Memo to Presidential Candidates: Stop Bashing Free Trade!

By David J. Blumberg

Three of the five remaining Presidential hopefuls oppose free trade. Businessman Donald Trump threatens tariffs and other trade busters. Secretary Hillary Clinton has flip-flopped her position and now opposes the Trans-Pacific Partnership, which she touted as the “gold standard” for trade deals while she served as Secretary of State. Senator Bernie Sanders proudly calls for socialism and wants to retreat far from America’s long-standing free-trade orientation.

Clinton, Sanders and Trump are exploiting an undercurrent of voter anger over economic stagnation; particularly among middle class and blue-collar workers.   While some may not sense it as acutely here in Silicon Valley, many Americans are hurting and frustrated. They are angry as hell and refuse to take it anymore!

Free trade is not the problem. On the contrary, free trade has created millions of net new jobs in the U.S.A., Canada and Mexico over the past three decades through the bi-partisan supported NAFTA Agreement. So why would we limit this now? Free trade is the voluntary exchange of goods or services between two or more parties, each exercising their “relative advantage.” It supports innovation, faster economic growth, greater labor market flexibility, and better training and incentives for career choices.

Here in Silicon Valley, we should be worried. Don’t be complacent or smug and think we are somehow immune to these dangerous economic policy sentiments. Our tech sector is integrally connected to and mutually dependent on the global economy. It benefits from and relies upon free trade. The imposition of trade restrictions, tariffs, higher taxes and over-regulation will hobble our innovation industry as it has many others in the past – such as manufacturing of steel, furniture, petroleum products and clothing, among others. Tech giants like Apple, Cisco and Intel manage complex, fully integrated supply chains that source raw materials, components and labor locally and overseas to serve global markets. Trade is a two way street; slow traffic in one direction will slow in the other. Our industry could suffer should Americans elect a President committed to shattering the consensus that has governed and multiplied global trade over the past seven decades.

The prevailing free trade regime has helped raise global GDP per capita, enabling a new and expanding global middle class to buy smart phones and tablets to search with Google, share on Facebook and shop via Amazon.

Many startups benefit from free trade. Vancouver’s social media platform developer Hootsuite serves SaaS customers in more than 190 countries. San Jose based Nutanix sells and distributes converged datacenter infrastructure appliances in more than 80 nations. This kind of rapid access to global markets was nearly impossible just a decade ago.

We dismiss the current protectionist sentiment at our peril. But while the anti-free trade rhetoric is mistaken, workers’ pain is real regardless of the cause. Silicon Valley: Take action NOW, lest we find ourselves shut off from product supply and customer demand.

Speak up, loudly: The election is only six months away. Now is the time to remind leaders, influencers and voters about what’s at stake through social media, conversations, emails, op-eds or phone calls. Speak out now before it’s too late; the risks are too great to elect a President who rejects a crucial global business foundation upon which our economy depends.

We have the technology and resources to help: We must acknowledge that globalization has uneven effects, and we can help Americans who’ve lost jobs. For example, tech industry consortia could partner with regional governments or labor unions to proliferate technology-based training apps for workers displaced by economic changes, and recruit those who qualify for the jobs of the future.

Think locally: Companies are always in search of low-cost environments. Given the uneven economic conditions around the U.S., some of the more challenged locales are right next door. For example, the mayor of Fresno is actively recruiting Silicon Valley companies to move operations to the Central Valley to benefit from reasonable housing costs, local colleges and universities, an eager pool of skilled labor and a pro-business attitude.

Silicon Valley has much at stake in this election. The risk of America electing an anti-free trader is too great for our industry to ignore. Follow our words with actions; help those who haven’t yet benefitted from globalization. It’s in our interest, and it’s the right thing to do.

David J. Blumberg is the founder and managing partner of Blumberg Capital. Follow him on Twitter at @davidblumberg