Perspective

by Don Boudreaux on May 14, 2008

in The Economy, The Future, The Hollow Middle, The Profit Motive, Trade

My latest essay in the Pittsburgh Tribune-Review is (are you sitting down?) on the benefits of free trade.  Here are some passages:

We’ve all seen a drawing that looks like two very different things
depending upon how the viewer looks at it. In one case, for instance,
what at first appears to be the craggy face of an old woman suddenly
looks like a beautiful woman standing in a sexy pose. If you look for
the old woman in the drawing, you see the old woman. If you instead
look for the gorgeous babe, you see the gorgeous babe.

Same picture. Same objective reality. Two wholly different sightings.

And so it is in economics. The very same set of facts — the
very same objective reality — often tells two (or more) very different
stories depending upon the attitude and knowledge that the observer has
when examining these facts. More imports from abroad and the losses of
specific domestic jobs that they typically entail are seen by some as a
sign of trouble for the domestic economy. Others see these same facts
as a boon — as the opportunity to get valuable goods and services at
lower costs and as releasing scarce domestic labor to produce outputs
that would otherwise be too costly to obtain.

…..

When trade is free, even craggy and slothful economies can be transformed into lively and fertile ones. That’s my perspective.

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{ 22 comments }

brian May 14, 2008 at 7:16 am

I can see that Don has read Thomas Kuhn. Or was the similarity in theme just a chance coincidence?

David P. Graf May 14, 2008 at 8:55 am

It's hard to appreciate the joys of free trade when you lose your job.

thinktwice May 14, 2008 at 8:59 am

"When trade is free, even craggy and slothful economies can be transformed into lively and fertile ones."

But are there countries that practice complete free trade?

Hammer May 14, 2008 at 10:34 am

More freedom in trade leads to more prosperity. More perfect freedom in trade results in more perfect efficiency. (Not to mention more perfect freedom in general.)

Think exercise. You don't have to be an olympic athlete to benefit from more exercise. Going for a jog 2-3 times a week won't win you a gold, but you will be better off than you were before.

As to DPG, it is very easy to appreciate free trade when you lose your job, but still can maintain a decent standard of living while looking for a new one by virtue of buying low cost items imported from other countries. The trouble is, people don't think to appreciate just how much they are benefiting every time they buy inexpensive things. We simply need to stop taking such things for granted.

Sam Grove May 14, 2008 at 10:34 am

But are there countries that practice complete free trade?

Bell curve.
We can compare those with freer trade policies to places with more restrictive policies.

Gil May 14, 2008 at 10:46 am

I probably do a muirgeo here but I see a role for small government providing basic infrastructure but I see a couple of roles that should exist that some here don't. Not to mention a few here are probably anarcho-types in the closet. I doubt Eastern Europe qualifies as a true free market but the countries are generally Capitalistic and things are getting better, likewise parts of Asia too I believe. >:b

Matt May 14, 2008 at 10:57 am

Trading is how we know other nations. Absent trade with China we would be much more ignorant of the nation, and of Asia in particular.

The more trade we do, the better we know each other and the less likely that ignorance causes problems.

Much more efficient than military confrontation based on uncertainty.

John V May 14, 2008 at 11:25 am

OK, wonderful, Gil. You got the infrastructure…now what?

Talk about looking for flees in a room full of elephants.

Good straw man.

Now, there's the another 99.99% of taxes, almost 3 TRILLION in funding, laws, tariffs and regulations and a whole whole slew of basic public choice incentive issues to deal with.

John Dewey May 14, 2008 at 5:36 pm

David P. Graf: "It's hard to appreciate the joys of free trade when you lose your job."

I am confident that those who have lost their job for whatever reason are better off being able to purchase goods at lower, free-trade prices.

I am also confident that those who are now free from paying ridiculous portions of their incomes to overpriced unskilled U.S. labor do appreciate the joys of free trade.

David, would you propose tariffs on imported goods? Why should I pay twice as much for sneakers or for a television or for a lawnmower? What right does an overpaid worker in Ohio or Pennsylvania have to my money such that you would force me to buy his goods rather than those from a foreign worker?

brian May 14, 2008 at 7:28 pm

Well, John Dewey, technically tariffs will not force you to buy the goods of the Ohion or Pennsylvanian any more than a business raising its prices forces you to hand over your money. Remember that you always have a choice to simply not buy the good rather than pay the extra cash.

Still, remember that that's a separate issue from whether such tariffs are socially efficient. The problem is not that you are forced to buy something (because you aren't) but that otherwise mutually beneficial trades do not take place.

Gil May 14, 2008 at 9:13 pm

What can I say JV? I believe the movers and shakers big and small, rich and poor, are the ones who roll up their sleeves and get things done and don't sit around much debating about this or that. While Libertarians and non-Libertarians (Communists?) debate whether roads should or should not be privatised the rich have private jets and helicopters. While Libbers and non-Libbers debate over what taxes are theft or do governments constitute a monopoly in a way that a private landowner isnt, the skilled middle class and unskilled poor migrate to the countries that give them the best opportunities. Is it then the sedentary poor, working class and mediocre middle class who debate over the fairness/unfairness of Guvmint?

sethstorm May 14, 2008 at 10:10 pm


It's hard to appreciate the joys of free trade when you lose your job.

Especially so if it was at the hand of some US-hostile consultant.


I am confident that those who have lost their job for whatever reason are better off being able to purchase goods at lower, free-trade prices.

That's called flooding the market with junk until it is the only thing that exists. So far, that has happened.

If that is the only choice, then there really is no choice. Using the market system as a shield does not dismiss the lack of choice.


I am also confident that those who are now free from paying ridiculous portions of their incomes to U.S. labor do appreciate the joys of free trade.

Not when they see business pulling the government to interfere against workers.

…What right does a worker in Ohio or Pennsylvania have to my money such that you would force me to buy his goods rather than those from a foreign worker?

They do when there is force in the form of worker-hostile industry and labor relations consultants influencing government. That has been the case from 1981 onward.

Is there a reason business gets a free pass on government? Furthering the point, explain how it is beyond heresy to make an attempt to put business in its place.

Interesting that this editorial was published in the proverbial backyard of Grigsby and Cohen. They're the ones who advise on how to disqualify citizens to get around the law.

brotio May 15, 2008 at 12:09 am

"They do when there is force in the form of worker-hostile industry and labor relations consultants influencing government. That has been the case from 1981 onward." – sethstorm

So, the Democratic Party has been under the influence of worker-hostile industries and labor consultants since 1981? They held the House from 1981 to 1994, and the Senate from 1987 to 1995.

Perhaps industrial unions aren't as politically astute as the teacher's unions. Those unions have had consistent success in keeping their paid Democrat representatives from allowing teachers to face competition in their markets.

I suppose it's Reagan's fault that Steelworkers had 14-week paid vacations – and tonnage paid on made steel rather than sellable steel, and thus discouraging the workforce from being an aggressive quality-control force?

Nope, unions and corporations who blindly assumed they were immune from competition had nothing to do with those idiotic contracts. Did they?

"Is there a reason business gets a free pass on government? Furthering the point, explain how it is beyond heresy to make an attempt to put business in its place."

There may be instances of a business lobbying Congress to expose it to foreign competition, but most often, businesses are right there with the unions lobbying Congress to protect them from the eeevil foreigners.

It's often assumed that free-traders are gung-ho on corporations, which is an incorrect assumption. Most of us simply believe that if government is restricted in its power to give unions (or corporations) the favors they seek, then all three are limited in the amount of mischief they can create.

sethstorm May 15, 2008 at 12:49 am


It's often assumed that free-traders are gung-ho on corporations, which is an incorrect assumption. Most of us simply believe that if government is restricted in its power to give unions (or corporations) the favors they seek, then all three are limited in the amount of mischief they can create.

So you're saying that limiting the government's power could achieve some of the same goals of limiting business influence without looking like you're pandering to either of the named groups?

As for the bit on picking 1981, it was one that was used as a moment in breaking unions much like 2003 is known for offshoring. I will give credit that there was a Democratic majority, though. It's that the same majority had also gone with some of Reagan's policies, and that they had a "free-trade" president in the 1990's.

brotio May 15, 2008 at 1:41 am

"So you're saying that limiting the government's power could achieve some of the same goals of limiting business influence without looking like you're pandering to either of the named groups?"

No. I'm saying that limiting government's ability to give unions and businesses the favors they seek would limit their influence WITHOUT pandering to either group and would force both to succeed or fail in the marketplace. If they can't turn to government to give them what they want then THEY have to pander to ME to get what they want by making a product I want at a price I think is fair.

"As for the bit on picking 1981, it was one that was used as a moment in breaking unions…"

If you're referring to the PATCO strike; they broke the law that was enacted at Saint Franklin of Roosevelt's behest, and were fired for breaking that law. I'm pretty sure the union leadership knew of that law when they encouraged the rank and file to strike.

"…much like 2003 is known for offshoring."

I'll ask you a question Walter E Williams asks protectionists that I haven't seen answered yet: Do you believe that it's bad for Toyota, Nissan, and Sony to "outsource" jobs from Japan to the United States?

John V May 15, 2008 at 9:24 am

Gil,

Again, looking for arguments that aren't being made.

John Dewey May 15, 2008 at 10:58 am

Sethstorm: "That's called flooding the market with junk until it is the only thing that exists. So far, that has happened."

Oh, I disagree. The foreign-produced goods I buy at Walmart – basketballs, golf balls, DVD players, marking pens, and more – perform just as well as the U.S.-produced goods I used to buy.

If the American consumer agreed with your assessment that foreign-produced goods are just junk, the Walmarts and Targets wouldn't have been able to sell so many of them. Incredible as it may seem to you, the average American consumer is probably just as savvy a shopper as you are.

sethstorm: "Is there a reason business gets a free pass on government? Furthering the point, explain how it is beyond heresy to make an attempt to put business in its place."

I have no idea what you mean. If you are saying that U.S. businesses should not get subsidies and protection from the U.S. government, then I wholeheartedly agree. But if your are saying that the lack of tariffs on imported goods is somehow a "free pass" for business, then I do not understand you at all.

John Dewey May 15, 2008 at 11:09 am

brotio: "There may be instances of a business lobbying Congress to expose it to foreign competition, but most often, businesses are right there with the unions lobbying Congress to protect them from the eeevil foreigners."

As I see it, most government protection produces both corporate winners and corporate losers. Tariffs on steel may temporarily help the U.S. steel industry and its workers, but they certainly hurt those companies and employees who purchase steel as a manufacturing input. Tariffs on sugar may help U.S. sugar growers, but they certainly made U.S. confectioners and their employees less competitive with foreign confectioners.

The problem, of course, is not the corporations, the labor unions and the lobbyists who are only acting rationally in furthering their self-interest. The problem is Leviathan.

John Dewey May 15, 2008 at 11:22 am

For Sethstorm's benefit, here's an explanation of how sugar tariffs caused candy production to be moved to Mexico and Canada:

Testimony before the house Ways and means Subcommittee on Trade revealed how steel tariffs have caused offshoring of manufacturing operations:

"In the 1970s and 80s, Voluntary Restraint Agreements, tariffs, quotas and other trade restraints enacted to protect steel producers resulted in 40% of the U. S. fastener manufacturing capacity disappearing or relocating offshore as a result of the higher U.S. steel prices that resulted from these protections."

sethstorm May 15, 2008 at 2:01 pm


No. I'm saying that limiting government's ability to give unions and businesses the favors they seek would limit their influence WITHOUT pandering to either group and would force both to succeed or fail in the marketplace.

Ok. If you insist on using the market message, fine. But that is one point I will accept.

As for PATCO, I'm aware of the use of the law, even if enforcing it had unintended side effect. I thought it was enacted as a reaction to mass strikes – with an overriden veto by Truman.

On offshoring/inshoring, it has to be viewed as something that is not economic invasion, but as a better product/service. For that, I can only speak of my short experiences with Toyota and Honda(which does have a factory north of the Mason-Dixon).

brotio May 16, 2008 at 1:01 am

John Dewey, RE: your post of May 15, 2008 11:09:45 AM.

Thanks for saying so succinctly the point I was trying to make. I don't disagree with a thing you said.

brotio May 16, 2008 at 2:28 am

"As for PATCO, I'm aware of the use of the law, even if enforcing it had unintended side effect. I thought it was enacted as a reaction to mass strikes – with an overriden veto by Truman." – sethstorm

You may be correct. But I think we both agree that there is a law prohibiting Federal employees from striking.

"On offshoring/inshoring, it has to be viewed as something that is not economic invasion, but as a better product/service. For that, I can only speak of my short experiences with Toyota and Honda(which does have a factory north of the Mason-Dixon)."

I don't understand what you're getting at here. Is your statement implying that if Dell feels they can provide me with a better product by building their computers in Mexico; and provide better service by employing Indians (Asia) for tech support that they should be free to do so? Your previous posts seem to argue in favor of protectionism, which seems inconsistent with how I'm understanding your quoted statement.

I am interested in your experiences with Toyota and Honda. Please elaborate? Thanks.

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