There's good reason to believe that more trade -> lower production cost -> lower prices
(all else being equal).
Nations can and must be able to choose which other nations that they trade with and the conditions of that trade.
Of course they do that. In some cases a nation chose to trade in slaves, or do slave raids, packing their captives off to the slave market.
But what they should do is leave everyone free to make their own choices, including to buy or sell, without dictating choices to anyone who's not doing something criminal. What every nation's government should do is step aside and ALLOW trade with all other nations, neither mandating the trade nor interfering with it, prescribing only some basic rules to prevent criminal acts, and without imposing separate rules or trade barriers against certain target nations they see as rivals.
They should not impose BOYCOTTS or EMBARGOS or SANCTIONS onto certain other countries or suppress trade with them out of an instinct to promote their political agenda or to inflict punishment onto villains or wage a crusade against an evil empire or tin-pot dictator or other mischief-maker they think has to be curtailed -- whatever the petty feud is with this or that political competitor, suppressing peaceful trade going on in the neighborhood is not a solution to anything, but only makes everyone worse off, on all sides of whatever dispute it may be. Some crusading against evil empires might be legitimate, but not suppressing trade, because that trade is a benefit rather than something evil, as long as it's non-criminal, and should be left alone to do its good regardless of this or that unrelated conflict happening in the region.
They should not "choose which other nations that they trade with" if this means choosing some nations to NOT trade with by EXCLUDING them and prohibiting someone from trading with them. Any individual buyer/seller should be FREE TO NOT TRADE with anyone they choose, but not be dictated to by someone else deciding "which other nations they trade with" by dividing populations into categories and claiming jurisdiction over this or that group and dictating which category may trade with which -- even though they claim to be sovereign rulers of some kind having authority over someone -- this does not entitle them to dictate who may trade with whom, despite their claim to such authority.
You cannot claim that it's just the way it is -- by that rationale any fascist dictatorship may torture and exterminate anyone they wish, because that's "just the way it is" in many cases.
No one can give any legitimate reason why a government should impose curtailment of trade if those buyers and sellers are doing nothing criminal. Just because such things happen does not mean it should happen. Just as slavery should not have happened even though it was a fact of life which happened and was the norm 1000+ years ago. Even so, it should not have happened, just as suppression of non-criminal trade should never have happened.
This is the way that it has always been.
No, there's no such thing as "the way it has always been" -- i.e., there's no one "way" that it has always been. And much of what was or has been should NOT have been. So saying "it has always been" doesn't mean it should have been, anymore than slavery should have been even though it had "always been" up until a few centuries ago. It should never have been and was not necessary, and it should not have been practiced and could have been avoided. It's the free market today, and free trade, which has mostly replaced slavery. Without the basic idea of free choice (free trade), there was nothing to put an end to slavery.
It's normal to have tariffs, as just one more kind of tax -- and taxation in some form is necessary -- but this tax has to be low, to not discourage foreign competition, and should be applied to ALL the players (all importers) equally, regardless what they produce or buy, or their nationality or any other category, and regardless of any cultural differences. It's up to the individual buyers and sellers to make any judgments about who they're buying from or selling to. There is nothing "fair" about imposing conditions onto them to dictate who they should buy from or sell to, or what prices they should charge or pay.
No net benefit is gained for society, for the nation or for any other worthy cause, by dictating to individual buyers and sellers what prices they should charge or pay for anything, or dictating who they should buy from or sell to. So if the imports are to be taxed, this should just be a universal across-the-board tax on everything -- all imports -- with no distinction of one country or industry or company from another.
Any rules have to be only to protect everyone from crime, and must apply equally to all players without targeting anyone or any one nation to be treated differently than any other. Nor should the rules aim at imposing anyone's morality onto anyone else, dictating to another nation what its internal practices should be, such as its human rights practices or its cultural or ideological beliefs or traditions, or its political philosophy. Rather, the individual buyers and sellers should decide for themselves whether to trade with someone of an alien culture, without such choices being dictated to them.
There is no legitimate need to restrict foreign imports or immigrant labor in order to protect the domestic wage level. No one can give any legitimate reason for such restriction. Whenever this is done the net effect of it is to harm everyone, with no net benefit to anyone (other than a short-term instant-gratification benefit to certain selfish interest groups to the detriment of everyone else).
And no rules should presume to impose onto buyers/sellers the "correct" prices for anything bought and sold, including for labor. No legitimate purpose is served by anyone ever dictating to another what price they should pay as a buyer, or what price they should charge as a seller. No one has ever laid out a rationale for this based on anything other than their own personal selfish interest, or their power-lust in service to some particular narrow interest group, to the detriment of everyone else.
This is what I believe that is referred to as "fair trade" in the OP, that is, what has been trade policy forever.
There's no such thing as "what has been trade policy forever." There are many trade policies, going back "forever" -- the best ones were those which allowed the maximum trade to take place, with minimum barriers, such as described above.
The term "fair trade" almost always means imposing higher wages, artificially, above the supply-and-demand level which would be paid if it's left only to the individual buyers and sellers to set the prices (for labor and anything else). This artificial propping-up of the wage level serves no legitimate purpose and only causes a net increase in total suffering, rather than a net benefit, by suppressing trade between buyers and sellers who would be better off if left free to make all the decisions themselves about wages or any other prices to be paid.
Lumpenproletariat is missing a couple of steps in his OP. He asks us to accept that "free trade" is the most desirable trade policy offering as the only evidence to support this assertion being that it lowers the prices of some consumer goods.
There's more benefit than lower prices, including even some access to very high-priced luxury goods which otherwise wouldn't be available. So there are even some higher prices as a result, in cases where consumers want those luxury items.
Free trade simply means more individual choice overall, or the opposite of slavery where people are denied free choice and instead have choices dictated to them by others acting selfishly, or dictated to them by the state acting paternally by imposing its dogmatic theories about what's good for people instead of letting them choose for themselves.
That to stop our free trade policies would roll back this tremendous benefit [lower prices] to the US economy.
So in order to fill in this gap, below I present the consumer price index for the post-World War II years to August 1 of this year, 2020. I need Lumpenproletariat or another free trade enthusiast to point to the period on this graph where we can see the impact on the economy that the lower prices that justify our free trade policies are. I can't see it.
Anyone?
There are many reasons not to interpret the above graph as contradicting the principle that more trade (and thus increased competition) leads to lower cost and thus lower prices (than would have been otherwise). If there were very few reasons, then the following Text Wall would be much shorter.
The facts about inflation over the last 50 years, in the data, the charts, and graphs, are totally consistent with the theory that increased global trade helps to keep down the rising prices, reducing the inflation rate. The best you can ever do with empirical data is show that good theory is consistent with the empirical evidence, but seldom that the theory is PROVED by the evidence. There are always too many variables, such as other factors which can impact prices.
The graph doesn't show the inflation trend as well as the following chart showing the inflation rates from the 1970s to the present.
https://www.usinflationcalculator.com/inflation/historical-inflation-rates/ These numbers clearly confirm that inflation was much higher in the period before the recent trade expansion, and that a significant reduction in inflation has occurred from the time after the Reagan-era "free trade" deals, such as NAFTA etc., which expanded global trade.
The above graph admittedly doesn't seem to show this very well -- maybe slightly, but the steepness of the curve for the 70s looks about the same as the steepness for the 90s and later, which doesn't make any sense. It seems to show an inflation rate after 2000 which is hardly any different than that of the 1970s. It almost seems to say the inflation rate did not change any after the 1970s and later. As if the extreme inflation of the 1970s is no different than the inflation of the 90s and after 2000, which is just not so, as the chart clearly shows.
By contrast, the inflation in the 1950s and 60s is more difficult describe, as it fluctuated from one year to the next, and it was also very low most years (even negative around 1950).
The FED artificially propped up inflation after 2000.
One factor you overlook, if you claim the recent inflation was not unusually low, is the fact that through most of this period, after 2000, the Fed has actually been trying to artificially PUSH UP the inflation rate, trying one trick after another to push it above 2%, or at least prevent it from dropping below the target 2% level. This appears to be a recent policy of the Fed and not something it did in the 1950s and 60s when the inflation rate was usually low. So it's likely that the recent inflation rates persistently 1-2% are partly a result of these artificial efforts of the Fed to push UP the inflation rate, which it did not do in the 1950s. I.e., our recent rate would have been even LOWER without these efforts of the Fed.
So our recent low inflation rate is somewhat abnormal and persistent despite these efforts of the Fed to push it up artificially, which have failed to maintain it at 2% every year, but have probably pushed it up higher than it would have been. So the non-artificial inflation rate would likely have been more like 1% or lower had it not been for the Fed's effort to push it up.
If this is the case, then our recent low inflation rate is very significant, not normal, and it has remained low over many years now, in contrast to the 1970s and early 80s (before most of the expanded China trade). And even in the 50s and 60s the natural inflation rate, not artificially propped up by the Fed, was probably higher than our modern inflation rate would have been had the Fed not pushed it higher to reach the 2% level.
Nevertheless, there is no way that empirical evidence can really prove the economic theory, on anything. In rare cases perhaps there is real evidence to "prove" a theory is true. But usually not. In this case we have good evidence which is consistent with the theory that higher cost of production -> higher prices, or lower production cost -> lower prices, or increased trade and competition -> lower prices.
It is totally accepted throughout all the schools of economics that higher production cost does lead to higher prices to consumers, and that lower production cost leads to lower prices. If this were not so, then we would not have antitrust laws requiring companies to compete rather than collude to fix prices. These laws exist, and sometimes are enforced, because all economists say that consumers benefit from lower prices as a result of the increased competition, with more players or more sellers competing to keep down costs and improve quality and optimizing the level of production.
Though the above consumer price index graph doesn't seem to reflect the lower price inflation, from about the 90s and later, still the chart showing the inflation rates since the 1950s clearly shows a long period of inflation, starting about 69-70 and declining in the late 80s and coming down steadily, as global trade increased, and then remaining low almost every year up to the present, in an unusual period of low inflation.
That doesn't prove the theory, because of all the other factors, but it's totally consistent with the theory that increased trade -- increased competition globally -- probably causes lower production cost and thus lower prices (or rather, lower inflation rate than would have been otherwise).
Another consideration is that trade is less than 1/3 of the U.S. economy, so whatever trade factors may be impacting prices are much less important than the domestic factors unrelated to trade.
In short, all the empirical facts are consistent with the theory that the increased global trade has caused downward pressure on prices paid by consumers. And this theory is based on fundamental economic principles of supply-and-demand and the benefits of competition, recognized by all economists. These are not contradicted by a graph, though the basic principles do have to be consistent with the empirical facts. It's not clear if the graph contradicts the numbers in the inflation chart, though it's difficult to harmonize the two.
Perhaps the CPI graph shows something different than the inflation rate, but the inflation rate chart reflects the increasing prices during the 1970s, and these numbers indicate that inflation before the expanded global trade was higher and then declined in the 1990s and has remained abnormally low up to the present, despite efforts by the Fed to drive it higher.
Also, the annual SS COLA increases show a pattern of low increases recently compared to the 1970s and 80s when the yearly increases were much higher.
https://www.aarp.org/retirement/social-security/info-2020/colas-history.html These increases have become less even after they started out high and dropped quickly from the 1980 level.
Also, the CPI graph above is problematic as to the meaning. It seems to say that average prices in about 2010-2020 have been 5 or 6 times higher than those of the 1970s, which is contrary to everything I personally experienced. Maybe apartment rentals, but in general there's hardly anything which is 5 times higher now than in the 1970s.
And since about 2000 it seems most prices have not increased. A few have, but they are offset by others which have decreased.
Everything I can remember buying has cost either the same or less in recent times, not more. Some of it is due to new technology which produces the same product (or improved product) in later years at a lower price than the earlier years. Like a heater which today cost only $10 but cost $30 or $40 back in the 1980s. And computer products and many other examples.
And all food prices I pay are the same or lower, except fresh produce which has increased only a little. Though I know there are increases in some things I never buy. And even produce has increased much lower than anything the CPI graph suggests. It's true a head of lettuce is much higher than in the 70s and 80s, but not 5 times higher -- not even close. So something is left out of that graph.
The increase in trade with Latin America has led to better choices in food products, and lower prices than there would have been otherwise. Also the use of immigrant labor has helped keep prices down. This is absolutely the case regardless of any graph you might come up with.
Maybe the explanation for the discrepancy is the inclusion of tourism and other luxuries having nothing to do with imports and immigrant/foreign labor which definitely help limit price increases.
Does the graph include drugs? Does it include college tuition? Maybe it includes restaurant prices or other luxuries which most people don't need, and these have gone up at an unusual rate.
Items which can easily be imported have not gone up in any way that this graph suggests. There's nothing I buy which costs 5 or 6 times as much as it did in the 70s and 80s. Even twice as much is rare. So it's not clear what this graph is supposed to include. It must include something many people buy which cannot be imported and involves more luxury spending, entertainment, fancy dinners, tourism, hotels, etc. Definitely hotel prices have skyrocketed.
If there was any way we could "import" hotels, or hotel services, or other tourism products, then probably that cost would not have increased so much.
There is no way to prove exactly what cause produced what effect, in economics. But the evidence allows plenty of explanation how cheaper labor led to lower prices.
And obviously there are many other factors than trade which can cause higher prices (and lower prices). Just because one factor put downward pressure on prices doesn't mean there are no other factors also pushing some prices upward. So the lower-prices benefit of trade could be counteracted by some other factors driving prices upward.
It's really wacko economics to maintain that higher cost of production per se does not put upward pressure on the prices.
