U.S. trade policy over the past several decades can be summarized in two words: cheap stuff. The more stuff the better. The cheaper the better. While we focused on all the cheap stuff we were getting, we lost our manufacturing jobs as plants moved overseas and we lost our innovation as countries indifferent to the rule of law stole our intellectual property. It turns out there was a high price to pay for all that cheap stuff.
Perhaps this trade policy didn’t seem like such a bad idea since the U.S. is a consumer economy. Maybe it even seemed like a great idea great as long as we could save a few cents on all the stuff we were buying. The problem is we forgot that while consumption can drive growth, it cannot stand on its own without a foundation of economic-driver jobs like manufacturing and services, jobs that actually support consumption-based economic activity. And we never paused to ask the critical question: What kind of a country do we want to be?
If our conscience was pricked at the reality that most of the cheap stuff we were buying was coming from China, controlled by a fierce authoritarian regime, we comforted ourselves by believing that economic reforms in China would lead to democratic reforms and basic human rights. We were wrong. In a few short years, China has modernized from a second-world country to the second-place economy and a world superpower.
China has accomplished this without a single democratic reform. On the contrary, human rights abuses have increased, freedom of speech has decreased, public dissidents are shut down and government autocrats are elevated.
None of this happened in China by accident. China always plays the long game. It has a vision. It has a strategy. And it has a plan. So far, that plan has worked out better than the country could have imagined. China has accomplished everything it set out to, and all we got in return was more cheap stuff.
China did what the USSR could not. Chinese communists loosened economic constraints while tightening government controls. Russian communists loosened economic constraints, lost control of the government, and ended up with an oligarchic mafia economy. Instead of economic reforms in China creating a new political regime, the opposite happened as the Communist party created a new form of capitalism — state controlled capitalism.
This authoritarian capitalism of the East vs liberal capitalism of the West is the great ideological and political conflict of the 21st century. The United States and China have entered a new cold war. The battle is over government-controlled economy vs. a market-governed economy. The good news is the U.S. has the correct principles of free markets, free enterprise and individual freedom that will win the day, as long as we stay true to them.
The U.S. is now beginning to employ those principles and aiming its trade policy towards fair trade, enforcement and accountability, and along the way accomplishing something most people, myself included, did not think was possible — bringing manufacturing jobs back to the U.S. But it is happening and those economic driver jobs are creating a positive ripple effect throughout the economy.
Derek Miller is the president and CEO of the Salt Lake Chamber.