From the Wall Street Journal:
I’m thinking of a country. America’s trade deficit with this country just reached an all-time high. This country holds more U.S. Treasuries than any other foreign country. It’s one of the world’s largest economies. And the name of that country is?
Japan.
Japan? Yes. Remember when Japan was a big threat to the American economy? You have to go back to the late 1980s. Back then, every politician in the mood for pandering to economic ignorance could scare a bunch of folks with worries about how the Japanese were stealing our jobs. How our trade deficit with Japan was going to destroy the American economy. How the Japanese economy was soon going to pass America’s. How the Japanese auto industry was part of a sinister strategy to destroy our core competencies.
[ . . . ]
But still. Why isn’t Japan scary?
One answer is that the doom-and-gloomers already tried, but nothing happened. They told us that Japan was going to destroy our economy. They told us we needed a plan to cope with brilliant Japanese economic strategies. But then the Japanese economy hiccupped and played Rip Van Winkle for a decade, while America kept growing.
The real reason Japan isn’t scary is because it wasn’t and isn’t a threat to our standard of living. Trade makes both parties better off, remember? But when Japan slumps and the U.S. surges, it’s too hard to fool people with bad economics.
So when the sky didn’t fall, a new candidate had to be found. Mexico and Nafta fit the bill. Not Canada, even though Canada was part of Nafta. Evidently, politicians and some voters find Mexicans more scary than Canadians. So it was Mexico. When that great “sucking sound” was never heard, a new sinister foreign nation had to be found. And so it’s the turn of the Chinese.
[ . . . ]
The next time you find yourself losing sleep over China, remember that you were worried about Japan and Mexico and everything turned out OK. Then ask yourself if America would be a richer country if China cut itself off from the rest of the world.
As the author says, protectionists never learn.