Welcome to Need to Know, your Saturday dive into thought-provoking research from think tanks, academics, and leading policy thinkers in Canada and around the world, curated by The Hub. Here’s what’s got us thinking this week.
Canada is a trading nation. In 2022, the value of exported goods and services totaled more than 30 percent of Canada’s GDP, and Canada has benefited immensely from a rules-based trade order aimed at reducing tariffs. But recent years have seen a backlash against free trade and globalization. President-elect Trump has proposed implementing tariffs of up to 20 percent on goods from outside the U.S. and upwards of 60 percent on China, which would completely up-end global trade.
Even Ontario Premier Doug Ford recently chimed in and recommended excluding Mexico from a potential Canada-United States-Mexico Agreement (CUSMA) renegotiation, despite Trump ostensibly reaffirming his support for the agreement this week. With the future of globalization and freer trade in flux, it’s a good time to take a step back and look at some recent first-principles cases for and against free trade.
The conservative case for globalization
In a publication for the Cato Institute, former U.S. congressman Jeb Hensarling makes the conservative case for free trade. Drawing on intellectual traditions from figures like Adam Smith and Edmund Burke, the Republican argues that free trade aligns with conservatism’s long-standing commitment to individual liberty, economic freedom, and limited government.
Economically, free trade benefits consumers through greater choice, lower prices, and increased innovation. It fosters competition, which drives efficiency and prosperity. Hensarling also emphasizes its geopolitical advantages, noting that trade strengthens alliances and promotes global stability by creating economic interdependence between nations.
Responding to critics who argue that globalization threatens national security, Hensarling counters that a strong economy—bolstered by free markets—provides the resources necessary for robust defence capabilities. He warns that protectionism often serves special interests at the expense of the broader public, enabling cronyism and stifling economic growth.
Hensarling also makes a moral argument, viewing trade as an extension of personal freedom. He asserts that individuals should have the right to engage in voluntary exchanges across borders, unimpeded by government intervention.
Ultimately, Hensarling champions free trade as a path to prosperity, stability, and freedom. He urges conservatives to reject protectionism and embrace open markets, reaffirming that globalization is consistent with conservative ideals.
The progressive case for globalization
Those on the Left side of the political spectrum have also long often made the case for free trade. Scholars Inu Manak and Helena Kopans-Johnson present a compelling argument for globalization from a progressive standpoint, emphasizing its alignment with core progressive values and its role in fostering global prosperity.
The authors trace the roots of post-Second World War trade liberalization to the progressive movement, highlighting how initiatives aimed at reducing trade barriers have historically promoted peace and economic growth both domestically and internationally. They argue that the establishment of a rules-based trading system reflected efforts to uphold shared values and the rule of law on a global scale.
Central to their argument is the assertion that globalization has significantly contributed to poverty reduction and shared prosperity—key objectives of the progressive policy agenda. By facilitating the exchange of goods, services, and ideas across borders, globalization has enabled developing nations to integrate into the international economy, leading to improved living standards and economic opportunities.
The analysis also addresses contemporary critiques of globalization, acknowledging challenges such as income inequality and environmental concerns. However, they contend that these issues can be effectively managed through thoughtful policy interventions rather than retreating from global engagement.
Overall, Manak and Kopans-Johnson see free trade as a powerful tool for advancing social justice, economic equity, and international cooperation. They call for policies that harness globalization’s benefits while addressing its challenges.
The conservative turn against free trade
If Hensarling represents the economic orthodoxy on free trade that has guided conservatism throughout the Anglosphere for the last several decades, then Oren Cass, the founder of the American Compass think tank, represents a new wave of heterodoxy gripping conservative circles. Cass argues that the conservative endorsement of free trade has led to economic stagnation and societal harm.
Cass, whose thinking influenced Trump’s presidential campaign, reflects on his early belief in free trade’s benefits, noting that real-world consequences have contradicted theoretical expectations. He highlights the “China Shock,” where an influx of cheap imports resulted in significant job losses and community decline in the United States, Canada, and elsewhere. Contrary to economic models predicting swift labour market adjustments, many displaced workers faced prolonged unemployment or underemployment, although recent research on the adjustment to the “China Shock” paints a more complicated story.
The article points to a stagnation in industrial production, with U.S. manufacturing output increasing by only 7 percent from 2000 to 2020, compared to a 94 percent rise from 1980 to 2000. Excluding semiconductors, industrial output in the U.S. has declined by 10 percent in the 21st century. Cass argues that the anticipated benefits of globalization, such as accelerated growth and productivity, have not materialized. Instead, productivity growth has stalled, and manufacturing productivity has experienced consecutive years of decline.
Cass critiques the conservative adherence to free trade, suggesting it has prioritized theoretical models over empirical evidence. He calls for a reassessment of trade policies, advocating for a balanced approach that considers the well-being of American workers and communities. By reevaluating the principles of free trade, he believes conservatives can develop strategies that promote sustainable economic growth and societal stability.
Readers can catch Oren Cass at live Hub events early next year in Ottawa and Toronto.
ChatGPT assisted in the creation of this article.
Taylor is The Hub's Research and Prize Manager. He is a Ph.D. candidate in Political Science at the University of Toronto. He has worked with several think tanks in Canada and the U.S. and previously served as a senior advisor to the Ontario Minister of Finance....
