Obama and Free Trade: Q&A With Jagdish Bhagwati

Free trade is never more necessary - or vulnerable - than in times of economic distress. The current global downturn is no exception. Protectionist barriers have shot up all over the world, including the United States.

Last year, Congress killed a pilot program allowing Mexican trucks to transport goods across America and included Buy America provisions in the stimulus bill banning foreign steel and iron from infrastructure projects funded by the legislation.

More disturbingly, President Barack Obama, after chiding Congress for flirting with protectionism, initiated his own ill-advised affair by imposing a 35 percent tariff on cheap Chinese tires.

If the world manages to avoid an all-out trade war of the kind that helped trigger the Great Depression after the U.S. imposed the Smoot-Hawley tariffs in 1930, it will be in no small part due to the efforts of one man: Jagdish N. Bhagwati, an ebullient and irreverent 76-year-old professor of economics at Columbia University.

Bhagwati has done more than perhaps any other person alive to advance the cause of unfettered global trade. A native of India, Bhagwati immigrated to the United States in the late 60s after a brief stint on the Indian Planning Commission, where he learned first-hand the insanity of an economic approach that tried to modernize a country by cutting it off from world trade.

Since then, he has devoted his efforts, both in academia and in the popular press, to showing that there is no better way of improving the lot of both advanced countries and the developing world than through free trade. His path-breaking contributions to trade theory have put him on the short list for a Nobel Prize in economics.

Though a dogged trade advocate, Bhagwati is anything but dogmatic. He is a free spirit who draws intellectual inspiration from many disparate ideological camps. A self-avowed liberal, he is also something of a Gandhian social progressive, though Gandhi himself supported economic autarky. Bhagwati works with numerous Third World NGOs on a host of human rights issues. Yet he has no problem taking on these groups - or his famous student, Nobel laureate Paul Krugman - when they question the benefits of trade.

In fact, he devoted his 2004 magnum opus, In Defense of Globalization, to a point-by-point rebuttal of these critics. Although he doesnt vote Republican because he dislikes the partys nationalistic jingoism, he readily declares that Democrats pose a far bigger threat to international exchange than Republicans.

Last summer, Shikha Dalmia, a senior analyst at the Reason Foundation, interviewed Bhagwati in his New York office. For a transcript of that interview, go to http://reason.com.

This video interview was filmed on the same day and conducted by Dalmia, Reason Associate Editor Damon W. Root, and Reason.tv's Dan Hayes, who shot and edited the video. Approximately 6 minutes.

Go to Reason.tv for downloadabe iPod, HD, and audio versions. And subscribe to Reason.tv's YouTube channel and receive automatic notifications when new material goes live.

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[truthadvocate]

@robertmike57, "job destroying free trade." You miss the big picture. Protectionism only protects a small special interest group temporarily at the expense of others. The net effect is a burden on most people. Higher prices, lower quality, misallocation of resources, failed businesses, a less competitive work force & eventual job loss. You can't rely on government to fight your battles. It does not serve your long term interest. It only serves itself. Government coercion is never the answer.

[sdfkjllshadflhadfshl]

@Zooksboardshop Tariffs are only advantageous if the other country doesn't start taxing your imports in response. If both countries tax any imports by say 30% its simply a drag on both sides. You can't tax your way to economic competitiveness, you just have to make a better product at a better price.

[felpaluche]

I liked it that a foreigner scrutinized this topic.

[TheBENGALHANNIBAL]

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INDIANS please be careful with NAZI ZION ameriKKKa.

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[Ramshobraja]

Trade is simply I scratch your back, you scratch my back. A mutual exchange. China manufactures our goods, in exchange we open up walmarts in China.

[megagagnon1]

@truthadvocate If this did work as you are imagining it, third worlders developing economies, the planet is simply incapable of supporting 6 billion prosperous folks. But i don't imagine this happening anyway, there's something like 4 billion people living on 2 bucks a day, that's a whole lotta nut to crack.

[truthadvocate]

@megagagnon1,

You see only an increase in potential workers. You fail to see the increase in potential employers or the increase in potential buyers. The allocation of resources would be directed by consumer purchases, not bureaucrats & lobbyists. This would increase the production of things consumers value. As a result a worker's money would go a lot farther to improving one's life. Plus money would be far more stable without the inflation that results from government mandated fiat currencies.

[megagagnon1]

@truthadvocate Let's imagine all countries simultaneously agreed to absolutely free trade. How could you possibly imagine in such a scenerio that the workers would prosper? Maybe third worlders would be better off, but that's not saying much. Supply and demand - 6 billion workers competing for jobs - it would be a race to the bottom for wages.

[truthadvocate]

@megagagnon1,

You & I use different definitions for the word "globalization." I define economic globalization as the integration of national economies into the international economy through trade, foreign direct investment, capital flows, migration & the spread of technology.

What you describe as globalization is a twisted combination of bad "trade agreements" that stifle free trade, migration prohibition & coercive government institutions including corporations, another bad government creation

[megagagnon1]

@truthadvocate Consider the effect of NAFTA. It hurt american workers, put lots of factory work south of the border, out of the reach of the EPA. It hurt mexican farmers, who couldn't compete with the subsidized american agri-corps. No workers on either side of the border were helped, the only winners were the corporations.

[truthadvocate]

@megagagnon1,

Economic globalization is good for the human race. Allowing every person on earth to trade with each other voluntarily would create an explosion of peace, cooperation & wealth. Since I'm rooting for the human race, I don't care if someone that happened to be born geographically close to me sees a wage decline. The majority of human beings will see their quality of life go up.

Globalization of government is a different story. That is extremely bad for the vast majority of humans.

[megagagnon1]

@truthadvocate My point stands. Many individuals in america improve their skill set, but that won't change the fact that globalization drives down wages. I said nothing about entitlements, i said working class, though now for millions of americans that's ex-working class. No heavy industry, most manufacturing in third world countries (where workers have no rights). The middle class is in decline and that will continue.