An excellent article by Martin Hutchinson on the failure of “Free Trade”. The world has been here before. In the mid-1800s, Great Britain adopted the Free Trade mantra – and declined from the Workshop of the World to today’s sad irrelevancy. The same process is clearly (and unfortunately) well advanced in the US today.
A relevant question is whether the long-term negative consequences of de-industrialization can be reversed? The example of Great Britain would suggest the answer is No; once the lead has been lost, it can never be regained. On the other hand, the example of China might suggest that a once world-leading country which threw away its advantages can eventually scramble back up the slippery pole to the top – the only problem is it took 500 years!
The Bear’s Lair: The Whig Free Trade Myth is Baloney | True Blue Will Never Stain
"… the Whig theory of beneficial free trade is twaddle. Outsourcing to low-wage foreigners removes necessary skills and dumbs down the domestic economy, making it a feeble competitor to hungrier overseas nations who avoid this error. …
Gordon and Ryu outline several mechanisms by which outsourcing can reduce productivity. Invasions of imports produce stagnation in domestic industry growth, which reduces its margins and starves it of the investment funding needed to modernize and retain its customers. A second mechanism is the outright closure of domestic producers, whose survival is made impossible by foreign competition. A third is the compounding negative effect of reduced investment in firms being subjected to increased foreign competition. Finally, offshoring renders domestic engineers unfamiliar with the manufacturing process, hugely reducing their ability to make improvements through a process about which they lack knowledge. …
This miserable chain of events has happened before – in 19th century Britain, which abolished tariffs unilaterally in 1846-60 and to everyone’s surprise watched Britain’s industrial lead disappear as if by evil magic, while the British workforce after 1870 or so watched its wages steadily descend down the international comparisons. …