While those days are almost a year behind us now, I want you, reader, to think back on those troubled few weeks before the Coronavirus made a jump over to American shores.
I, news junky that I am, was following the situation with rapt attention. At first, it seemed like a modern-day Moses had visited retribution on the Chinese people with a combination of plague, locust swarms and historic flooding. As the situation in Wuhan deteriorated, the Western press was dishing out horror stories about dead bodies littering the streets, cattle starving in the yards and crops rotting in the fields. The first wave of Corona-chaos to hit the U.S. wasn’t the virus itself, but a problem that few Americans even knew existed.
With few domestic producers, the United States is utterly reliant on Chinese manufacturers for common drugs, including drugs used to relieve symptoms of COVID-19. There was justified fear and panic that the Chinese government, in the interest of maintaining its own strategic stockpile, would cease or reduce the flow of drugs into the United States, with dramatic effects on the U.S. health care system.
Thankfully, that calamity never came to pass, but the problem still remains. The U.S. has severe trade vulnerabilities with China that came to light because of Coronavirus. This Forbes article from March 2020 points out that the U.S. is dependent on Chinese trade for strategic resources like aluminum and steel, high-tech gear like smartphones and drones, superconductors, and batteries. China has long since eclipsed the U.S. in ship-building as well. Most worrying, nearly all the U.S. supply of common drugs like ibuprofen, hydrocortisone, acetaminophen and so on goes through China, and nearly 80% of all U.S. antibiotics are made in China. The last US-based supplier of penicillin closed down in 2009.
All of these strategic vulnerabilities spurred a brief but interesting debate in early 2020 about the merits of strategic economic autarky. Autarky, just a fancy Greek word for “self-sufficiency,” is an economic posture that suggests nations should maintain a home-grown industry in certain fields even though it is economically less efficient. For example, the US might use government subsidies to maintain a domestic medical manufacturing industry despite the fact that it would be cheaper and more efficient to import from China.
Free-traders, the overwhelming majority of economists, resisted calls for autarky. Alexander Salter, for example, writing for the American Institute for Economic Research, suggested that proponents of autarky had to wrestle with several major problems in the theory. For one, autarkic policies would make said strategic resources more expensive. Domestic factories, when not in use, would apparently be sitting idle. Finally, Salter suggested that strategic autarky was undesirable because the government couldn’t be trusted to run it with any common sense, something right-of-center proponents of autarky would likely assent to.
At the root of the problem is a fundamental misunderstanding, I think, of the relationship between economics, politics and the American people. Traditionally, it seems, economics is defined as “the science of increasing efficiency and profits within a system of trade,” and politics is defined as, “the science of convincing a majority of voters to go along with whatever plan the economists are recommending.” The rift between Free-Traders and Strategic Autarkists is a philosophical one, primarily. To the proponent of autarky, economies are designed to increase access within a given society to the necessities of a good life. When access to necessities, like antibiotics, are threatened by bad trade policy, it is worth taking a hit to efficiency and profits in order to ensure we are not caught flat-footed without a reliable source of life-saving drugs. Additionally, politicians have a duty to serve their citizens, which means lawmakers should be putting the economic interests of American citizens as a whole before the health of the economy. Having a healthy economy is good, all things considered, but not if that comes at the cost of gutting highly valuable domestic industries, like drug manufacturing.
While the debate has died down given that the calamitous event (a drug embargo from China) has not come to pass, it still bears repeating given the short attention spans of journalists, politicians, and the public. The U.S. still stands at a severe import deficit when it comes to important medicines. We shouldn’t wait for the next global pandemic to do something about that.
Image Credit / MisesInstitute.org
