Questions for Bryan

by Russ Roberts on September 30, 2009

in Trade

Bryan writes over at EconLog:

Counterintuitive claim: Free trade makes countries richer, even if the other countries have big advantages like cheaper labor or more advanced technology.

Intuitive version:  We’d be better off if other countries gave us stuff for free.  Isn’t “really cheap” the next-best thing?

I use versions of this argument all the time.

But there is a problem with it.

Who is “we?”

How do you answer that without being a utilitarian and adding up net costs and benefits?

When I first started teaching trade, I used the standard efficiency argument that the gains to those hurt by tariffs are outweighed by the costs. I don’t like that argument anymore. But it is hard to avoid. So hard that even Bryan, who doesn’t like utilitarianism finds himself invoking it implicitly. But maybe he has a different story. I’m listening.

There is a natural tendency in economics or at least in writing about it to treat nations like people. And to talk about “America’s gains from trade” and “America’s comparative advantage.” I think this kind of shorthand (which is really another way of saying “net gains”) is natural because we’re often talking about national economic policy. But as I have learned from my co-host, borders are a red herring. And as I’ve learned from Adam Smith, expanding the scope of trade is what creates prosperity and opportunity, both within borders and across borders. I think that’s the way to think about it, not in national terms. But it’s very hard to think that way. I am working on it.

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{ 102 comments }

Miko September 30, 2009 at 12:47 pm

When you make an argument, it’s more important that it appeal to your audience than to yourself. I’m not a utilitarian, but if I’m arguing with a utilitarian, I see no reason to avoid using utilitarian arguments.

Randy September 30, 2009 at 1:10 pm

Miko,

Exactly. I don’t even mind using marxist arguments against marxists. Its great fun because I can often get away with both doing it and accusing them of doing it :)

Anonymous September 30, 2009 at 12:50 pm

Excellent question! That is exactly what I asked when Don posted this. And I’d push Bryan even more than that, not just on who “we” is, but whether this is really addressing protectionist concerns. There’s no dispute that cheap things are good as far as I can tell. Their concern is over where production is done and the implications of that… to convince them we need assuage those concerns – not tell them what they already know (that cheap stuff is good).

Anonymous September 30, 2009 at 1:21 pm

Yes, we now have LOTS of cheap things. Assuage me of how we are better off now.. as I look out the window.

I’m not so sure what we are seeing here is just a bump in the road. I fear the average kid today in America will not have more then their parents.

Anonymous September 30, 2009 at 1:27 pm

muirgeo – I didn’t say cheap things will single-handedly make everything better. Simply that they are good.

I’d be a little more optimistic – people were pessimistic like that in the Great Depression too, and they had much more REASON to be then than you have to be now. We (and I should define “we” given the discussion… I do mean Americans, for better or worse) may not be on top of the heap by the end of my life – I’m certainly willing to stipulate that. But there’s no doubt in my mind we’ll be better off – even if there is some temporary stagnation.

Anonymous September 30, 2009 at 2:43 pm

Saying cheap things are good is like a smoker saying it makes him feel good. We need to look at the whole… what I’m seeing outside my window and in my office at work is a lot of people smoking and happy with their cheap stuff… for now.

As far as IF we will be better off my argument would be. If we plan well we have a chance at being better off. If we plan poorly or don’t plan at all, as some desire, I think it is clearly just a matter of time until there is a great “die-off” that will make this one and the Republican Lead Great Depression seem like Happy Days.

But of course the mentality is that since that never happened it’s unlikely to happen again. The happy optimist were all around on the bubble economy just a little over a year ago. Happy overly optimistic people with cheap plastic things… that’s how bad stuff happens. Communist selling us rope with which to hang ourselves.

Anonymous September 30, 2009 at 3:15 pm

RE: “Saying cheap things are good is like a smoker saying it makes him feel good. We need to look at the whole…”Very true. And we need to ask why goods are cheap too (I like “because we’re making them more efficiently” better than “because we’re in the middle of a recession”, personally).But looking at the bad situation we’re in and looking at cheap goods and tying the two together like you’re doing doesn’t really qualify as “looking at the whole…”.

Sam Grove September 30, 2009 at 5:38 pm

Looking at the whole, empire is very expensive.
Then too, entitlements are very expensive, perhaps not so much the direct costs as the indirect costs.

matt September 30, 2009 at 1:32 pm

You are a magnificent dumbass.

Marcus September 30, 2009 at 2:10 pm

“Yes, we now have LOTS of cheap things. Assuage me of how we are better off now.. as I look out the window.

I’m not so sure what we are seeing here is just a bump in the road. I fear the average kid today in America will not have more then their parents.” — muirgeo

Doesn’t the second paragraph directly contradict the first?

If access to cheaper goods doesn’t make us better off as the first paragraph seems to suggest, why the concern in the second paragraph about kids having more than their parents?

Anonymous September 30, 2009 at 1:05 pm

Prospect theory, where losses loom larger than gains, is extremely relevant here and helps to explain why protectionism persists. The job losses from free trade are weighted more heavily than the gains in lower prices. This happens in part because the job losses are much more visible than are the price reduction gains. The losses are also more more concentrated while the gains are diffuse.

Douglas Johnson September 30, 2009 at 1:24 pm

Russ,

Here’s hoping that you don’t work too hard on it.

Cross-border trade exists because of reciprocal trade agreements between nations. Sure, it’d be great if all nations removed every conceivable trade barrier and suddenly all governments worshiped at the feet of Adam Smith, but people and nations are motivated by different things, aren’t they? And besides there are all sorts of reasons to restrict trade with various countries (England, Japan, Germany, Soviet Union, Iran, Saddam Hussein etc.).

Personally, I can’t wade very far into blind free trade without hearing John Lennon’s Imagine coming in as background music. For a lot of folks that’s a kind of anthem, for others anathema. But regardless of how one views it, it is at its core about ignoring borders (whether national, religious, etc.)

For a lot of Americans this “we” defined by the Declaration of Independence is a very definite thing. It’s the tradition of Washington, Jefferson, Madison, and Lincoln. When I lived in Japan I witnessed an entirely different “we” that the Japanese had no trouble defining, and which chartered the course of their trade and national security policies. I don’t think most Middle Eastern countries have any trouble defining “we.” (The Canadian national pastime is a never-ending struggle to come up with some sort of “we.”;))

Am I wrong? Is history rife with examples of thriving civilizations that had no way to define “we”?

If it turns out that “we” is and must be a definite thing, then national borders are hardly a red herring. I don’t see how it’s possible to argue otherwise without first cueing up your John Lennon. Granted, that’s an exercise that a handful of countries tried, but I’m not so keen on the results.

Randy September 30, 2009 at 1:39 pm

Douglas,

I think the “we” is exclusive not inclusive, and that it is otherwise propaganda and myth. The term is most often used by the ruling political class, a) to define its members, and b) as myth building propaganda to support its rule. So of course the ruling political class can define it – its who they are. And the general population can also define it – in the terms to which they have been indoctrinated.

Anonymous September 30, 2009 at 2:09 pm

Randy,
That’s fine, but you’ve just written off the whole basis of the American founding.

Randy September 30, 2009 at 2:26 pm

Well, yeah. There’s a theory that everything we have we owe to a revolutionary political class and the political classes who followed it and claimed an inheritance. There’s another theory that this was a wide open country settled by people who desired and demanded freedom to make the most of it. Ockham’s razor…

Anonymous September 30, 2009 at 2:38 pm

Not really. Let me suggest Harry Jaffa’s Crisis of the House Divided and the sequel, A New Birth of Freedom. If you read these books you’ll have read the best mind on the topic with the most widespread (i.e. left and right) acclaim among academic circles.

Anonymous September 30, 2009 at 2:48 pm

This has nothing to do with one world or eliminating borders. You’ve misunderstood my point. My fault. I’m presuming too much background conversation that has gone on here over the years on the topic.

Where you live matters a lot.

All I meant was that if you buy something from a fellow Minnesota because it’s a really good deal or from someone across an invisible imaginary line who is called a Canadian because it’s a better deal really doesn’t matter.

Anonymous September 30, 2009 at 3:27 pm

Perhaps this is more than you can address in blog comments, and if so, that’s fine. But when you say “really doesn’t matter,” what do you mean? Doesn’t matter with respect to what? Of course it is easy to reference many scenarios where it does matter with respect to politics or reciprocal trade agreements.

Are you saying that between two countries that share a common understanding (of politics, religion, democracy, security, etc.) it doesn’t matter? Sort of like between Oklahoma and Wyoming? If so, I completely agree.

But to get to a scenario where it doesn’t matter, don’t we first have to ignore what we say DOES matter?

P.S. Loved “The Price of Everything.” I bought copies for the whole family.

Sam Grove September 30, 2009 at 5:44 pm

Economic principles do not change across political boundaries anymore than do physical laws.

Anonymous September 30, 2009 at 6:25 pm

Sam,

For the sake of argument let’s assume that social science = physical science. Okay, now what?

We can explain why a rock doesn’t accelerate at 10m/sec2 when it has a parachute attached, but we still have to account for the parachute just as we have to account for politics, trade barriers, etc. when discussing economics. There’s a reason why a Japanese car manufactured in Japan in, say, 1988 cost a great deal more in Japan than it cost in the United States, even after being shipped around the world.

In this case, the political borders matter a great deal in explaining the economic outcome of Japanese manufactured Honda (or a Hitachi RAM chip) costing more in Japan than the USA. So I’m still left asking “doesn’t matter with respect to what?”

Anonymous September 30, 2009 at 5:57 pm

“…or from someone across an invisible imaginary line who is called a Canadian because it’s a better deal really doesn’t matter.”

But it DOES matter if the biggest reason it is cheaper is because they circumvented the labor and environmental standards to get to cheap communist labor.

Yeah we could become a communist country as well to compete on a level playing filed and make our own home grown cheap labor without the need for the large transportation costs. But is that what we want. Because the WE as far as I am concerned IS US…the citizens of the USA. If the we doesn’t matter I suggest to those who think t doesn’t matter to move to where the THEY are.

Yeah it’s a little bit nationalistic but countres exist and succeed in cvarying degrees because of who and what they are.

Anonymous September 30, 2009 at 6:04 pm

Huh? What do you mean by “cheap communist labor?” Do you mean that their wages are artificially low? Then what is the implication? That we shouldn’t trade with them? Why? Do you believe that the average Chinese worker has not benefited from trade over the last ten years?

Sam Grove September 30, 2009 at 8:03 pm

Perhaps he thinks that slavery is superior to serfdom.

He also believes that serfs are no longer serfs if they are allowed to vote even if their circumstances are otherwise the same.

I sometime envision slaves rowing in a Roman galley getting to vote on the task master. They are supposed to be happy with their lot because they get to vote even though they still have to row as they did before.

Anonymous September 30, 2009 at 9:03 pm

What do you mean by “What do you mean by “cheap communist labor?”

The purpose of transfering capital to areas of cheap labor is nothing but explotation and has nothing to do with increasing productivity.

Yes their wages and their currency are artificially lower.

We SHOULD trade with them but we should demand standards for there workers and REAL FREE trade rather then their protectionist policies.

What I mean by communist labor is labor by people who don’t have the same freedoms as us. If we are supporting libertarian policy positions shouldn’t we support the Chinese persons right to liberty in all spheres rather then just economic ones because we derive benefit from them.

Are you truly concerned with the Chinaman’s lifestyle or do you just want him to make you cheap plastic things?

If they were a nation of slaves, child laborers…arguably they are… would trading with their masters be OK?

Comparative advantage as I understand requires capital to NOT cross borders, trade to be close to equal and employment close to full. When these requirements are not met one side or both sides can be taken advantage of by the “trader”. That’s exactly what we are seeing.

I mean Russ why is are economy so bad off if all these free trade agreements were supposed to be so good for us?

I care more about how the average American has benefited then I do about the average Chinese person.

Again the “we” is US Americans. If the average American is out of work, they lose their insurance and I lose patients and now have to work much harder to maintain our practice and standard of care. This shoveling of wealth to an elite non-productive exploitative class has very real effects on the day to day of us really productive people. And our trade policy seems to be set up to benefit a small few elites at the expense of a larger whole.

Done right the Chinese people and the American people will both benefit from trade but denying the gross exploitation and trying to justify it by the meager improvement of the average Chinese persons living standards does not wash with me.

Anonymous October 1, 2009 at 1:13 pm

Do you mean that their wages are artificially low?

He means the wages are taxed. Weren’t wages in the Soviet Union artificially low? If a central authority allows more market organization so that it has more produce to tax, benefits to workers might rise a bit, but their consumption is still artificially low.

Then what is the implication? That we shouldn’t trade with them?

Most protectionists arguing this way want a protective tariff to compensate for the artificially low wages. They might say that underpaid workers subject to the dictatorship should receive the revenue from the tariff, but that’s not possible.I don’t necessarily agree with this logic, but it’s not total nonsense. Ironically, despotic regimes have all of this underdeveloped labor to organize largely because they also suppressed its spontaneous development in the past. Dictators can learn the error of central planning without becoming less despotic.

Why? Do you believe that the average Chinese worker has not benefited from trade over the last ten years?

Even if they’ve benefited, they haven’t necessarily realized the gains that a market organized without fixed exchange rates would deliver. If the benefits to particular factors are systematically suppressed, then benefits for particular factors among their trading partners can also be systematically suppressed. That’s the theory, and it makes sense to me.

The argument against protective tariffs says that the unprotected economy can always provide new opportunities for the particular factors competing with suppressed wages by progressing along a developmental path toward goods and services not yet produced by the economy suppressing wages. Maybe that’s true, but it’s not obvious to me. Why would the economy without suppressed wages necessarily lead development?

Randy September 30, 2009 at 6:22 pm

Muirgeo,

Just because you decide to declare the existance of a collective doesn’t mean I have to believe in it. Certainly you can force me to pay it off, but you can’t force me to believe. I guess that’s all that’s left of a free country… but hey, if you don’t like the fact that I don’t have to believe, maybe you should move.

Anonymous September 30, 2009 at 9:05 pm

You are the one who doesn’t like the already agreed upon rules. So you need to move. I ain’t going nowhere. I like this country and the idea behind it. We simply need to get the power back in the hands of the people and away from the corporations who are destroying this democracy.

Anonymous September 30, 2009 at 7:55 pm

A better deal? If producers (manufactuers and service providers) are blocked from competing in a market by an arbitrary authority then to what end? Are these producers allowed to fail because their competitors have unlimited access to all of the market. The argument is made that consumers should have access to all available goods and I agree.

The competitors granted unlimited access to all of the market will gradually eliminate the producers not granted similiar access. This is because the market granting authority has determined certain producers will not fail. The limited market producers will go out of business and consumers will not be able to consumer unless the market granting authority allows them jobs in their authority owned enterprises.

The end would be consumers would be dependent on the government for income — what government will that be. That would probably be the market granting authority that picked and supported the producer winners –the ones with total market access. People that are supported by the government may not care what government supports them and so they probably find no cross border distinctions.

Sam Grove September 30, 2009 at 7:59 pm

But regardless of how one views it, it is at its core about ignoring borders (whether national, religious, etc.)

It goes a lot further than that, eschewing possessions (!) among other things.

The question about “we” relates to our tribal instincts and the necessity among many leaders to have an enemy to firm the base.

The question about borders, for me at least, is whether we should give up national political boundaries for the sake of a planetary boundary, IOW, about political rule vs individual liberty.

Anonymous September 30, 2009 at 8:05 pm

I’m a libertarian first and American second. My loyalty to America goes only so far as it still stands for freedom. Obama’s American /= a country I could swear loyalty too. My loyalty is to my family and my bankbook.

Sam Grove September 30, 2009 at 9:34 pm

Agreed.
The left believes all will be well if there is only one political boundary instead of many, but a political boundary implies a ruled territory, so their goal is to rule the whole planet under a “progressive” regime.

Thus they seek to replace many political boundaries with a unitary boundary under which everyone on the planet would be subject to unitary rule.

Imagine the power…and the corruption.

Anonymous September 30, 2009 at 9:45 pm

I don’t think the issue is how many political boundaries, but what is the law of the land. If all current boundaries were done away with on the proviso that the world becomes libertarian, I’d be all for that.

Anonymous September 30, 2009 at 10:30 pm

Gentlemen,

In the Lincoln-Douglas debates, Lincoln argued that if we are indifferent to slavery then we have undercut the basis that keeps any of us from being slaves, viz that we are all created equal by God. This was/is a radical and uniquely American notion that you could only claim within these borders and within this system of government.

Therefore, if we only care about the welfare of our family and our bank book, then we have no more claim to liberty than the slaves to whom we’re indifferent. It’s all a matter of claiming what’s yours. Your “liberty” under that scenario has a shelf life of however long it takes for a mob to walk down your street with more guns than you’ve got.

I’m not saying you’re indifferent to slavery, but I am saying that you’ve essentially given up your liberty already if you define it as nothing more than the welfare of your family and your bank account. Indeed if our forefathers felt that way, you’d be British, not American. And to the extent the Brits held that philosophy, you’d most likely be German by now.

And just to benchmark where I’m coming from, I’m moving out of my current state because I can’t stand the draconian gun laws, and if I could handpick my President it’d probably be John Bolton.

Anonymous September 30, 2009 at 10:08 pm

Sam,

Do I understand you to say that you think we (the United States being the we to which we presumably both belong) should give up our political boundaries?

Sam Grove October 1, 2009 at 1:36 am

I say there is little point in exchanging one political boundary for another and the idea of a planetary political union is likely more dangerous than national unions.

My point is that the conflict between supporters of either political scheme tends to supercede the conflict between liberty and political rule.

Joshua September 30, 2009 at 1:55 pm

I think “Even if your implicit premises were right, your actions achieve the opposite of your goals” is a stronger argument than “Your premises are wrong.”

Michael Foley September 30, 2009 at 1:58 pm

Is this point about “Who is ‘we?’” what is meant by the Autrian “methodological individualism” approach?

If so, I wonder how I would recast Caplans intuitive version using an Austrian foundation?

Ike Pigott September 30, 2009 at 2:07 pm

Anything with a defined “value” lends itself to comparisons. It’s unavoidable in any market.

You don’t have to embrace Utilitarianism to appreciate the method of the calculation.

Those people who are protesting John Mackey’s expression of free speech by choosing to bypass Whole Foods and shop elsewhere are willing to spend more of their own resources to assuage their conscience – which is a value they place upon themselves.

Those who choose not to purchase clothing made in certain countries are electing to place a value on something other than strict utility. There is nothing wrong with that.

The question should be:

Are we better off when nations/corporations/individuals through their generosity/pricing/practices give us the maximum leeway with which to make our personal economic decisions?

If what you value is the freedom to make decisions for yourself, then the answer to the above question is yes.

dsylexic September 30, 2009 at 2:27 pm

agree completely. also, if your conscience is assuaged by buying high cost tires which are made in america,it is a valid decision. only dont force others to possess similar guilt

Ike Pigott September 30, 2009 at 2:41 pm

Allow me to refine:

Utilitarianism demands that the purchase that increases efficiency for the greatest number is the moral choice.

The economic argument we are making here is not one that maximizes utility, but rather one that maximizes freedom.

dsylexic September 30, 2009 at 3:31 pm

so, freedom doesnt necessarily have to imply increased choices. thats what lefty anarchists have been railing against. freedom to not to have many options is also valid -maybe it assuages the guilt of those like muirgeo.he should not buy chinese tires.

Ike Pigott September 30, 2009 at 3:49 pm

I’m not sure what you are saying.Freedom does in fact imply a wider range of choices. That range might include:- making a purchase for $5.00- making a purchase for $10.00- driving elsewhere to get a competing product- NOT making a purchase at allThose who impinge on free trade are limiting your freedom.

Anonymous September 30, 2009 at 9:33 pm

Given ambiguity, there can be a difference between ‘being free to buy a $5 item’, and ‘being free to buy a $5 item if it does not violate other freedoms’

Anonymous September 30, 2009 at 9:30 pm

Freedom as a moral concept applies to morals. Morals are values held by individuals pertaining to human behavior. Therefore freedom as a moral concept is human behavior that is unconstrained by other human behavior.

Freedom as a moral concept cannot apply to being hit by a hurricane, eaten by a mountain lion, ravaged with a disease, dissolving in a supernova, being constrained by gravity, or starving in a drought. It only applies when one person has a choice to forcibly interfere with the behavior of another person.

(In short, you are right.)

Anonymous September 30, 2009 at 9:21 pm

“increases efficiency for the greatest number is the moral choice”Which is why utilitarianism is not a consistent philosophy, and in particular is not moral. Morals are individual human values. Utilitarianism labels as “moral” the unwilling sacrifice of the few to the many. Utilitarianism therefore labels as “moral” antimoral actions.One can be utilitarian in many other senses of the word, but not in a moral philosophical sense. People who describe their philosophy as utilitarian are just evading a real philosophy.

Brian September 30, 2009 at 3:45 pm

I would also suggest that you read Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism (9781596913998): Ha-Joon Chang. He presents some interesting concepts about the benefits and drawbacks of trade policies that you may find useful.

Specific to your question, the question of who receives the benefits of a trade arrangement is usually strongly biased in favour of the larger and more economically developed partner.

Anonymous September 30, 2009 at 4:53 pm

Brian,

What evidence is there for your claim?

China and India have had astounding growth from trading with the rest of the world. And the benefits haven’t all gone to the leaders.

Anonymous September 30, 2009 at 5:04 pm

Re: “What evidence is there for your claim?
China and India have had astounding growth from trading with the rest of the world. And the benefits haven’t all gone to the leaders.”

I think part of the evidence could actually be the astounding growth of China. Some would argue that their gains from trade have resulted from trade barriers that artificially boost exports, not free trade – exactly the sort of policies that Chang often highlights. Protectionism doesn’t always mean autarky.

Anonymous September 30, 2009 at 5:00 pm

A lot of Chang’s arguments revolve around infant industry concerns. I think it’s important to be careful about conflating that sort of argument with things like the recent tire tariff or steel tariff. Even the infant industry case isn’t always inspiring or convincing – but whether it’s convincing or not, it shouldn’t be used to justify trade restrictions in the modern U.S.

Anonymous September 30, 2009 at 5:01 pm

I should say – a lot of Ha-Joon Chang’s arguments in his older “Kicking Away the Ladder”. I haven’t read Bad Samaritans.

Anonymous September 30, 2009 at 3:48 pm

Walter Williams on disappearing manufacturing jobs:

http://www.capmag.com/article.asp?ID=4657

Even he admits it’s happening.

Anonymous September 30, 2009 at 3:56 pm

Shawn Reed on disappearing ostler jobs:

http://www.thisisnotnews.com/chillout.net

Even he admits it’s happening.

Ike Pigott September 30, 2009 at 8:27 pm

Time to outlaw backhoes, because more shovels means more jobs.

Anonymous September 30, 2009 at 8:31 pm

Just keep up the sneering while the Democrats keep winning election after election until ALL our freedoms are gone. Will you be sneering then? We need a modified version of Dubya’s “compassionate conservatism” in order to stem the tide of all-out socialism.

Ike Pigott September 30, 2009 at 8:48 pm

I’m not sneering.

I just don’t think “Compassionate Conservatism” is a solution for anything.

What we need is a return to fiscal responsibility. What we have is an administration that will meet its stated promise of not taxing households under $250k, by merely borrowing to create unsustainable programs.

In one regard, the Democrats are right. The GOP has become the Party of No.

What the Republicans have failed to do is provide the “No! And here is why…” piece. Granted, it’s difficult to get traction with that message while the media is firmly under the spell of the Obama narrative.

But trying to out-bid Democrats for the purchase of votes through “compassionate” (yet unconstitutional) ventures is a sucker’s game.

Anonymous September 30, 2009 at 9:00 pm

“The GOP has become the Party of No.”

To be fair, there have been some good ideas coming out of Republicans of late. But there have also been some terrible ideas, like banning pre-existing condition exclusions, and mandating the purchase of insurance products.

The Democrats are an unmitigated disaster. The Republicans are just a mitigated disaster. The only good thing it seems we can get out of these parties is paralysis.

Anonymous September 30, 2009 at 8:54 pm

What we need is a change in our expectations of government. “Compassionate conservatism” is another acceptance of welfare statism. People should expect to find compassion elsewhere. That expectation can be realized by recognizing that compassion is a human attribute, and organizing humans into a coercive state does not make them compassionate.

Anonymous October 1, 2009 at 12:15 am

That’s wrong. I see compassionate teachers, public health nurses, doctors, policemen ect….

I also see people who die or go bankrupt because some people think its OK and some how necassary for the Fortune 400 to need a combined income of $1.4 trillion. THAT is a position of ignorance and lack of not even compassion but just down right men-spirited. There’s NO reason for it EXCEPT to hold to some supposed higher bullshit ideological purity.

Anonymous September 30, 2009 at 5:30 pm

Miko’s comment is also appropriate for dealing with those who see things as “us against them.” Most arguments I’ve heard against free trade boil down to a defense of retaliatory trade restrictions merely for emotional gratification (the others are even more nonsensical and filled with non sequiturs).

I am, however, interested in an argument that does not rely on–or even implicitly reference–utilitarian arguments.

Anonymous September 30, 2009 at 5:37 pm

Wait – if you aren’t interested in utilitarian arguments then all that’s left if emotionalism.

Anonymous September 30, 2009 at 6:18 pm

No, reason is still left. Utilitarianism is neither rational nor (subsequently) moral.

Anonymous September 30, 2009 at 6:21 pm

No reason is simply a tool. You can either apply utilitarian or emotional reasoning to your subject of choice. I’m not that capitalism only has a utilitarian argument. The moral component is 50% as far as I’m concerned. That moral being freedom of choice.

Anonymous September 30, 2009 at 6:14 pm

I have no use for utilitarianism which not a consistent philosophy. But, I do recognize the benefits of free trade. The reason *I* refer to a nation is because (1) the terms under discussion are defined that way (international trade), and (2) it captures the bigger scope of the argument which includes all individuals living under such a system over time.

And it is recognition of that larger scope that dooms the protectionists who argue against free trade on the basis of the few individuals transiently hurt during the interval starting with better foreign competition. The context of switching productive activities in an economy free to trade, is different than switching in a hindered economy. Opportunities, including the one you are switching from, are more numerous in a free economy.

An analogy is an upward trending sawtooth versus a flat or declining smooth line. I’d rather ride a sawtooth miles above the straight line.

Anonymous September 30, 2009 at 11:28 pm

Or how about…

Better to be ratcheted up to Heaven, then to slide smoothly into Hell.

Jérome C. September 30, 2009 at 7:30 pm

I suggest :

Free trade maximizes the gains WITHOUT infringing the individual rights of anybody (to keep a monopole being not a right).

Sam Grove September 30, 2009 at 7:43 pm

Nobody owns market share, though many act as if they do.

Anonymous September 30, 2009 at 11:26 pm

I wish I could click you 2 [Like]‘s for that one.

Dallas Weaver September 30, 2009 at 11:34 pm

Borders aren’t a red herring unless you assume that political power does not exist within the border. Obtaining rents within the country is the name of the game in the states, but such activity doesn’t work the same across borders. As the borders become freer and trade increases, the cost to the state for the rent seeking of sub groups in the society become higher. Yes, subsidized production of commodity X would allow external market penetration and possible dominance in commodity X, but at a significant increase in subsidization cost. Effectively the benefits of the subsidy are passed onto the receiving country and the costs paid by the exporting country.

No matter how you cut it, more free trade is not good for the existing successful rent seekers and the political class that supports them. When the costs of their rent seeking activity goes up, it becomes harder to maintain the support of the political class. Borders do count in understanding the forces behind maintaining our silly tariff system.

Anonymous October 1, 2009 at 12:45 am

Bravo, jdouglassj, libertarians piggy back on the liberty of the U.S. without alleigiance and so no sweat equity in freedom; oh well, its a free country.

I hope your guns are locked away from incompetent theives when you are away and that children in your sphere of influence know full well that guns are incredibly efficient killing machines.

Sam Grove October 1, 2009 at 1:49 am

Fwah, how many Americans value liberty over their favorite government scheme?

Anonymous October 1, 2009 at 4:54 pm

I don’t understand how we avoid utilitarianism by grounding our arguments in what is good for people “within borders and across borders”. This still appeals to an aggregate good (albeit not a national one).

Adam Smith was not shy about appealing to utility. According to his “theory of approbation,” the proximate cause of any moral viewpoint is usually some notion of propriety, but utility not only figures prominently in the development of our notions of propriety, Smith sometimes talks as though “utility” and “beauty” were identical concepts.

Methodological individualism is just that: a method, not a moral philosophy. If individualism were a moral philosophy, and professor Bourdeaux were a genuine individualist, then he would not bother to defend free trade in a public forum and express indignation at blinkered protectionists. He would simply drift over to the side of the lot where the government trough is and start jockeying for position with all the other rent-seekers.

Randy September 30, 2009 at 2:57 pm

Thanks, but I’m a bit short on reading time, and honestly, credentials don’t impress me. Some of the most notable writers in history were nothing more than propagandists for the political classes of their times. You think that Jaffa is different? So tell me why.

Anonymous September 30, 2009 at 3:36 pm

Randy,

Methinks you’re a young lad.

Randy September 30, 2009 at 3:39 pm

Not so much. Just a natural born heretic.

Anonymous September 30, 2009 at 5:51 pm

There are very good arguments to be made that the recession has big roots in our trade imbalance and in the stagnating workers wages we’ve seen in big part from forcing the American consumer to compete against communist laborers.

Anonymous September 30, 2009 at 5:56 pm

I agree – people are too quick to point to Greenspan as the source of lots of money sloshing around, but often ignore global imbalances.

But that’s just a case against imbalances. How is that a case against trading with low wage countries in general?

Sam Grove September 30, 2009 at 7:40 pm

Economic PRINCIPLES don’t change across political boundaries. Those principle help explain why and how political policies affect costs.

IOW, the effects related to political boundaries are as arbitrary as the political boundaries themselves.

Similarly, we would expect similar effects if you were precluded by government policy from trading with people living across the street from you. This actually occurs to an extent in towns that straddle political boundaries.

Seth September 30, 2009 at 9:00 pm

Don’t you think other national banks might have followed Greenspan?

muirgeo – Do you think the trade imbalance had its roots in fictional worth created by a housing bubble? i.e. I refinance my house for twice what I paid for it four years ago because lenders think it’s going to keep going up in value and then go on a spending spree on foreign goods. Then, lo and behold, my house is suddenly worth what I paid four years ago and my foreign goods are worthless, I declare bankruptcy and and poof – all that fictional value is gone.

Anonymous September 30, 2009 at 9:02 pm

The trade imbalance predates the housing bubble.

Ike Pigott September 30, 2009 at 9:10 pm

I agree, there has been more substance.

But the general perception is one of total obstruction, because that’s the only power the GOP appears to have.

And that perception is getting in the way of any true debate.

Anonymous September 30, 2009 at 9:26 pm

Once I heard the GOP saying they supported banning pre-existing conditions I knew they jumped the shark. There is no more difference between the 2 parties. It’s socialism and socialist-lite if that. I think it’s more of a reflection of the fact that America has lurched severely to the left.

Anonymous September 30, 2009 at 9:14 pm

“obstruction, because that’s the only power the GOP appears to have”

I only wish that were true. If the Democrats could agree with one another, the GOP would have no power to obstruct. It is reasonable to say that the GOP is not obstructing anything–Democrats are.

Randy September 30, 2009 at 9:23 pm

Yeah, good look with that… getting me to move or getting the kind of “democracy” that you think you deserve :)

Anonymous September 30, 2009 at 10:39 pm

First off, 2/3 of the early Americans were pro-British or neutral. So there goes your theory that if it weren’t for ALL Americans in the 1780s we’d not have a country. America is only valid in so much that the idea continues forth. The political boundaries are of no relevance to me. If tomorrow Spain becomes more like America, I’m going there. I have no loyalty to a piece of dirt and rocks.

Anonymous September 30, 2009 at 11:03 pm

“I am saying that you’ve essentially given up your liberty already if you define it as nothing more than the welfare of your family and your bank account.”

You are implying an additional belief–that action against others in pursuit of those values is justified. They implied no such thing. Liberty is precisely a collection of individuals like them–people pursuing their own values while not denying that pursuit to others.

MWG September 30, 2009 at 11:24 pm

Wages in China are rising rapidly you moron.

Anonymous October 1, 2009 at 4:00 am

“What do you mean by “What do you mean by “cheap communist labor?”"”

What do you mean by “What do you mean by “What do you mean by “cheap communist labor?”"”

Anonymous October 1, 2009 at 1:36 pm

The purpose of transfering capital to areas of cheap labor is nothing but explotation and has nothing to do with increasing productivity.

“Nothing but exploitation” is clearly false. You have a point, but you don’t make it persuasively with this hyperbole. Cheap labor can be cheap because of its low productivity. In this case, transferring capital is not exploitative. On the contrary, it’s humane and benefits everyone.

Transferring capital to exploited labor can raise the productivity of exploited labor without relieving the exploitation. The productivity gains don’t necessarily accrue to the laborers.

Anonymous October 1, 2009 at 12:11 am

It was Lincoln’s belief that the whole country would either be all slave states or all free states, and he was not at all optimistic that freedom would prevail (see repeal of MO Compromise and Dred Scott). What was necessary for liberty to fail, in Lincoln’s eyes (and Jefferson’s, Madison’s etc.), was indifference to the liberty of others within our borders. Vikingvista writes “…while not denying that pursuit to others,” but what do you think indifference to slavery did? To draw a line around your things and be indifferent to the liberty of others within your borders was the ground work of Dred Scot.

Yes, “America is only valid in so much that the idea continues forth” but explain to me how the idea continues forth in a nation where we are indifferent to the freedom of anyone but our own family. If all libertarians are islands unto themselves, then by definition, no libertarian would ever lift a finger to defend your freedom when the apparatchiks come knocking at your door.

I see this discussion is degenerating but it is frustrating how today’s libertarians often believe they can preserve liberty by being an island unto themselves and not see their liberty as dependent upon the liberty of all within this nation. Some libertarians will watch liberty erode all around them and bank on it popping up somewhere else (Spain?!?!) out of nowhere–and believe they’ll be welcomed into this new mythical world with freedom rolled out for them on a red carpet. Arrowsmith asserts he’s all about liberty but he’s indifferent to America. His government could never call on him to defend liberty beyond his property line. Man, just think about that!

I must say I can be guilty of the same. I just bought a home surrounded by forest and the closet neighbor is seven miles away. It is EASY to sit out there on my porch with my rifle in hand and think I’ll just worry about me. I get it. But then I snap out of it.

Sam Grove October 1, 2009 at 1:37 am

He was right, at that juncture, liberty failed.

Anonymous October 1, 2009 at 1:41 am

“”…while not denying that pursuit to others,” but what do you think indifference to slavery did?”

1. Slaveholders and their immediate relations were clearly not indifferent to slavery, so it wasn’t indifference that perpetuated slavery–it was strenuous advocacy.

2. Why do you think not denying liberty to others counts as indifference to slavery? I’m not going to deny liberty to others, therefore I don’t care if I deny liberty to others? That doesn’t make sense.

“he’s indifferent to America”

He’s indifferent to dirt and rocks. He is not indifferent to his libertarian values. If the founding values of America disappeared from America and were recreated somewhere else, then his heart would be somewhere else. I feel the same. Are you saying that what you like most about America is its geography?

Sam Grove October 1, 2009 at 2:55 am

Well, I ran for U.S. congress three times as a libertarian and I have contributed no small amount of funds to libertarian campaigns.

Does that qualify me as not indifferent?

Anonymous October 1, 2009 at 1:45 am

“That’s wrong. I see compassionate teachers, public health nurses, doctors, policemen ect….”No, that does not make me wrong. I would wrong if you could prove that those same people would NOT be compassionate working outside the government. You ever consider that maybe they chose their professions because they were compassionate BEFORE they entered government service?Basic logic, muir. Why are you incapable of basic logic?

Anonymous October 1, 2009 at 3:03 am

Umm.. the trade imbalance predates the world war. So what? I can’t figure out why this argument keeps being made. If I buy a TV for a grand from someone in Asia, and then he lends me the money back to buy another, I win. If I default on my debt, well sucks to be him. I just got two TVs for the price of one, and the best he can manage is to take one of my TVs back. In a grander sense, if my enthusiastic producer in Asia decided to burn the initial grand (gasp!) instead of lending it back to me, then we’ve just contributed an entire thousand dollars to the ‘imbalance’, but then the nation has just received a free television.

The imbalance tin-hatters are just plain silly. I’ve read the island analogies, and the only way any of this matters is when government tried to ‘correct’ them by trying to steal my second TV, or prevent me from buying it by making it more expensive. It happens, but the problem isn’t the imbalance, it’s the response.

Anonymous October 1, 2009 at 11:07 am

I was simply responding to your suggestion that the imbalance had it’s roots in the housing bubble. How could it have its “roots” (as you say) in the bubble if it’s roots were laid years before the bubble? That’s my only point.

I’m also not saying trade is a bad thing – so don’t worry about knocking down that straw man. Trade is a very good thing. Imbalanced trade with a rapidly growing trading partner who is quickly accumulating our currency causes a lot of credit and money to slosh around. Money and credit sloshing around has consequences. That’s not a critique of trade. That’s not saying trade is bad. Trade is good. But being “good” doesn’t mean we pretend that lots of money flooding our credit markets doesn’t have the usual effect that money flooding our credit markets has.

If anything I’d say the bubble has its roots in the imbalances.

Anonymous October 1, 2009 at 1:39 pm

So is the Chinese entitlement to taxes imposed on you. That’s just precisely what their growing portfolio Treasury securities is.

Chinese authorities simply give away their own countrymen’s legal tender, effectively seizing their produce and selling it at a discount systematically. That’s just a fact. Chinese authorities accumulate your legal tender in the process and buy entitlement to your tax revenue from your own authorities. That’s a fact too.

Individuals on both sides of the border benefit from this trade amongst the statesmen, but are you one of the beneficiaries? Maybe you are. I don’t know.

I expect U.S. statesmen ultimately to screw the Chinese by inflating much of the value out of their entitlement to U.S. tax revenue, but I don’t know that. Maybe they’ll tighten the screws on you instead. I don’t see how else they can pay off the bonds.

Anonymous October 1, 2009 at 3:06 pm

I should probably do a better job of defining “indifferent” in my discussion of Lincoln. Stephen Douglas was anything but indifferent in his run for Senate and his eye on the Presidency. And yet, he believed that the question of slavery should be decided only by popular vote in each new territory and subsequent state. IF they vote slave, it’s slave. If they vote free, it’s free. IOW, Douglas was passionate about popular sovereignty–even to the point of relative indifference to whether the populace voted for or against slavery (although Douglas personally opposed slavery).

Anonymous October 1, 2009 at 3:20 pm

Regarding #1: this isn’t quite right. The repeal of the MO Compromise and the new opportunity to expand the number of slave states relied not on the advocacy of the small number of southern slave holders, but rather on the willingness of northern free states to allow new territories to decide this question by popular vote. The MO Compromise said absolutely no slavery above 36’30″. The repeal left it to popular vote.

Re: #2: What I mean here is that you could live in 1858 Maine and say that you aren’t going to deny freedom to anyone you ever meet. You can say you are absolutely opposed to slavery; you just want you and your family left alone on a mountaintop. But along comes the repeal of the MO Compromise. You can stand up and say, hell no I won’t stand for any new slavery in any new territory. Or you can sit back and say, well that’s for Kansas to decide for themselves. In doing the latter you haven’t denied liberty to anyone (and there’s a good chance that territory will vote to ban slavery), but you are indifferent to the outcome preferring popular sovereignty on this question to an outright ban.

P.S. When I say “you” I don’t necessarily mean this is how you think or would have thought.

Anonymous October 1, 2009 at 5:15 pm

1. If the Northern states were indifferent, why was a compromise needed at all?

2. “that’s for Kansas to decide”

The attitude to leave others alone as they leave you alone IS truly the exact attitude, when spread across a population, that makes for a society built on liberty. If the population around me is not like that, then we are not talking about liberty. If I am “alone on a mountaintop” then we are not even talking about a society.

Shall I venture down from the mountaintop into a brutish society? Risk myself and family by leaving my a safe refuge? Shall I hug my wife and kids and say “So long. I’m going to change the world. Don’t wait up”?

Not me. And not most people. I will do what most people do. I will seek a land of liberty, if I can find one, and move there. That’s what happened in colonial America. That’s what happened during the great waves of immigration to the US. That’s what happened during the cold war. And that’s what sill happens today. That is how most people change the world.

So excuse me if I don’t grab my rifle and haul off to Kansas. But I don’t see how sacrificing the liberty I have found to the barbarians in Kansas is certain to do anything more than sacrifice liberty. Liberty is far too precious for me to risk on something as commonplace as Kansas.

To me a better question for you to ask is not whether we should sacrifice ourselves to civilize barbarians in a distant land, but what we should do to keep the barbarians outside the gates.

Anonymous October 1, 2009 at 5:52 pm

And so, indifferent to the question of slavery outside of your mountaintop, states across the nation give up liberty in the name of slavery. QED.

Anonymous October 1, 2009 at 5:55 pm

Wow. I didn’t realize I had so much power.

Anonymous October 1, 2009 at 6:03 pm

You do when combined with enough who think like you do. But fortunately, most disagreed and decided to fight for the liberty–including your liberty. Final point: when we lose our liberty here, there’s nowhere left for you to go. You might want to get off that mountaintop.

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