Editorial Board

On China, Donald Trump Brings Out the Worst in Mitt Romney: View

On most economic issues -- notably the source of his personal fortune -- Republican presidential candidate Mitt Romney seems to believe in the most extreme form of let-the-chips-fall-where-they-may capitalism. An exception is China.

Last week, accepting the endorsement of Sinophobe Donald Trump, Romney declared that “on my first day in office,” he will slap tariffs on any Chinese goods that arrive on American shores through “unfair trade practices” that “have cost American jobs.” He openly threatened a “trade war” because “you have to stand up at some point and say enough is enough -- you have killed too many jobs.”

Romney’s critique of China is a blur of accusations -- they manipulate their currency, they “steal our designs, our patents, our know-how,” they “hack into our computers” -- all of which contain some truth. But the political power of trade as an issue is the more general accusation that they “unfairly attack our markets and kill jobs here.”

If Romney limited himself as president to addressing Chinese behavior that actually violates laws and treaties to which they have agreed, we would have no objection. But that will not save many American jobs. The main reason American jobs are moving to China is that Chinese workers are willing to work long hours for low wages under squalid conditions that no American will -- or should have to -- put up with.

A stunning series of recent articles in the New York Times described the horrific lives (and sometimes deaths) of Chinese workers manufacturing parts for iPhones. The question is whether these kinds of working conditions (common, or probably worse, in much of the developing world) alone constitute an unfair trade practice -- or even a human rights abuse -- that would justify a tariff or outright ban on imports into the United States. The complicated, unsatisfying answer: at some point, yes; but in general, no.

As Romney surely knows, the eternal temptation of a trade war is that, especially at first, the benefits of barring the door against foreign competition are evident, and the costs are hidden. Jobs saved by tariffs and other forms of protectionism are concentrated and identifiable. Jobs created or saved by free trade are diffused throughout the economy, as are the more general benefits of free trade -- and even of unilateral or unreciprocated free trade. Economics, however, teaches that the benefits almost surely exceed the costs.

A nation cannot enrich itself, or stay rich, by denying its citizens the benefit of cheap foreign labor. And throwing up a tariff wall against Chinese goods is no favor to the workers of China, either. They take these horrible jobs because they regard the jobs (probably correctly) as better than any alternative.

Certainly we in the prosperous United States are not offering them any better alternative. China is going through a stage of development that all societies must go through on their way to prosperity. The U.S. itself went through it in the 19th century. We wouldn’t be an affluent country today if we’d been held back then to the standards that some people would like to impose on China today.

Of course, there are limits. Slavery, for example, or conditions of servitude tantamount to slavery. There are working conditions so appalling that we don’t wish to be implicated in them by buying the products that result -- even if the immediate result is to leave the workers worse off. But those who would ban those products on moral grounds must keep in mind that this would, in fact, be the immediate effect. And they must have good and specific reasons to believe that the threat of a tariff or boycott can lead to some improvement.

Romney’s anti-Chinese passion may well be an election-year convenience. President Barack Obama was only slightly less adamant in his State of the Union address, in which he announced the creation of a “Trade Enforcement Unit” to protect us against “unfair trading practices in countries like China.” But we would have expected Romney, as such a preacher of capitalism, to show a bit more backbone against the constant and ruinous danger of protectionism.

    To contact the senior editor responsible for Bloomberg View’s editorials: David Shipley at davidshipley@bloomberg.net .

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