Russ’s new book, of course, is now out; a copy already graces a bookshelf in my home. But for those of you who haven’t yet read Russ’s first book — The Choice — I urge you to do so ASAP. It offers the best explanation of trade, and case against protectionism, penned since Bastiat last wrote more than 150 years ago.
A major theme of The Choice is that free trade — or, more generally, producing any good or service with fewer and fewer resources (including human resources) — releases resources (again and especially, including human resources) to produce other goods and services that would not otherwise be possible to produce.
And when human resources are released from many of the tasks that demanded it over the years (agriculture, manufacturing), human beings are able to find other occupations that generally are more fulfilling. Although the span of time over which this emancipating process takes place is long enough to avoid detection and appreciation by those whose observation is only casual, stepping back and looking at our society today in comparison with that of 200 or even 50 years ago makes clear that this process of emancipating human labor from tedium is real and is responsible for much (I would say most) of what is fine and wonderful about our world today.
This comic-book account of robots replacing human labor makes the point. (HT Ronald Hayden, who found this nice story at ColbyCosh.com)
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{ 13 comments }
I read The Choice a few months ago, it really is excellent.
I will look to read The Choice, but, if it attributes so much of the good in life to free trade as this comment of Boudreaux does then I am not sure it will truly convince me… since rock and roll must also have played an important part in reducing tedium.
By the way, what is tedium made up of? Might tedium be something good or at least a necessity for some?
Also when we look around and see the global product diversity being diminished as global goods take over… can we really be sure that free trade – while releasing resources to produce other goods and services that would not otherwise be possible to produce does not in fact overall diminish the biodiversity of products.
I mean have you ever compared a pristine tropical jungle with a reforested tropical jungle… ce n'est pas la même chose.
Per, you make the common mistake in thinking that diversity is beneficial in and of itself. That is not necessarily so. To your point, some places wear shoes that are just strips of leather holding a thicker peice of leather to the sole of your foot. They might look nice and be ok for wearing to the beach but over time the lack of support and cushion they offer is terrible on the joints of the leg, causing those who live to older age to have all manner of problems. A cheap pair of Nikes would be vastly superior in protecting those joints, improving the quality of the person's later life. Certainly it is not good to keep the poor fellow in leather sandals for the sake of diversity.
To the point of the Don's post, I was thinking about something similar this morning while listening to folks talk about the Olympics on the radio. I was thinking how interesting it is that only the industrialized countries can field top athletes in nearly all of the events, while less capitalistic and industrialized nations usually can only compete in two to three events, and generally rarely excel. Take Africa (the entire continent). Africa produces a number of excellent runners as well as some other track and field events, but you rarely see water polo or gymnastic teams from the entire continent. Contrast Germany or France (to low ball) who generally have at least one competitor in nearly every event. I suspect there is something of a direct relationship between how capitalistic and free a country is and the percentage of their population who can spend the time to excel at a particular event, more so if said events are not the national past time.
So, Per, you really think there is less diversity of products today than a generation ago?
Give data, not anecdotes.
The free-trade narrative is convincing. I love to point out those in favor of trade barriers that if my neighborhood could only use what was produced inside its confines, the entire neighborhood would go to pot, as the engineer had to stop engineering to raise cattle and the dentist had to stop drilling to make furniture or grow corn. People have to stop one activity in order to start another that somebody else was previously doing for them.
However, I have not yet come up with a good answer to what happens when the country has idle capacity due to unemployment. In my neighborhood example, if the barrier was just that we had to grow our own strawberries, and 20 of my neighbors who were previously out of work started growing those strawberries, then the neighborhood appears better off with the regulation.
How does the theory accommodate this?
I've seen this principle in action throughout my career in IT. Computers make business processes faster, but jobs aren't necessarily lost as a consequence. We just find more things for people to do. See Toys-R-Not-Us
Per, if you are suggesting that global product diversity is diminished as as a result of global trade, then I'd like to see an example. (Any example of a product that existed at a production level above .001 percent of GDP in any nation on the planet that no longer exists or is produced.)
You can back in time for your examples and extrapolate statistics to historical periods if you'd like (canoe manufacturing, stone tablet engraving services, etc.).
Creative destruction does not mean annihilation. Trade in an ever expanding marketplace creates diversity of choice. It has never, in human history, reduced choice in goods or services. Only regulation can do that.
Chris:
Those are either more expensive than strawberries you could have bought were it not for the barrier, or they're cheaper (or roughly the same price). In the first case, the rest of the neighborhood is made worse off in order to benefit the 20 strawberry growers, since they have less left over after buying strawberries than they would without the barrier. In the second case, the incentives for those 20 people to grow strawberries are there without the barrier, since they can do so competitively and efficiently. Now, in the second case, introduction of the barrier removes some of those incentives, because they now have a captive market and are only subject to competition from one another, rather than strawberry growers across the world. This ultimately moves the second case into the first, where strawberries in your neighborhood are more expensive because of the barrier erected.
You may argue that having 20 fewer people idle during the day is a benefit to the neighborhood, but the barrier isn't necessary for this. If those 20 people idle are imposing such a cost on the neighborhood that putting them to work, even non-productively, is a net benefit, then nothing is keeping the neighbors from creating make-work projects for them. In other words, even if they can't grow strawberries competitively, put them to work growing strawberries, just to keep them busy. The cost you bear from buying their overpriced strawberries is, in this case, less than the cost you bear from having them out of work. As above, if they can grow strawberries competitively, nothing in the barrier-free neighborhood is keeping them from doing that. The barrier also locks up those 20 people (or some other group of resources), regardless of what need may arise tomorrow.
No matter what the case, efficient or inefficient strawberry growing, idle workers being an economic drag or simply not contributing positively, the barrier does nothing to help the situation. It only appears to when (a) the behavior it's supposed to encourage would have happened anyway, or (b) seen benefits (strawberries in the market, 20 people working) are paired with unseen costs (higher strawberry prices, opportunity costs).
Billy –
You had me up until your suggestion that the people could be put to work growing strawberries. It seems to me that a subsidy for domestic business is equivalent to a tariff on foreign business.
Incidentally, there is a collective action/free-riding problem with the "there's nothing keeping the neighbors from creating make-work for them" approach. If everybody else in my neighborhood is paying the town drunk to grow strawberries, then I don't have to. So, you usually see this solution from government (which can force people to pay). And, with that, you have another trade barrier.
Chris,
You're absolutely right that such action by the neighbors is a barrier in its own right, and carries with it the problems you mention. However, the case where the cost of 20 idlers is greater than the cost of supporting 20 unneeded, inefficient strawberry growers is the only case in which the neighborhood is better off putting the idlers to work unproductively growing strawberries. My point with that comment was simply that the same effects could be achieved even in that limited case without the barrier being imposed, which may be a distinction with no difference.
I think the "real answer" is that the idlers go find a neighborhood with a shortage of capacity, but I didn't read that possibility into the hypothetical. Similarly, I assume that your stipulation of idle capacity means that no matter how free and innovative, the neighbors simply can't find a productive use for these people, which I don't think will typically be the case. Those two constraints gave rise to the comment you object to now.
In paying more for the strawberries under these conditions, the neighbors are basically buying more than strawberries. They're also buying protection from petty crime and reducing whatever other costs are associated with the idlers. They're still each determining, though, how much all of that extra benefit is worth, rather than having a worth determined for them and the price imposed (and sale forced) on them from above. Because of that, I still think the neighborhood is better off in this case than with the imposed barrier in place, even if only slightly.
Hey Per,
This is strictly anecdotal and not proof of anything, but as to the diminishing diversity of global products: I sat in a meeting room this morning waiting to tape some settlement statements for the BP explosion cases, attorneys from California, Texas, Louisiana, and victims from all over central and south America, as I waited I peeled and munched my Leechee nuts and not one single person among all those even had a clue as to what I was eating.
Diminishing diversity of global products? I suspect you went out on a limb there. My Leechee nuts are just the tip of that iceberg of things most don't have a clue about.
Dr. Boudreaux:
Do you not find dispiriting the persistent manner in which some of your regular commenters taunt people whose views on trade are less libertarian than yours?
Thank you for the article. Cards on the table: I view Ricardian theory about the way Pat Buchanan views it; I am no trade liberal. You would regard me as one of those that stands on the other side of the great trade debate. However, not having read Russell Roberts' book but having followed the link you have provided, I do have a question.
The page you have linked says,
Ricardo takes the reader and Ed Johnson into the future to see an America of free trade and an America of complete self-sufficiency.
Is this an accurate description of the relevant part of the book?
The reason I ask is that I believe the choice suggested—between unimpeded international flows of goods and capital on the one hand and autarky on the other—to be a false choice. I don't know any economic nationalists that want autarky. We want traditional U.S. tariffs in partial substitution for income taxes and are willing to pay a theoretical, second-order GDP penalty to get them. We want not autarky but rather a significantly enhanced degree of national self-sufficiency, of the kind the U.S. actually enjoyed from 1816 through 1939, an extended period of extraordinary economic growth. In Mike Huckabee's alliteration, we wish to retain the ability to feed ourselves, fuel ourselves and fight for ourselves with weapons we make ourselves. This does not mean that we are fundamentally against importing bananas and Chilean grapes—or, for that matter, importing anything the U.S. consumer is willing to pay a moderate tariff to obtain, especially when the tariff does not disappear but rather goes into the U.S. treasury, which the U.S. consumer must one way or another fill. But we do prefer to make things here when we can, and we believe that the citizen, a producer as well as a consumer, ought to have as broad an array of choices before him in production as he does in consumption.
You know the rest of the argument, I think, so I'll let it rest there, but I did want to ask if the one sentence quoted was a fair representation of the relevant part of the new book you so like.
Regards,
Howard Harrison
So seemingly reasonable, so measured, weighty, and well written, yet somehow so frightening too.