Posted on 03/09/2018 5:41:32 AM PST by Oklahoma
Whenever you hear any of these arguments against free trade, you will have answers. The arguments against free-trade all have this in common: they rely on coercion by the government. All of them rely on a concept of the legitimacy of government agents with badges and guns who have the moral authority and legal right to stick a gun in the belly of one or more people who want to make a voluntary transaction. The government tells these people that they do not have the moral right or the legal authority to make such a transaction.
Think of two men: Jones and Smith. Jones wants to make a voluntary transaction with Smith. Brown is in competition against Smith. He does not want Jones to have a legal right to buy from Smith, because Smith offers lower prices, better quality, or some other advantage which Brown either does not want to offer or is not in a position to offer.
Brown goes to the government and demands that Smith not be allowed to make this offer to Jones. He does so in the name of national prosperity. He persuades the government that any price-competitive offer from Smith to Jones will reduce the wealth of the nation. Therefore, he insists, the government has to send out someone with a badge and a gun to stop this kind of trade.
There is one other factor: an invisible line, called a border, which separates Jones and Smith. It is a legal border. It regulates who gets into the country, or who has a right to vote in the country, or who has the right to stay in the country.
In this case, Jones lives in the United States. So does Brown. Smith lives in Canada.
Certain borders in the United States and in most countries have no economic relevance to trade. Borders between counties have little or no economic relevance. Borders between states have little or no economic relevance. In fact, the Constitution of the United States was written by a group of participants who specifically had been assembled in Philadelphia in order to deal with the question of tariff barriers between states. The 1786 Annapolis Convention had been called to deal with this. It had failed. The Philadelphia Convention was the follow-up meeting. This is why the Constitution prohibits any tariffs established by state governments. The United States is a gigantic free-trade zone. It is unconstitutional for any state to impose tariffs against the imports from other states.
The only state border that is guarded is California's, and the justification for this is the protection of California agriculture from fruit flies and other bugs that might be attached to agricultural products that people carry in their cars into the state. This justification is entirely bogus. The border patrol system is the remnant of an illegal restriction on people from other states coming into the state during the Great Depression in the mid-1930s. The Supreme Court declared these restrictions unconstitutional. But, once the border patrol set up the restrictive barriers, it did not want to take them down. Those people wanted to keep their jobs. So, the legislature invented a new excuse for restricting entry into the state: fruit flies. The border patrol people all kept their jobs. The bureaucracy still exists 80 years later -- a welfare program.
Tariff barriers and other import quotas that are established for any purposes other than revenue generation assume that the invisible line known as the national border is completely different, economically speaking, from all of the other invisible lines, also called borders, that exist inside the nation. No one accepts any of the arguments for restricting trade across the internal borders. Yet they accept these arguments with respect to national borders.
These articles detail the economic reasons why arguments in favor of restrictions on voluntary trade across the invisible lines known as borders are invalid from an economic point of view. These pro-tariff arguments are deceptive. They lead to policies which reduce most people's freedom, and most people's wealth.
Most of these arguments have been around for well over two centuries. Most of the arguments in favor of restrictions on trade have been around in the West for over 300 years. They promote a system called mercantilism.
Adam Smith became famous in 1776 for his arguments against mercantilism. His book, The Wealth of Nations, is a treatise against tariffs and import quotas. Nevertheless, millions of people who claim to be defenders of the free market, and who think they are followers of Adam Smith, hold exactly the positions that Adam Smith wrote his book to refute. It is one more case of self-interest and bad economic logic combining to confuse millions of voters.
Still, on the whole, the arguments in favor of free trade since 1960 have been persuasive in the United States. Most of the tariff barriers have come down. Most of the import quotas have come down. Democrats and Republicans have generally agreed that free trade is better for America than managed trade, at least with respect to imports.
Congressmen believe in mercantilism with respect to government subsidies for exports. This is completely illogical economically, given the case for free trade.
There is still managed trade by international bureaucracies, most notably the World Trade Organization. Another one is NAFTA. These organizations are not in favor of free trade. They are in favor of bureaucratically managed trade. I am not a defender of these organizations.
If you think you have an argument in favor of tariffs, send it to me. I will use it to write another article. There are always more bad arguments against free trade that I have failed to cover. But most of them are variations of a handful. They all boil down to this: "Government agents with badges and guns make us richer by restricting our choices."
If protectionism is so bad then why does every other country practice it?
2. Products may not cost more - The assumption that our products will go up significantly in price is a realistic concern. But it is not an absolute given. In the immediate period of implementation according to some of the best estimates the tariffs may raise the purchase price of a new car something close to $45, and a twenty-four pack of beer by .05 cents. But what happens if steel & aluminum production begins to match volume wise the amount we import from other world sources? Economics 101 teaches us that prices drop as inventory surges. If our steel production grows enough we could wipe out the gains mix-minused in our dependence on China.
3. The world doesn’t like it - Of all the pushback this reasoning is among some of the most inane. When the United States does what we have to do to shore up our markets, jobs, workers, and life we have less and less need to care what the world thinks about it. This isn’t hubris, this is independence. To be tied to China’s cheap steel, Saudi Arabia’s oil reserves, and the good graces of the global community fundamentally puts us at a more vulnerable position from an economic & national security standpoint. Like much of the rest of the Trump focus, America needs to shore up America’s capacity for whatever faces us, and being utterly dependent upon others doesn’t move us in that direction.
4. We shouldn’t pick winners & losers - This is an argument normally made when discussing competition between domestic companies here in the USA. Jonathan Hoenig, appearing on Neil Cavuto on Friday, repeatedly invoked this as some sort of determining factor as to why the tariffs should be prevented. But it’s an illegitimate argument. This isn’t picking one steel factory over another and using tax-payer incentives to cause one or the other to succeed. This is a fight for survival between a metal industry that has suffered enormous loss for the better part of multiple decades, and the slave labor of China. The winners in the near term are steel and aluminum workers.
5. The national security consideration - Those that have argued that a trade war is inevitable, seem to also forget the increasingly perilous hair trigger of real war that the globe is constantly on the edge of. If America were to find itself drawn into a conflict with North Korea or Iran, it is likely whatever degree of imports we get from China and Russia would immediately be frozen. Fifteen years ago more than a dozen aluminum smelters were in operation. Today there are only three and the entire capacity of one of those three is necessary just for the military and related technologies. We are more vulnerable than necessary, and increasing domestic production solves this vulnerability.
6. Had to be (as it was) done in the correct sequence - Because of the rapid growth of the economy by rolling back some 2000+ regulations coupled with the very real impact that Trump tax reform is having now is the absolute right time to push for this “leveling of the playing field.” Most Americans will be more likely to accept an increase in the price of their next car by $45 if they know that Americans are benefitting. They are even more so if they have on average $90 more per week appearing in their pay check.
There is no such thing as Free Trade. All around the world there are restrictions on trade, tariffs and government subsidies.
But the US has engaged in that game far less than other nations. And as a result, we are losing ground. Our politicians sit on the sidelines while we lose the game.
Trump isn’t “starting a trade war”. Trump is just getting us into the game so that we can play like the others. It’s stupid not to engage. The false concept of “Free Trade” is simply a rhetorical device to keep us in a weak position. It is an immoral position because it weakens the nation.
This guy is wrong on so many counts. A border is not some kind of invisible, artificial construct that physically separates two geographic locations. It also separates two legal systems and — in most cases — two monetary systems. These have huge implications on so-called “free trade.”
Townhall ^ | 8 March 2016 | Kurt Schlichter
Posted on 3/8/2018, 1:11:38 AM by lowbuck
I like free trade – I just don’t like snooty ideologues who won’t take their own country’s side in a trade fight. The ideal market means a willing buyer and a willing seller paying a mutually agreed price for goods or services with minimal government interference. That’s called “capitalism,” and as a business owner and someone who digs prosperity, I really like it. So why am I not wetting myself about Donald Trump’s steel and aluminum tariffs?
Cue the True Conservatives™ to tell me it’s because I’m stupid and terrible and awful. I know how they work. It was only a few years ago that I might have been with them. And they aren’t totally wrong opposing trade barriers – in the macro, free trade is a powerful engine of prosperity, the most powerful ever devised. But the key part of “free trade” is the “free” part, and they never want to talk about that when it comes to holding the foreigners accountable. My question, one a lot of Americans before me have been asking and that no one seems to want to answer, is “When does this free trade stuff actually start?” I mean, if we’re going to have free trade, we all understand that this involves us lowering our barriers to imports. Fair enough. We have dropped our barriers – the trade deficit is enormous. We buy from everyone. We got importing stuff down. But what about the other guys, though? We export a lot, to be sure, but is it on equal terms?
We never seem to hear much about that from the Free Trade Crew – a crew I was a part of not long ago, and with which I still sympathize. It’s a simple question – “Do foreigners have exactly the same barriers to entry to their steel and aluminum markets as the United States does?”
And if not, why the hell should we put up with it?
Again, cue the calling me dumb and economically illiterate and stuff. That’s been the default reaction of my party’s establishment whenever members of our party who believe they are being hurt by foreigners who put up high barriers that keep our stuff out while we drop ours and let the competitors dare to complain.
“Hey GOP, unfair trade practices are hurting me!”
“Shut up, economic illiterate! There’s no problem. You’re imagining it. Shut up.”
I don’t know – I am thinking that’s an unconvincing argument to those folks who actually go out and vote and who have concerns that probably could be addressed better than with hysterical dismissals clothed in insults.
Maybe you didn’t notice that our president is Donald Trump, but our Republican voters are a bit done with GOP Establishment gaslighting. It’s not just on trade. Remember the whole illegal alien thing? You know, our own voters kept expressing concern about the myriad problems illegal aliens cause our voters but our intrepid establishment undertook a dual-track strategy of denying the problems our people were experiencing while calling them racists. That sure worked out for President Jeb!.
Please clap.
Here’s the thing – foreigners are not always facing the exact same barriers to entry into the United States market as Americans are facing to entering foreign markets. Look, if a U.S. company can’t compete on a level playing field, that’s one thing. Sorry guys. But when it has to push a boulder uphill, that’s another. Sometimes it’s laws, sometimes it’s taxes, sometimes it’s products being subsidized by the local government so they can snag market share over here. Where the trade barriers are not identical, can we at least agree that this is a problem, and something needs to happen to change that?
No, we can’t agree to that, because American workers and their jobs are not the priority of the bipartisan establishment that is beholden to its corporate donors. To them, our workers are an inconvenience, a hassle, drones to be browbeaten into silence.
Well, there are consequences when you ignore the expressed concerns of a large group of Americans. One is named Donald. Trump did not campaign as a free trader – instead, he campaigned as a fair trader and promised that he would put America’s interests – not the interests of the corporate bigwigs who don’t mind sacrificing our people on the altar of their balance sheets – before anything else. Trump ran against 16 others who failed to pick up the torch, and then against a drunken felon who actively hated the Normal Americans who build and feed and fuel this country.
He beat them all. There’s a message there, and this festival of fussiness about the last-resort step Trump took 15 months into his term shows that the GOP Establishment has learned nothing from this failure either.
It’s a bad idea not to stick up for your own voters. Why is the notion that we should refuse to engage in unequal trade relations so crazy to so many people who write for the cruise shilling conservative press? Ahoy, mateys – maybe run a panel on the Lido Deck about how we ought to listen to our voters when they are hurting instead of demanding that they ignore their lying eyes.
So, if tariffs on unfair steel and aluminum competitors are a bad idea, what is a good idea? How do you propose to solve the problem, and continuing to ignore it is a NO-GO. What is your idea that results in an end state where U.S. manufacturers face exactly the same obstacles to entry into foreigners’ markets as they face entering ours?
I don’t know the answer, but then I am not wetting myself over these tariffs just yet. Maybe pain will work where talk talk talk has failed. If there is a better tactic that will actually achieve the goal of exactly equal footing between our workers and the foreigners, cool. I want to hear it. Tell me exactly what it is. I get tariffs. “You hurt us, we hurt you” – I get that. So do the voters. But if there’s a better idea, let’s hear it. I don’t like tariffs – give us an effective alternative.
But we haven’t heard anything but demands we unconditionally return to the unacceptable status quo, and how the economy is going to collapse because a beer can will cost another penny. Somehow, I am unconvinced about these hypothetical risks. What is not so hypothetical are the devastated communities throughout the Midwest.
Yeah, I know. But but but…
There’s always some reason we can’t stick up for our own people. There’s always some reason we can’t offend the foreigners. There’s always some principle that demands Americans who didn’t get fancy degrees like we did be the ones getting shafted.
Weird how that works. Except it isn’t working anymore. To the extent free trade has a bad name, it’s because the free traders are less concerned with actual free trade than with the purity of their doctrine. Our voters are not going to support a system where they are getting the short end of the stick, nor should they. How about we demand equal trade terms, and when we don’t get them we make it painful? Because if someone has to suffer the pain that comes with unfair trade, I vote it be the people trading unfairly.
How about you?
“If protectionism is so bad then why does every other country practice it?”
Because politicians, bureaucrats and unionists are ignorant and venal.
“If protectionism is so bad then why does every other country practice it?”
This argument is devoid of any sense or logic. Substitute “single payer healthcare” or “a 25 hour work week” for “protectionism”. See how stupid that sounds. Bad ideas are bad ideas and tariffs and protectionism are bad. I’ll put Hong Kong 1960’s up against France or England and their protectionism any day. Some of you need a real primer in economics, read Wealth of Nations by Adam Smith first and work your way up to Milton Friedman. I get some of you love Trump, but let’s not be lemmings or fanboys and park our common sense.
You’re directing this to the wrong audience. No “big government lovers” here, but nice try.
Best for you to contact the dozen or so foreign nations - and the WTO - and lecture them.
And your ‘analysis’ is an oversimplification, by the way.
Q: Yes or no. The Conservative position on taxes is to favor regressive taxes as opposed to the income tax which is very progressive in nature.
Simple yes or no answers. please.
Adam Smith was a Utopian ass.
We are not every other country. Sometimes freedom is not convenient or even provides good jobs. You would hold up China as our example?
Tariffs in general are not a bad idea. I do think they make more sense when they are applied uniformly to every import from a given country. Tariffs that are targeted for specific products or (especially) raw materials just end up pitting one U.S. industry against another.
That is why economists are such losers in my estimation. They tell us politics should play no role economic decisions but politics and economics are inextricably intertwined. They are one and the same.
Why do totalitarians have the right to tell me I cannot protect myself with a gun ..... or trade with whomever I please?
Your right about politics and economics. Politicians have been trying to control and restrict freedom since time began. They especially despise economic freedom.
And that will never change. Economic policy has to benefit the most people. And by most people I mean my fellow Americans and not gooks.
Big government conservatives believe government bureaucrats can better manage the economy than hundreds of millions of free people freely making hundreds of billions of decisions in their own self interest. Markets don't work unless they are managed by government. People cannot be trusted to do the right thing so they must also be managed by government.
Big government conservatives are not conservative.
Free trade is not equal to FAIR TRADE....Trump is making himself the equalizer given we have a bunch of globalist dumbarses who have done nothing but promote the steady erosion of middle working class in this country.
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