The issue I have with free trade is that nothing is ever free. By having “free” in the name, we are distorting the reality of the situation and not thinking about how the costs of free trade actually change in good times and in bad, like a pandemic. One economic shock can quickly erase all prior gains of free trade. If your TV costs $200 in the good times, but your ventilators cost $500,000 in the bad, you can see how the savings equation becomes a flawed argument.

It is easy to argue in support of free trade because, in theory, it does save consumers a little money, encourages specialization, and that it’s also a healthy way to work with other countries. That argument, however, misses one very important point: what are the costs of free trade when a major shock happens? Today, we have a shortage in medical supplies, medical equipment, and drugs not only because of the global pandemic, but also because in America, we don’t make any of it. We’ve had a decade long love affair with free trade, run by a generation of corporate outsourcers and bailout lords (had to do it), and it’s showing its weakness now.

In my view, free trade has made our supply chain vulnerable. By outsourcing our entire manufacturing sector, we’ve exposed ourselves to a serious risk in a time of need. At this moment, we need medical supplies and we can’t do it. We are waiting on ships to drop them off at our ports. A strong supply chain and manufacturing sector is invaluable in times like this. You can’t put a price on it. As prices sky rocket and supplies run short, the consequences of free trade are simple — all prior savings will be wiped out. It is the Turkey Problem, re-formatted:

Going forward, as an investor and trader, I will be fascinated in pushing this cause. Maybe we should be manufacturing at least some percentage of GDP at any given moment or focusing on industries that are of national security importance. Another thing I am thinking about is why we give so many Internet retailers tax advantages to airdrop cheap outsourced goods from overseas while avoiding interstate taxes and real estate taxes when we could divert those advantages toward manufacturing or real production. I would think one of these industries, over the long-term, is far more favorable and deserving of a tax advantage. We don’t need cheap pizza cutters imported overseas by Amazon when the country is trying to handle a pandemic, we need equipment.

I am also interested in this manufacturing problem to find opportunity. I wonder why, in America for example, we have not made any great leaps in terms of automation or robotics for manufacturing. The fact we are still paying people to sew shirts together is somewhat of a bummer to me considering how often we talk of our genius technologies and put them on magazine covers. Perhaps there is opportunity to fix that.

That is all for now. Thanks for reading.