Should we have free trade in a dangerous world?
Yes, with a very few exceptions.
Every time there is a war, we see a predictable chorus of pundits calling for the end of globalization. Let’s hope they don’t get their way, because if globalization ends then wars will become much more frequent.
My view is that sanctions are usually counterproductive. One exception is when one country invades its peaceful neighbor, as in the current Russia/Ukraine war or in the case of Iraq’s invasion of Kuwait. In that case, the international community has a clear interest in punishing the aggressor. (Although as David Henderson points out, the current sanctions against Russia are not particularly effective.)
But sanctions don’t work at all unless the target country is linked to the global economy. Free trade creates a situation where bad actors have more to lose from economic sanctions.
Over the years, I’ve argued that Russia is a much greater threat to world peace than China (although China is certainly a non-trivial threat, especially to Taiwan.) Thus I’ve opposed the economic sanctions the US has applied to China, as well as the broader US trade war against China. My critics counter that we can’t afford to be economically integrated with a dangerous country such as China.
I respond that we cannot afford not to be integrated with China, precisely because it is dangerous. We need China to be so deeply enmeshed in the global economy that it would pay a heavy price if it were ostracized. A sullen isolated China, a North Korea with 1.4 billion people, would be a far greater threat to world peace. Our current policy of isolating China makes it more dangerous, not less. After WWII, the victorious powers realized that the best hope for peace was to have Germany closely integrated into the broader European economy. This idea led to the European Common Market, and later the EU.
When I point to recent events as evidence that I was right that Russia is the greatest threat to world peace, my critics respond that Taiwan is next. And then they say that if they are wrong, if China doesn’t attack Taiwan, it’s only because they are held back by the unexpectedly severe sanctions that the West imposed on Russia in recent weeks.
I don’t think they realize that they are making my point.