value chain – within both the manufacturing and tradable service sectors – while minimizing the degree to which the government picks specific winners makes sense to me as a framework, because the only way to generate high-wage jobs – which is ultimately the goal here – is to keep moving up the value chain, but I don’t think our government – or any other government – has a great track record at picking national champions, or running companies.

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Justin Green

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