In the post immediately below I address Seekingexports’s suggestion that I am somehow being disingenuous by not sending letters-to-the-editor demanding that Uncle Sam retaliate against market restrictions and manipulations by foreign governments.
Here, though, I take a different approach to Seekingexports’s comment. His (or her) comment in full is this:
Why does Mr. Boudreaux give sanction to Chinese officals that erect ever changing non-tariff barriers that are so effective? This is a de-facto manipulation of the beleivers in free trade–I will not buy his party line. The tire issue is pocket lint in comparison to goods and services blocked by Non-Tariff Barriers. Where is the commentary and letters that address these barriers? Are these barriers to complex and nonclassical to warrant even lip service?
Suppose you’ve long been exchanging your baby-sitting services with your neighbor in return for his lawn-mowing services. Each week, approximately three hours that you spend sitting with your neighbor’s brood of brats is repaid by two hours your neighbor spends mowing your lawn.
Then one day your neighbor informs you that he’s about to incur a huge debt to hire a fabulously expensive child psychologist who will quickly teach his children some skills in how to better care for themselves — so your neighbor will now need you to sit with his young’uns only one hour each week rather than three. But, your neighbor quickly adds, he’ll continue to mow your lawn just as before.
You think to yourself that your neighbor is nuts. Incurring massive debt to hire a child psychologist who claims to be able to train toddlers to watch over themselves?? You conclude that your neighbor has done himself no favors — indeed, that your neighbor has harmed his family, especially over the long run. You even worry that, when your neighbor must start repaying this debt, he’ll have less time to mow your lawn in the future. But being a decent human being, you mind your own business and say very little.
So here’s a question for Seekingexports: Would you be wise, in this situation, to ‘retaliate’ against your neighbor by telling him that, until he restores you to three hours of babysitting weekly, you will limit him to only one hour of mowing your lawn each week?
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{ 29 comments }
A Ralph Wiggum laugh at seekingexports.
Acutally you want Nelson Muntz’s “ha ha” laugh.
That’s right; that’s the kid.
I will not answer your classic economic logic question because my point is why don’t address the non-classical trade barriers that China so effectively imposes.
The FORM of the trade barrier — “classic” or not (whatever that means) is irrelevant. If you cannot answer my question, I’ll presume that you have not effective answer to offer.
Right on, Seekingexport! This question more adequately addressed by applying super-duper neo-modern alchemy and exorcism practices, not by old-fashioned “classic” logic.
Was that sarcasm? Because I’m not sure whether to ‘like’ this or just ignore it?
The whole point of writing this trade barrier criticism is to affect, through persuasion, those people/policymakers/asshats within your circle of influence. Why should Don spend his valuable time critiquing what the Chinese do? Would they listen? Are their citizens getting on the Internet and having dialogue about the inter-working of their economy so as to steer voting behavior? Think about those for a while. And in the mean time, let’s not harm ourselves and our own citizenry through the use of those economic weapons that our representaives [and their domestic business lobbyists who seek protections from foreign competition] had pointed at us.
Don, what a great example! You can bet it will find its way into my lectures on trade restrictions.
At some point the neighbor will have less time (because of his debt) or will find a neighbor who is willing to receive fewer lawn mowing hours (because he only demands one hour of babysitting in exchange).
You would be wise to invest in a faster, more efficient lawn mower.
What will China do with all those U.S. dollars they import from us?
who cares. as long as the chinese people and/or the govt (most likely) believes that the recycling the dollars and ‘vendor financing’ debtladen US consumers/govt is more valuable than improving their own prosperity by strengthening the yuan or investing in non export chinese companies,why should americans point out the folly of their ways?
when someone buys the dow at its peak, its not the fault of the guy who sells it to him.
Exactly, but the question was posed to provoke thought in someone who didn’t know the answer.
Suppose that your neighbor tells you that he is paying the interest on his debt by pilfering money from his other friends (he call it taxes). Are you willing to gain the two hours you no longer need babysit at the price of his coercion?
I prefer this argument to the one below. Great analogy.
Import duties that we put on cheap foreign good are bad for us, even if those nasty foreigners impose their own import duties on US goods.
Analogy: I’m going on a hunger strike until you stop your hunger strike.
Analogy: I’m not going to buy anything from my local supermarket until they buy my homemade donuts from me.
Thought experiment: If inexpensive (but good) tires began falling from the sky, would we collect and destroy them to “protect american jobs”.
Reality: Any money spent on Chinese tires is respent by the Chinese. They will spend the dollars, placing a demand on US manufacturing or services somewhere in the US economy, supporting jobs.
Reality: US auto manufacturers will be less able to make autos in the US and ship them to foreign buyers, because they won’t be able to buy and use cheaper Chinese tires. This kills US jobs and hurts our economy. See hunger strike above.
Excellent!
“An eye for an eye will make the whole world blind.”
“They will spend the dollars, placing a demand on US manufacturing or services somewhere in the US economy, supporting jobs.”
Too much of this money goes into Chinese banks to be used to buy US federal government debt. Must I wear a tinfoil hat to wonder if there isn’t some US-Chinese government collusion to keep this debt financing monster going?
Mr. Boudreaux constructed a simple person-to-person metaphor in order to demonstrate the advantages of international trade. I introduced into his metaphor the element of coercion in order to raise a moral issue: Are libertarians prepared to reap the advantages of trade if those advantages are based on the coercion (e.g., the taxation) of innocent third parties who have little or no say in the matter? If so, how does that comport with the philosophy of libertarianism, which purports to be anti-coercion?
RogerD,That’s an involuntary exchange between this guy and his neighbor. I’d probably tell the neighbor that ‘so-and-so’ is stealing from him. It’s really none of my business to try to coercively force this guy to stop stealing. It’d be an unjustified act of aggression if that’s what you are implying. I don’t see a right for a third party to come in and commit aggression unless the neighbor being stolen from explicitly cuts a deal with a bodyguard or security force, or even yourself, to handle this business for him. If you take it upon yourself to just go all vigilante without having an agreement with the neighbor then you are guilty of a whole new act of aggression.The only person who has a right in this case to retaliate is the neighbor. All you can do is tell him what’s going on. Maybe he can make ‘so-and-so’ stop, or maybe he files a lawsuit against him. No matter what, if you say to ‘so-and-so’ “I am no longer trading with you because of this stealing”, he will say “too bad for you, now I’m going to trade with Mr. Jones down the street and I will continue stealing none-the-less”.RogerD, it’s a noble attempt but I really don’t think your thought-experiment reveals anything meaningful.
OK. That is a good and frank answer from joenorton. (I disagree with what he says about third party rights of retaliation. I don’t think it constitutes aggression. But that is not really relevant for international trade.) The bottom line for international trade is this: Libertarianism holds that it is fine to profit from coercion, as long as it is exercised by other people. Does Mr. Boudreaux agree? Would he apply it to his example? If he learned that the lawn-mowing neighbor, far from hiring the child psychologist, had kipnapped him and was holding him prisoner in his gulag basement, would he agree that the two saved hours of baby-sitting should still be enjoyed. Oh yes, you can tell the psychologist that coercion is being used against him (as if he didn’t know) and let him deal with it. But is that sufficient to clear the consumer’s conscience. Is that the libertarian view on profiting from coercion?
RogerD,
As an individual, I may not choose to profit from what I see as an abuse or worst of a third party. Furthermore, I will criticize, on moral grounds those who seek to profit however indirectly from that abuse. However, I will resent being prevented by force to enter into a voluntary agreement with the abuser by another party (the government) which selectively do so when it fits the interest of some of its constituents at the expense of others.
Also when it comes to China and many Third World countries things are not so clear cut as in your example. It might be that by my trade I am making the citizens of those countries better off that they might otherwise be even though by my own standards they are being abused. It might be that I am closing the only way I have to positively influence those countries.
My only condition about trade with nations with objectionable governments is that no subsidy or especial deal should be given in order to make it happen. Because that subsidy, apart from being wrong in all cases, in this particular case will be like adding insult to injury.
Having born and raise in communist Cuba I think I know a bit of what is going on in those countries and what it is good or not good for the people there. Mutually beneficial commerce is OK with me, subsidies and guarantees either directly to the Cuban (or Chinese) government or the companies who choose to deal with it no. And let me as individual decide if I want to be the customer of one of those companies.
An intresting rebuttal, jcdecardenas. But one preamble to my rejoinder: The beauty of Boudreaux’s example is that it abstracts from all talk of nation states, real or imaginary, and forces us to discuss trade in terms of individuals. We need to preserve that framework.
1. You say: “As an individual, I may not choose to profit from what I see as an abuse or wors[e] of a third party.” But the question is not about what you may do; it is about what you ought to do: Ought you to profit from your trading partner’s use of coercion to obtain his goods or services?
2. You say: “I will resent being prevented by force to enter [from entering?] into a voluntary agreement with the abuser [the seller of coercion-obtained goods and services] by another party.” (I stop the quote there, because we are leaving governents out of this.) But the question is not whether you will resent it; the question is whether you ought to resent it.
3. You will concede, I hope, that while you are profiting from a seller’s coercion-obtained ability to reduce his price, other seller’s are being harmed by that seller’s acts of coercion. (It’s just the reverse of minimum-wage laws: Yes, some sellers of labor benefit from a coercion-obtained ability to raises prices, but others are harmed.)
4. Now, if a person is suffering economic harm as the result of coercion, why is it immoral for him to use coercion to stop the harm? He is not interfering with a voluntary trade, because the seller does not own the good. Think Nozick. A seller has a right to good if, but only if, he can trace his possession of it back through a series of voluntary exchanges. Your seller cannot. Thus, a person being harmed by your seller’s sale of the coercively obtained good has a right to stop the sale coercively.
You continue to refer to “coercion”, but I do not see any coercion in Professor Boudreaux’s example.You asserted that libertarians hold that it is OK to profit from coercion. Can you provide some evidence that you know how libertarians feel about coercion?“if a person is suffering economic harm as the result of coercion, why is it immoral for him to use coercion to stop the harm?”Who said anything about actions being immoral? If you believe it wrong to purchase tires or anything else from producers you feel are paying workers too little, that’s fine. Don’t buy their goods. But don’t try to impose your beliefs on me. Don’t prevent me from trading with whomever I wish to trade.If you wish to change the behavior of Americans, RogerD, make your arguments and convince them to stop buying Chinese goods. But don’t use the power of government to force your choices on the rest of us.
Johndewey, I have the sense that you have not followed the development of this argument. No, there was no coercion in Boudreaux’s example, which was supposed to make us think about international trade by reducing it to a matter of interpersonal exchange. It was I who altered the example in order to introduce the factor of coercion and so represent the reality of tax subsidies and slave labor. By that means, I wished to ask whether those acts of coercion changed the moral equation.
You ask: “Can you provide some evidence that you know how libertarians feel about coercion?” Yes. There can be no doubt that libertarians have celebrated the ability of people to profit by the coercion of others. In “Free To Choose,” Milton and Rose Friedman wrote: “Suppose a foreign government gives such subsidies [to their producers], as no doubt some do. Who is hurt and who benefits? To pay for the subsidies, the foreign government must tax its citizens. They are the ones who pay for the subsidies. U.S. consumers benefit. They get cheap TV sets or automobiles or whatever it is that is subsidized. Should we complain about such a program of reverse foreign aid?” Obviously, the Friedmans were celebrating the American consumers’ ability to profit from the coercion exercise by a foreign government.
You end by saying: “If you believe it wrong to purchase tires or anything else from producers you feel are paying workers too little, that’s fine. Don’t buy their goods. But don’t try to impose your beliefs on me. Don’t prevent me from trading with whomever I wish to trade.” That remark is completely irrelevant to every argument I have made. I have said nothing about “paying workers too little.” I have spoken only about the role of coercion.
Why is it so difficult to get a direct answer to my question: Is it moral to profit from acts of coercion committed by others? Mr. Boudreaux?
Roger, I think it’s “so difficult… to get a direct answer to [your] question” because it’s not an easy analysis. Per Bastiat, “the good economist takes into account both the effect that can be seen and those effects that must be foreseen.”
I do not consider myself a libertarian, but one thing I know about libertarians/libertarianism is that they do *not* believe that two wrongs make a right (or, that two coercions make freedom).
What I mean by this is that just because a foreign government coerces its citizens (e.g. by taxation or tariffs), it is not “just cause” for our government to turn around and coerce us (e.g. by taxation or tariffs).
Say there is a product/good not made in the United States, that is only made by two countries in the world. You or I might make the personal moral decision to trade or not trade with Protectionist Country A, but it would *also* be wrong for us to legislate this at the federal level (tariffs), because our neighbor may subjectively ‘value’ the degree of coercion emanating out of Protectionist County B to be more egregious, and he/she would prefer to not trade with [i]them[/i].
Another way to look at your moral dilemma is this… under the scenario you’ve laid out, I should not trade with companies from Maine, New York, or Hawaii, because they all have high tax rates. So, is it moral for me to buy stuff from those states?
Another wrinkle I see is this:
A coconut bra that I buy as a souvenir for my wife in Hawaii isn’t exactly a blood diamond from Côte d’Ivoire…
But then again, that’s just my subjective valuation.
So, in all of that, I still don’t think I’ve given you a direct answer. But I hope I have helped to point out why a “direct answer” may not be so easy to arrive at.
RogerD, why do you keep asking about what is moral or immoral? If you and other Americans believe that the tariffs of China are “immoral”, then don’t buy Chinese goods. Write letters to newspapers saying so and try to influence your fellow Americans. If you are successful in persuading enough Americans, then Walmart and other distributors of Chinese goods will change their sources. The voluntary actions of Americans – the boycotting of Chinese goods – will force American companies to change.
So why do you wish for our government to retaliate against the Chinese? If Americans believed that Chinese tariffs were immoral, retaliatory tariffs would ne unnecessary. As I see it, RogerD, those who want tariffs for morality reasons do not want Americans to have the freedom to decide for themselves what is immoral. Instead, they want to impose their morality on their fellow Americans.
Mr. Syma, I have the sense that you, at least, are close to giving me an answer. The only thing that remains is to return to the framework Mr. Boudreaux proposed and think of trade in terms of individuals, abstracting away the existence of polities, such as nations, states, municipalities, and so on. Johndewey seems unwilling to do this; I hope you are not. Of course, since you are not a libertarian, we may finally arrive at different answers. (Johndewey may not be a libertarian either, for he seems not to believe the immorality of using coercion against people. But in that case, I do not see what grounds he has for complaining against the coercion involved in tariffs.)
As a preliminary, however, I must tell you that libertarians do generally hold that two coercions (sometimes) make for freedom: when the second coercion is used to prevent the first from having its effect.
Now, in my modified version of Boudreaux’s example: my lawn-mowing neighbor has been able to lower his price, because of an act of coercion: he has kidnapped a psychologist and is forcing him to teach discipline to his children (thus allowing him to lower from three hours to one hour the amount of baby-sitting he needs from me, even though he still gives me two hours of lawn-mowing.) In this way, I am profiting from his coercion against the psychologist. Is anyone hurt by it? Yes. The other lawn-mowing folks in the neighborhood who still need three hours of baby-sitting from me in order to give me two hours of lawn-mowing. Because the kidnapper has introduced coercion into the market, they cannot get jobs. (It is the same principle, but in reverse, to minimum wage laws. When coercion is used to set an artificially high price, some benefit and some suffer from the coercion. When coercion is used to set an artificially low price, some benefit and some suffer from the coercion.) Now, since these lawn-mowers are suffering harm as the result of coercion, libertarian theory says that they have the right to use coercion to stop that harm from taking place, perhaps by stopping the trade from taking place. Your lawn-mowing neighbor cannot protest the intervention by those that his coercion is harming, because his trade arrangement is predicated on his coercion of the psychologist, and that is something to which he has no right. And since he has no right to trade any services predicated on the coercion of others, neither have you a right to trade for those services and profit from his coercion.
Well, that at any rate is the argument. I do not insist that it is valid. But if it is not, I should like to know why not.