Sunday, August 14, 2016

Treading On Trade

     A couple of doctrinaire libertarians have upbraided me for coming out against one of the articles of the libertarian faith: completely unrestricted free trade across national borders. So I thought I’d spend a few hundred words on the subject, in the interests of explaining my position.

     A cross-border trade can be either dyadic – a simple exchange between two trading partners – or complex – an exchange that partakes of interventions by other parties than the nominal traders. At this time, much cross-border trade is complex, in that it’s affected by intrusive governmental policies: typically tariffs, subsidies, or asymmetrical regulation. Much of the problem of job loss in America stems from such intrusions.

     If one is determined to omit consideration of the difference between dyadic and complex trades, there are many cases to be analyzed before arriving at a conclusion about the goodness or badness of “free trade.” However, the ultimate question is a simple one:

Is complex trade legitimate trade, or is it an exercise of governmental policies?

     My answer is that complex trade is not legitimately free trade. It’s a process whereby governments strain to acquire certain economic or fiscal advantages for themselves and/or for favored corporations or industries. In other words, it’s morally and practically indistinguishable from pre-Enlightenment mercantilism.

     William Hawkins and others have championed a return to mercantilism as the only truly “conservative” economic model. If one regards a government, an entity that gets what it seeks by exercises of coercion, as a legitimate player in the economy, this position is defensible...but I don’t hold that view. It’s my position that as soon as a government does anything to render trade complex, it ceases to be “free trade.” Therefore, measures taken in defense of one’s own economy become morally defensible.

     But what, then? Shall Americans be “deprived” of cheap foreign goods on the grounds that the actions of a government – whether ours or another – are rendering them cheaper than American-made equivalents? No. Rather, let the prices of those “cheaper” goods be raised by an import tariff until they’re roughly competitive, allowing for differences in quality, with the American equivalents. Then use the proceeds from that tariff to reduce domestic tax burdens. In effect, that would confiscate the proceeds from governmental interventions and redistribute them to the longsuffering American public.

     This was the original – one might even say “conservative” – means for financing the federal government. Remember that from 1866 to roughly the end of the Nineteenth Century, there was no income tax and no corporation tax. Yet the federal tax surplus was so large that Washington could find no way to spend it.

     I’m sure there will be nit-picking. The largest nit, of course, is that we could never hold Washington to such a policy. It would surely “absorb” the proceeds from the tariff in increased federal spending. As matters stand today, this charge is irrefutable.

     Thoughts, anyone? Politely, please. It’s not yet 7:00 AM and I’m already having a very bad day.


Anonymous said...

If it's any consolation, some anonymous guy on the internet (me) agrees with you.

I am not an historian but I suspect that prior to the U.S. Civil War, the Yanks had similar issues with regard to the agricultural products of the South. By doing what was morally right in abolishing slavery, the northern states did what was economically wrong. They hamstrung their own agricultural production. The Commerce Clause (in theory, at least) prohibited them from placing tarriffs on slave-produced goods from the south. It was the the restriction against tarriffs that made the north unable to engage in trade with the south which led to all that followed.

The spectre of a "trade war" will always be raised by the pro-"free"-trade crowd. Well, maybe this is something that the northern states should have thought of before abolishing slavery. Maybe it's something the U.S. should have thought of before hamstringing its manufacturing capabilities with labor, environmental, and a slew of other overly-restrictive regulations. In the absence of the dreaded trade war, what you have done is outsourced U.S. manufacturing, polluted the holy "environment", and become an accessory to the use of slave labor -- a slaver-by-proxy.

A society which allows slavery (or which has almost no environmental protection, or workplace safety regulations, or diversity rules, or ...) cannot engage in trade on an equal footing with a society with disallows it (has restrictive environmental laws, etc). From an economic perspective of the latter, it is "free"-trade itself which creates the trade war and, at the same time, preemptively surrenders.

So-called "free"-trade not only has nothing whatever to do with capitalism (i.e. a free market). In fact, the two are MUTUALLY EXCLUSIVE. To suggest otherwise is to say that a free market is one in which the market determines all, including the price of a human being, there are no laws, no rights of life, liberty, or property to be protected. Pure "caveat emptor" and "caveat dominus". A leftist's caricature of capitalism. Without the Rule of Law, and without legal protections of property rights, protections against fraud, etc; you don't get a free-market capitalism, what you get is an anarchical tyranny of mercantile warlords.

"Free-trade" is a tool used to foster globalization. More specifically, it's a tool used to create the circumstances that will then be used as an excuse to demand global unification (likewise, the global debt bubble).

Nairb said...

Amen. I consider myself to be libertarian and I agree with your thoughts both trade and tariffs. I don't believe free trade can exist unless conditions for production are the same on both sides of the trade equation. So, it is not likely to ever occur. We might as well defend our national interests and fund our government rather than be flooded in cheap goods and unemployment.

Scott said...

If I can get the time & space, I'll try to get some extended thoughts up.

But yes, basically. Especially the part about income duties being better than an income tax.

Conan the Cimmerian said...

I am with you and VoxDay on this subject. You are simply correct and our Nation must be preserved. Tom Woods hosted a good debate with VoxDay on this.

I am a former? libertarian...or now a nationalist libertarian...

Joseph said...

Was the South successful at exporting goods other than sugar, tobacco, and cotton? For one thing, there weren't that many railroads going between the North and South.