1. Forrest Johnson
The United States had loath to become involved in international affairs, with most
administrations (certainly prior to the Franklin Delano Roosevelt administration) choosing to take
George Washington’s farewell address advice to heart and not get involved with “foreign
entanglements.” US foreign policy had, for much of its history, been focused only on interacting
with states as necessary. After the First World War, the United States was encouraged to accept an
invitation to become a formal world power as a key member of the League of Nations. The invite
was declined. When it was extended a second time, the role of world power was seized and the
United States began shaping international relations as it saw fit. A primary example of these actions
took place at the Bretton Woods conference in 1944. The United States set out to formulate a
global economy that would feature the dollar as the international reserve currency and take a leading
role in trade by setting up organizations designed to promote liberal fiscal principles and encourage
economic development. As a result the United States finds itself at the center of the global
economy. This has also lead to the United States being a very important trading partner to much of
the world, usually as states look to introduce good into the wealthy and varied US market. Because
of wishing to promote liberal trade policies, the US has had to adopt these policies too resulting in
very open trade policies that have negativelyimpacted some but benefitted others.
Hayes addresses this trade off possibility by framing it in the debate that the classicists would
have had between protectionism and free trade. They figured that free trade would benefit society
more and that protectionism was aimed at benefitting certain individuals more. Hayes sums up
Claude Frederic Bastiat’s argument that free trade sets up an abundance and benefits the consumer,
whereas protectionism sets up scarcity and benefits the producer. Therefore to the classicist, free
trade is preferred over protectionism. Hayes also points out that given the current system of

2. government where the producers tend to have more say in affairs, protectionism is sometimes the
order of the day. This increased clout that producers carry comes from efforts by corporations to
employ workers in different congressional districts, which in turn allows corporations to have
multiple elected leaders as advocates for their cause. Consumers do not have the same level of pull
as the consumer groups often have very little influence and they certainly lack the financial muscle of
corporations.
For import competitive corporations, protectionism is important to maintaining their
bottom line. They feel the effects of free trade in a more focused way than consumers see the
benefits of free trade. They are directly impacted by the loss of market share ceded to imported
goods that are most likely produced with a comparative advantage and therefore can be cheaper.
Recently this has affected the textile industry in the United States as cheaper textiles can be
produced around the world in states like Bangladesh, Vietnam, India, and Pakistan. Check the
nearest label of clothing to see evidence of this. And while the benefits of cheaper clothing are
spread among the consumer base, the detriments of cheaper, imported textiles are focused squarely
on the domestic producers of textiles.
Anyone who lives in a town with a significant textile industry has seen that industry contract
if not disappear. Many American towns are drying up because of it. However, some small cities
have been able to diversify their manufacturing to offset the losses of this hard hit industry. Those
who can are benefitting from free trade and the opportunities of foreign direct investment. A little
known example of this can be found the Georgia community of Troup County. Troup County was
once home to several textile mills as well as a myriad of other industries ranging from sanitary paper
products to guided missile systems. When the mills began to close, the county was able to use its
diversity and highly skilled labor force to attract other industries where it could offer a comparative

3. advantage. This culminated in the construction of a Kia assembly plant that was aided by the
recently ratified free trade agreement with South Korea. For skilled manufacturing centers like
Troup County, free trade has been beneficial but there are other factors at play as well that have
aided it in finding manufacturing jobs when so many are being outsourced.
One of the biggest losers and one of the biggest opponents of free trade have been
organized labor unions. Labor unions add costs to manufacturing products and those costs get
passed on the consumer. Imported goods often are manufactured in places with very little labor
control and therefore the goods are produced more cheaply. Cheaper produced goods do not
always need to be imported, however. Sometimes the capital in what is imported and the goods are
manufactured domestically. This example of free trade has benefitted places like Chattanooga,
Tennessee (home to a Volkswagen plant), Greenville, South Carolina (home to a BMW plant),
Montgomery, Alabama (home to a Hyundai plant) and many other communities where right to work
legislation has helped keep their labor force competitive with foreign labor while still being able to
support domestic job growth and domestic consumers. These flexible labor forces in the United
States are winners of free trade policies. The import of capital can also lead to the export of goods.
Free trade works both ways. The United States still enjoys comparative advantagesin many
manufacturing sectors and these are aided by free trade policies as well. It is not all about cheaper
goods for the American consumer, it is also about finding markets for American products.