Trade Hobgoblins: Japan, Mexico and Now China

"The whole aim of practical politics is to keep the populace alarmed -- and hence clamorous to be led to safety -- by menacing it with an endless series of hobgoblins, all of them imaginary."~H.L. Mencken

When it comes to trade, politicians certainly need an endless series of imaginary hobgoblins to keep us alarmed. In the 1980s, the trade hobgoblin was Japan, which was going to: a) destroy our manufacturing sector, b) take away all of our jobs, and c) then buy up American assets, TBonds and real estate with the dollars flowing to Japan to buy its cars. In the 1990s, the trade hobgoblin was Mexico and NAFTA, and the nitwitery of a "giant sucking sound" of U.S. jobs to Mexico that never materialized.

The current trade hobgoblin of course is China, writes GMU economist Russell Roberts in today's WSJ article "Protectionists Never Learn." After tracing the history of previous trade hobgoblins Japan and Mexico, Roberts asks the question:

"So why can politicians still make China scary? Why didn't Americans learn from the previous sky-is-falling episodes? The simple answer is that if you don't understand economics, you might be convinced by a politician who says that trade with China is bad for America.

The next time you find yourself losing sleep over China, remember that you were worried about Japan and Mexico and everything turned out OK."

Amen.