March 13, 2018
Okay, Brownstein didn’t use the word “fake,” but that is the position he described in his CNN column. Brownstein argues that the Democrats predominately live in tech centers like Seattle and the Bay area which export large amounts of high tech products and services. He argues these tech areas won’t be helped by Trump’s steel tariffs and could be hurt by retaliation from foreign countries.
While it is true that these areas will not be helped by steel tariffs it is dishonest to say that these industries support free trade. The tech sector is hugely dependent on protectionism in the form of patent and copyright protection. These government-granted monopolies raise the price of protected items by factors or ten or even a hundred over the free market price, making them the equivalent of tariffs of several thousand percent or even tens of thousands percent.
There is a rationale for this protectionism, as there is for all protectionism. This is the government’s way to provide incentives for innovation and creative work. But there are other, more efficient, mechanisms for financing innovation and creative work that would not put so much money in the pockets of high tech sectors. The people who insist on longer and stronger patent and copyright protections, and use trade deals to lock them in domestically and impose them on other countries are protectionists, not free traders. (This is discussed in my [free] book, Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich Richer, chapter 5.)
It is also worth noting that most of Brownstein’s “free traders” are just fine with the protectionist barriers that insulate doctors and other highly paid professionals from foreign competition. In the case of doctors these barriers have created a situation in which the average pay of our doctors is roughly twice as high as it is in other wealthy countries (see Rigged, chapter 7).
Protectionism for doctors costs us roughly $100 billion a year in higher health care costs. This is ten times as much as the amount of money at stake with the steel tariffs. All the people who apparently are fine with the barriers that prevent foreign doctors from competing with U.S. doctors are protectionists, not free traders.
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