Plan for the Future You Have, Not the Future You Want

By Tim Shea

Angeloueconomics Contributor

It’s no secret that economists as a profession strongly support free trade. Comparative advantage, labor specialization, optimization of inputs – the advantages offered by trade are pretty much the track listing of economic theory’s “greatest hits” from the past 250 years. Simply put, from an efficiency perspective, few things can match globalization as the tonic it has been for the world economy. Yes, there have been winners and losers, and yes, disturbing human rights abuses persist. But taken as a whole, the equation remains simple: trade = poverty reduction + wealth creation. 

From that perspective, it’s easy to understand why economists, industry professionals, and others are concerned about the recent trend against free trade. Whether it’s Brexit, President Trump’s antagonism towards China and Mexico, or the increasingly popular worldview that economics is a zero-sum game, we have no shortage of evidence that we will soon be walking backwards on the path to trade liberalization. This is frustrating, and rightfully so. The question is what should be done about it?

On one hand, leaders within the businesses, industries, and communities most likely to be affected by policy changes can fight this knee-jerk Mercantalism. They can speak out. They can lobby. They can file lawsuits, and then gnash their teeth at the injustice of it all when they lose, and they’ll be perfectly justified in all of this.

They just won’t be very smart. 

The fact is that the United States stands on the edge of a neo-protectionist cliff. Maybe we will take the plunge, and maybe we won’t, but failing to plan for the possibility of shifting trade policy is the height of foolishness. That doesn’t mean jumping aboard the Trump Train with no reservations and offering full-throated support for a Border Adjustment Tax or similar policies. Proponents of free trade can and should continue to fight the good fight. But responsible community leaders must also accept that change may well in fact come. They must begin diversifying economic development strategies and business operations now to ensure that future success does not rely on which way the fickle winds of politics blow. 

So what does that mean in practical terms? First, it means taking stock of how reliant your community is on trade. For cities along the Texas-Mexico border, where billions of dollars of goods pass to and fro every day, trade-restrictionism could be devastating. The tech-reliant economies of San Francisco, Raleigh, Salt Lake City, on the other hand, probably have less to worry about, at least in the short term. The point is, an honest accounting of the current situation is essential for charting an effective course forward.

Second, communities must begin laying the ground work for a more regionalized economy. Any restrictions on international commerce will inevitably induce companies to undertake localized production and distribution operations that allow them to bypass trade barriers. Is your community ready to accommodate those needs? Do you have existing warehouse and industrial space, or shovel ready sites on which to build them? Are you workforce ready? Are site location professionals aware of what your community can offer? If the answer to these questions is “no”, what can you do now to turn it into “yes”? 

Finally, you must ensure that the brand you are building is that of a forward-looking, adaptable community ready to face whatever challenges the future may bring. Right or wrong, many business decisions are made based on perception and reputation and gut instinct. Do you want to be viewed as the community that cries foul whenever something doesn’t go your way, or do you want to be viewed as the proactive, pro-business community that will strive to build the best economy possible no matter what?

And that, really, is the crux of the issue: it’s about attitude. Maybe a post-free trade America is not the economic ideal, but that doesn’t mean it is lacking for opportunities. The communities that succeed will be the ones that sift out the good from the bad, and the communities that identify their strengths and start planning how those strengths can be leveraged once NAFTA is rolled back and the tariffs start piling up. 

In other words, to be successful, you need to plan for the future you have, not the future you want.