Warren Buffett, the famed investor, warned more than 20 years ago about the folly of American free trade policy. “Our country has been behaving like an extraordinarily rich family that possesses an immense farm,” he wrote. “We have, day by day, been both selling pieces of the farm and increasing the mortgage on what we still own.”
The problem is our trade deficit, which measures the difference between what we produce and sell to the rest of the world, and what the rest of the world produces and sells to us. If free trade worked, we might import lots of goods from other countries and export just as much back. Our factories would make less of some things and more of others. But that’s not what has happened.
Most economists see nothing wrong with this. They have long promoted the idea that low prices for consumer goods are more important than whether American workers have any role in producing them. And they got what they wanted. According to one estimate, Maine has lost over 30,000 manufacturing jobs since the United States embraced free trade in the 1990s.
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