May 23, 2026

During the last few years, the free traders and globalists have been lumped together as if they were the same. Yet we argue that globalists are free traders and that free traders are not globalists as they are commonly defined. A common depiction of globalization argues that it advocates and supports an open border policy. Thus, globalization and free trade share a common interest when it comes to trade in goods but they differ when it comes to the issue of migration. Many free traders argue that an open border policy is inconsistent with a welfare state and ultimately creates a antiimmigration and anti-globalist political backlash that is wrongly being extended to free trade. The migration inflow impacted the Brexit vote; they have also impacted national elections in both Europe. In the US border and immigration were key factors in President Trump victory. In the aftermath of WWII and over the subsequent decade’s institutions and governments promoted the creation of international trade agreements that facilitated the movement of goods across national borders. Offshoring and divergence in production across nations is a direct result of the trade opening. It also increases economic interdependency among nations and increases the potential costs or risk of disruption to the global supply chain. Some have argued that this is a positive development because economic interdependency could reduce the likelihood of conflicts that disrupt trade among nations. Countries must weigh the benefits of free trade against the supply chain risk. This line of reasoning suggests that a completely free trade policy may not be optimal. That some level of domestic production may be desirable as an insurance policy against the supply chain risks. Free trade critics argue that the offshoring was hollowing out the manufacturing sector. But extrapolation these results to the general economy leads to the wrong conclusion. But that is not all, with the exception of the 1970’s what has been called by some the lost decade and the economic performance is partially attributed to the policies adopted during the decade. President Nixon devalued the dollar , closed the gold window , imposed waged and price controls as well as capital controls. The data shows a secular increase in employment, an increase in productivity and higher real compensation jointly suggesting to us that labor’s wellbeing steadily increased as the free trade policies were adopted. But what about capital? The data also shows the corporate profits after tax and the evaluation of these profits, i.e., the S&P 500 have steadily increased. The data does not support the view that globalization has hurt either labor nor capital in the aggregate. Nor does it support the view that the US has been ripped off by the foreigners or that the tariffs were necessary to fend off the ripoff. Free Trade increases the susceptibility of supply chain disruption such as COVID, Trump’s tariff and the war in Iran. Each of these disruptions has had a different impact on the global economy that would have been hard to anticipate and even if anticipated it would have been very hard to assess the risks to the different products supply chain. An obvious solution that ameliorates these risks is to re-shore. Viewed from these perspectives the reshoring we are seeing in the US may not be a result of the Trump tariffs , instead it may be the result of attempts to minimize the supply chain disruptions.

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