October 08, 2016
The NYT printed a column by Arthur Brooks which beautifully displayed how political elites misunderstand the appeal of Donald Trump. The piece, which is titled “those who don’t understand Trump are doomed to repeat them,” complained that many people see Trump’s rise as meaning, “that mainstream positions on issues such as trade and immigration must be fundamentally rethought.”
Brooks goes on to assert:
“The real issue is weak, unevenly shared growth. If we addressed this issue, and if people felt their lives improving, the appetite for invective on secondary issues such as trade and immigration would dissipate. So walking away from free enterprise principles on trade and immigration is not the solution.”
While the real issue is in fact unevenly shared growth, the fact is that we have not been following “free enterprise” principles on trade and immigration. Longer and stronger patent and copyright protections, which are the equivalent of tariffs of several thousand percent, are not “free enterprise.” Nor is a licensing system which prevents foreign trained doctors from practicing in the United States unless they complete a residency program in the United States part of most definitions of “free enterprise.” (Dentists have to complete a dental school in the U.S., although recently graduates of Canadian schools were also allowed to practice here.)
As a result of patent and related protections for prescription drugs we will pay more than $440 billion for drugs that would likely sell for around 10 percent of this price in a free market. The difference of close to $400 billion a year is more than five times the amount that we spend on food stamps and twenty times the amount that we spend on TANF. The “doctor tax” that we pay as a result of protectionism is close $100 billion annually. This is the difference between what we pay for doctors in the U.S. and what we would spend if our doctors were paid the same as doctors in Germany, Canada, or other wealthy countries.
These and other forms of protectionism are responsible for “unevenly shared growth.” The Trumpites will thrive both as long as such protections persist and even more so as long as our elites pretend that they are just the free market. This is of course the point of my new book, Rigged: How Globalization and the Rules of the Market Economy Were Structured to Make the Rich Richer.
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