I admit that I blindly accepted the “free trade” argument. I still do. BUT….
First, A little history:
Free trade arguments can all be delineated back to David Ricardo’s concept of ‘Comparative Advantage’.
What Ricardo argued was that, given certain conditions, free trade benefits ALL NATIONS (very important distinction) as specialization increases the income of all trading parties, even the productively disadvantaged ones.
Think of it this way:
Let’s say a Doctor can earn $500/hour treating patients but must spend 2 hours per day filling out Obamacare paperwork. So everyday he earns $3000 (6 hours * $500 = $3000/day).
Now, let’s say he hires a beancounter (like me) to fill out his paperwork and agrees to pay me $30/hour. But it takes inefficient me 8 hours to do what takes him only 2 hours to do.
Should he hire me even if he is 4 times better (more efficient) at paperwork than me?
Of course he should!
While I’m doing his paperwork, he can see patients an additional 2 hours per day. Thus, with inefficient me on board, he will now make $4000/day, pay me $240, leaving him with $3760 or an increase of $760/day!
That’s how “Comparative Advantage” works.
Hurray! Free Trade For Everyone! Not so fast…
In order for comparative advantage to work internationally to every NATION’s benefit, there must be restrictions on the flow of CAPITAL (tools, machines, factories, technology). If CAPITAL can move freely across borders than all the CAPITAL will migrate to where it can be employed at the lowest cost (typically where labor is the cheapest).
It would be like the doctor hiring me, then I learn his trade (intellectual capital)while working for him, and then I steal all his patients by undercutting his rate at $250 per hour!
And that is why factories (capital) in Michigan are being left to depreciate and are “moved” to places like Seoul and Beijing.
Without capital controls, “Comparative Advantage” utterly fails…uh…I mean, utterly fails the NATION STATES with comparatively higher labor costs. However, free trade always benefits INDIVIDUALS in total.
So if you are a “NATIONALIST” residing in a high labor-cost nation than you should definitely be opposed to free trade. What’s more is you can argue your point using the very same Comparative Advantage argument that free traders invoke. Stress that the key underlying assumption of Comparative Advantage is that capital must be fixed (cannot migrate from nation to nation) in order for free trade to benefit all NATIONS.
I am anti-state and am not scared of freedom. It might require me sharpening my skills a little, though.
Here’s the Austrian School’s take on when free trade fails.
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