Obama’s Mercantilist Approach to Trade

Terry Miller / March 03, 2010

The Obama Administration’s 2010 Trade Agenda, unveiled March 1, is a radical departure from traditional American economic policy and values. It abandons not just the 65 years of trade liberalization on which American and world economic prosperity has been built since the end of World War II, but attempts to turn the economic clock back to the 17th Century and the mercantilist theories that predate Adam Smith.

Mercantilists viewed the world’s economic production in static terms. Mercantile theory exalted exports and a positive trade balance. Prosperity was defined by the acquisition of wealth in the form of bullion. Think Ebenezer Scrooge hoarding his pile of coins. Better yet, think China and its two trillion dollars of reserves built from trade surpluses. Bizarrely, this seems to be the model embraced by the Obama Administration. (more…)