Global Cooperation

by Don Boudreaux on October 21, 2011

in Complexity & Emergence, Cooperation, Seen and Unseen, Trade

My and Russ’s friend Pietro Poggi-Corradini sent to me this e-mail; here’s its body in toto:

My case for free trade (in the fewest possible words): The more people helping each other out, the better.

Yep.

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{ 129 comments }

Invisible Backhand October 21, 2011 at 11:54 am

Kumbaya my lord, kumbaya…

Andrew_M_Garland October 21, 2011 at 12:01 pm

You are against people helping each other? Amazing.

Rick Hull October 21, 2011 at 12:08 pm

It’s the voluntary helping that really gets him. He would much prefer mandatory helping enforced by the state.

Invisible Backhand October 21, 2011 at 12:22 pm

Oh! Oh! Rick Hull is visiting us from Ponyland! Friendship is magic!

Libt October 21, 2011 at 2:39 pm

Having friends is great, since you have none, it is no wonder you support the state in trying to be your friend.

Stone Glasgow October 22, 2011 at 4:26 am

Sometimes, voluntary trade is immoral. Even though we all act rationally from our own point of view, it is naive to assume that it is best to allow one’s children to roam the house, free from supervision.

Parents know which chemicals are dangerous, and that fire is not a pleasant thing to touch. If a neighbor trades a playstation for your daughter’s virginity, it might be okay to demand oversight, to demand that because of superior knowledge, you force them to avoid the trade.

The same thing happens in the modern world when consumers are as ignorant as 13 year old girls, and the men with whom they make (rational) trades are as experienced as your neighbor.

rhhardin October 21, 2011 at 12:10 pm

My version for self-scaling disaster recovery.

If there are a million people in a disaster, there are a million helpers in recovery.

Bret October 21, 2011 at 12:16 pm

The assumption is the conclusion.

vikingvista October 21, 2011 at 1:43 pm

What do you think is the assumption, and what the conclusion?

Bret October 21, 2011 at 4:43 pm

The assumption is “the more people helping each other out, the better.”

The conclusion is “the more people helping each other out, the better.”

More is not always better.

vikingvista October 21, 2011 at 5:01 pm

Does every statement for you constitute circular reasoning?

Frankly, I was expecting more from you, like an actual parsing of the statement or listing of implicit assumptions. As usual, the counterpoint on this blog is disappointing.

anthonyl October 21, 2011 at 10:11 pm

I make something that others find valuable. I find things that other make, valuable!

Martin Brock October 21, 2011 at 1:29 pm

It’s a great case for free trade. It’s not a case for heavily regulated trade, and it’s not a case for a reform of heavily regulated trade, even in a slightly “freer” direction. A slightly reformed, heavily regulated system of trade is only a different, heavily regulated system of trade.

The Other Tim October 21, 2011 at 2:45 pm

Would you thus contend that, for instance, lowering the size of a tariff does not decrease deadweight loss?

Martin Brock October 21, 2011 at 3:17 pm

I don’t advocate retaliatory tariffs, but if you believe that jailing murders discourages murder, you might also believe that retaliatory tariffs discourage subsidies. Accepting for the sake of argument that retaliatory tariffs discourage subsidies, then lowering or eliminating tariffs might encourage subsidies, and the increased subsidies might add more dead weight loss than the lowered tariffs subtracted.

I can accept this reasoning and at the same time believe that trade with neither subsidies nor tariffs is more productive than trade hampered by both. Once trade is highly regulated, I have no theoretical framework permitting me to favor one highly regulated system over another. If you want a particular tariff lowered, you might only want to increase the value to you of some subsidy.

vikingvista October 21, 2011 at 3:23 pm

Taxing murder discourages murder. Taxing trade discourages trade. Retaliatory tariffs may very well encourage subsidies to prop up the subsequently failing exporters. And historically what you can expect it to encourage are additional tariffs–hence the phrase “trade war”.

Martin Brock October 21, 2011 at 3:43 pm

Both subsidies and tariffs tax trade, and both discourage trade. How they interact is debatable, but where many of both already exist, removing any one of them doesn’t create clear economic signals. Imagine yourself in a house of foggy mirrors. Wiping a single mirror doesn’t change anything, because you only see all the other foggy mirrors reflected in the one clear mirror.

vikingvista October 21, 2011 at 4:04 pm

It sounds like you are making the argument that antimarket activities, because they affect the market, hopelessly corrupt the market–a weaker version of the “free trade has never existed” argument against free trade.

But that is mistaken. Free markets work in any context, including in a mostly unfree market. E.g., the free market provides a large industry of tax accountants and tax attorneys to deal with the wildly antimarket tax code. The reason free trades are always useful is because any free trade is necessarily a bilateral act of self-interest.

An uncommon free trade isn’t the one clear mirror, it is an escape hatch from the hall of foggy mirrors. It is unfortunate to be in the hall at all, but fortunate to have some means to help deal with it.

Martin Brock October 22, 2011 at 9:34 am

“Free market” describes a theoretical abstraction regardless of my arguments. Abstractions are the only things we can argue about. Arguments occur in our heads, but the world does not exist our heads. At best, we model the world in our heads, and our models correspond, imperfectly, to the world.

Every economy is free except where it isn’t free, but if we naively model every economy as a free market with a night watchman state enforcing Lockean propriety and contract, or even a Rothbardian anarchy, then we necessarily reach many erroneous conclusions.

“Free markets work in mostly unfree markets” seems a contradiction in terms, but if you mean that my freedom to trade can benefit me if you are not so free to trade, I can agree with you. Imagine a partially free market. You and I are completely unfettered, but everyone else may trade only subject to our dictates. I suppose you and I are better off than the rest.

Now, we make this economy “freer” by adding one more person to our tiny group of freemen. Does this reform make our economy more or less productive?

The answer clearly depends on unstated assumptions. Suppose you and I are devout libertarians and will not impede anyone’s trade while the third member of our trifecta is Joe Stalin. Presumably, this reform improves Joe’s prospects, but does it make the larger economy more productive? I doubt it.

People like questions with simple, “yes” or “no” answers. We can construct these questions all day long within our theoretical models, but I don’t find many of these questions in reality.

vikingvista October 22, 2011 at 9:10 pm

““Free markets work in mostly unfree markets” seems a contradiction in terms”

Only out of context. A voluntary trade can be reasonably well-defined. The free market is simply the set of all such trades. You put too much importance on non-free trade when judging the merits of free trade in an non-free environment.

Think of it this way, a hurricane can do devastating action against you and your property. Certainly being hit by hurricanes, especially repeatedly, affects the free actions that people take (must buy special windows, perform repairs, use weather and emergency services, etc), and creates terrible hardship. But the free actions are still the best way for people to deal with it. When people, such as criminals or government agents, take devastating action against you, the only real difference is that they do so willfully, and perhaps there is always some chance you can persuade them to change their minds–that is, there is an option you have for dealing with them that you do not have with the hurricanes.

That’s why I say that free trade always has the right context. And when people like murgeo (but hopefully not you) try to claim that there is no free trade, on the basis of the existence of willfully involuntary actions, they miss the point.

“Now, we make this economy “freer” by adding one more person to our tiny group of freemen. Does this reform make our economy more or less productive?”

Yes, it is an improvement, however small. To the extent there is free trade, there is some degree of improved resource allocation. There are no important hidden assumptions. The trade does, in isolation, improve the welfare of the free traders. Even if the OTHER actions in those traders’ lives involve murder, theft, vandalism, and slavery. Free trade is never the problem. The problem in those case is instead, the murder, theft, vandalism, and slavery.

Martin Brock October 23, 2011 at 9:12 am

Yes, it is an improvement, however small.

You offer this answer while completely ignoring the context of the question.

To the extent there is free trade, there is some degree of improved resource allocation.

No. That’s absurd. If only three people are free to exchange without restriction and everyone else must trade subject the dictates of these three people, then the identity of these three people clearly matters. Adding Joe Stalin to the mix in the scenario described makes a huge difference and certainly does not improve resource allocation.

The trade does, in isolation, improve the welfare of the free traders.

Right. I state myself that Joe’s prospects improve, but this fact is beside the point. I don’t ask you about Joe’s personal welfare. I ask you about total productivity of the economy subject to the will of these three central authorities.

Free trade is never the problem.

I never assert that free trade is the problem, so this statement is also irrelevant. The problem is a specific structure of the impediments to free trade.

A highly unfree system of trade is not necessarily improved by a small, marginal increase in the nominal “quantity of freedom”, because this change only replaces one highly unfree system with another highly unfree system, and there is no monotone relationship between a simple aggregate like “total productivity” and another simple aggregate “total freedom”. These aggregates themselves are meaningless.

You might as well discuss “aggregate demand” and “aggregate supply”. Once you start aggregating, you violate assumptions behind the downward sloping demand curve, and simple, economic arguments often already assume that the demand curve slopes down in a straight line, an assumption that is neither logical nor empirical.

vikingvista October 23, 2011 at 1:33 pm

“That’s absurd”

And yet late you say you agree with it. When you catch your errors within a post, you should go back and make the appropriate edits. I already know that your misinterpretations are absurd.

You are somehow missing the obvious point that I have been correcting *your* errors of aggregation by going back to fundamentals of individual trade. Your aggregations, not just across many people, but across many actions of a single individual, are what is leading you to believe that somehow free trade can be bad. Ironic really, because even in your Stalin example you admit free trade is beneficial to him. Now if you would only realize that the evil Stalin does are separate actions from his free trades. But until you stop aggregating, you will never realize that.

The Other Tim October 21, 2011 at 4:28 pm

I don’t really mean to introduce retaliatory tariffs or subsidies. I only mean, is it not a good thing to recoup at least some of the societal loss caused by a tariff by lowering the tariff?

http://en.wikipedia.org/wiki/File:EffectOfTariff.svg

Aren’t smaller pink triangles better than bigger ones?

vikingvista October 21, 2011 at 4:38 pm

Good point. A tax may be targeted against one party in a trade, but it comes out of the pockets of both parties.

Martin Brock October 22, 2011 at 9:46 am

Again, I don’t advocate retaliatory tariffs, but my answer to your question is “I don’t know,” because the world is not a simple figure with two straight line segments crossing.

If you’re asking me if the pink area in your figure increases with the blue area, the answer is much easier, but this answer involves Euclidean geometry more than Economics, and I’m not even sure that Euclid got geometry entirely right. Modern Physics says he didn’t.

Is an Economic theory more reliable than a Physical theory? Human beings are not ideal, classical particles (and neither are real particles). Economic systems are more complex than the systems that physicists typically ponder.

Martin Brock October 22, 2011 at 9:55 am

Both subsidies and tariffs come out of the pockets of people on both sides of a border, but they don’t affect all pockets equally. They also fatten some pockets on both sides of a border. This has always been my point regarding the regulation of international trade.

vikingvista October 22, 2011 at 9:12 pm

“Is an Economic theory”

Depends. Some economic theories are more certain than any theory in physics could ever hope to be.

vikingvista October 22, 2011 at 9:21 pm

“but this answer involves Euclidean geometry more than Economics,”

You are talking as though you don’t understand the ideas behind the diagram?

Martin Brock October 23, 2011 at 9:23 am

You are talking as though you don’t understand the ideas behind the diagram?

I talk as though I understand many assumptions behind the diagram. For example, the diagram displays a simple, straight line relationship between price and demand and price and supply.

I understand why economists assume that demand falls with rising price and supply rises with rising price, for a single commodity, all else being equal; however, neither the rise nor the fall is necessarily linear. Furthermore, “commodity” itself is an idealization, and all else is not equal.

I also understand that a tax raises the price of a good, but a typical tax does not fall on one good exclusively, so an “all else being equal” assumption is not valid.

I could go on, and so could you, but you don’t. That’s the problem.

vikingvista October 23, 2011 at 1:16 pm

“I talk as though I understand”

Well clearly lack of understanding is a handicap to self realization. You couldn’t possibly understand and go on about geometry the way you did, or think that the linearity of the supply demand curves in the chart is at all relevant. You might start your education by realizing that it is an abstract conceptual schematic and not a data plot. The intended ideas expressed are unaltered by the application of an appropriate convexity to the lines. That’s why the simpler straight lines are used.

Ken October 21, 2011 at 1:30 pm

I see it as an extension of Julian Simon’s idea: Human ingenuity is the most valuable resource.

vikingvista October 21, 2011 at 1:49 pm

Statists don’t necessarily disagree. They just think it is a resource that should be violently mined from a subjugated population.

Jon October 21, 2011 at 1:42 pm

I like that, but I’d replace the word “trade” with the word “market.” After all, a free market will have free trade.

Bastiat Smith October 21, 2011 at 1:53 pm

Golly this reminds me of New Orleans.

Out of state carpenters literally wanted to rebuild the city, but the state explicitly told them no…Funny how the state has a tendency to stop people from helping one another.

muirgeo October 21, 2011 at 2:05 pm

Sounds like something the Pharaohs of ancient Egypt might have said with regards to the builders of their pyramids.

The immensity of the disconnect from reality to assume that statement applies to our trade agreements is indeed as big as the pyramids. And still it is said by serious minded professors and confirmed by the flock here as if it was something profound. Yet to believe you’ve cited a great truth that requires you to ignore the 20+ million underemployed is well…. is well… well maybe I am wrong… maybe it isn’t bizarre if you indeed are just able to ignore 20 million people.

Jon October 21, 2011 at 2:07 pm

Check out where a lot of the unemployed are: states without Right-to-Work laws. Heavily unionized states. States that prevent the free-flow of labor and capital across their borders. Just sayin’.

Also, the Pyramids were built by aliens. :-P

brotio October 22, 2011 at 12:33 am

:D

Will October 21, 2011 at 2:13 pm

what is “under-employed” and how is it caused?

vikingvista October 21, 2011 at 2:21 pm

Caused in part by the burden of OVERemployed government workers.

muirgeo October 21, 2011 at 4:01 pm

You could only say something like that because you are ignorant of the facts.

http://www.opm.gov/feddata/HistoricalTables/TotalGovernmentSince1962.asp

Those are the facts… do they change your mind?

vikingvista October 21, 2011 at 4:26 pm

Are you trying to make my case for me? Four million government employs is a HUGE burden. Now, care to show data on the salaries and benefits of those employees?

muirgeo October 21, 2011 at 5:36 pm

And if the trends were the other way they’d may your case even more better. I would be embarrassed if I had to make replies like you did and somehow convince myself I made a good point. Reality has no meaning to you. You might as well be a goat or rock.

Again whatever you say doesn’t matter much to me because talking with people who don’t care to admit to reality is very uninteresting except maybe as a study of human psychology. But as far as economics and politics you here have all been so beaten into the dirt that the reply you just gave is as good as any I’d ever expect to get from you all. There is nothing of substance to your values, your ideas, your logic and your inability top cope with and recognize reality. You’re all hunkered down in primitive protective mental psychological mechanism evolved much earlier in our evolutionary history for completely different environments.

Dan J October 21, 2011 at 5:56 pm

DC is beginning to resemble mother Russia. The capital Moscow was a big thriving center, which stole from it’s subjugated and occupied out lands. The outer lying areas, of course, were horribly impoverished by the theft.
Today, in America, we have DC filled with govt employees making an avg salary of $126,000. The money to pay these govt employees is stolen from the rest of the lands and impoverishing more and more as DC thrives.

vikingvista October 21, 2011 at 6:41 pm

Oh, so it is the trend that is important for you! It detracts nothing from my point about the burden being large, but since trends are what persuade you, let’s see the trend in Federal government total outlays for Federal employee salaries and benefits. Got that one handy, or do you think 6000 morels cost more than 4000 truffles?

vidyohs October 22, 2011 at 5:12 am

Two classes of under-employed people, government workers and union workers.

They may show up on time, but neither of them give you full value of labor.

VV, trust me, there is no such thing as an over-employed government worker.

vikingvista October 23, 2011 at 1:35 pm

Vid,

Depends on what you mean by “overemployed”.

Libt October 21, 2011 at 2:36 pm

It is a great truth, the more people trading and help each other, the better. You on the other hand are only stating a nationalist diatribe about foreigners taking jobs, yearning for a WW2 world where only America was rich and the rest of the world suffered.

vikingvista October 21, 2011 at 2:44 pm

Americans were hardly rich during WW2.

Darren October 21, 2011 at 4:52 pm

He didn’t say Americans were rich. He said America was rich. It’s the lack of that final “ns” that confuses you.

vikingvista October 21, 2011 at 5:03 pm

Oh I see. He was referring to America minus Americans. Yes, that is less confusing. Really.

Methinks1776 October 21, 2011 at 5:26 pm

Viking,

Americans were richer by comparison, even during WWII.

After all, American women didn’t have to dig a trench around your city on a hearty breakfast of face powder (I kid you not – all the rats had been caught and eaten), and the men weren’t forced into said trench with a gun and no bullets. Americans were rich :)

vikingvista October 21, 2011 at 6:51 pm

Embarrassingly, I was not comparing to the plight of those living under the purer socialist states. Thanks for the reality jolt.

Methinks1776 October 21, 2011 at 9:00 pm

Yeah….war in Utopia is no picnic.

brotio October 22, 2011 at 12:38 am

Yeah….war in Utopia is no picnic.

Poor Yasafi.

Uncle Joe’s nephew, Franklin, died before he was able to implement that Utopia here.

The Other Tim October 21, 2011 at 2:46 pm

Keynesians aren’t allowed to disagree with pyramid building. Look it up.

House of Cards October 21, 2011 at 3:19 pm

Sounds like something the Pharaohs of ancient Egypt might have said with regards to the builders of their pyramids.

If you’re suggesting that the pyramids of Egypt were built with slave labor, you’re wrong; that view was debunked long ago.

The pyramids were constructed by skilled, paid builders.

Ken October 21, 2011 at 3:33 pm

HoC,

muirgeo regularly claims that free markets lead to slavery and subjugation, often making the statements that free markets resulted in feudal England. I think in his bizarre mind free markets and slavery are equivalent.

Regards,
Ken

Patriotic American October 21, 2011 at 4:35 pm

“I think in his bizarre mind free markets and slavery are equivalent.”

Hello? Slavery had to be made illegal to stop it. Making something illegal is regulating the free market. Wherever slavery exists today is because of the unregulated free market. Hello?

Jon October 21, 2011 at 4:40 pm

Wow, one data point and you’re jumping for joy. The fact is, however, capitalist economies (including this one) were moving towards (or outright) ending slavery, often without the need for legislation. Example, Britain. The most mercantile Northern states. Europe. In these societies, legislation was passed outlawing slavery after the fact that it became, for all intents and purposes, socially unacceptable. Even the South was moving towards ending slavery before the war. Paul Krugman wrote a great blog post on this idea. I’ll see if I can find it.

Ken October 21, 2011 at 4:43 pm

PA,

Ha! I guess people can convince themselves of anything right to suit their world view, amaright?

Free markets by definition do not involve coercion. Guess what slavery involves. So, no you are incredibly incorrect.

Regards,
Ken

vikingvista October 21, 2011 at 4:44 pm

Although laws against slavery provide disincentive to it,antebellum chattel slavery would have been pretty difficult to maintain without the laws that supported it.

Ken October 21, 2011 at 4:45 pm

Edit: I guess people can convince themselves of anything to suit their world view, amaright?

vikingvista October 21, 2011 at 5:06 pm

Ken,

You may be right. But some do so with at least an iota of education and intelligence, while others do it like PA.

Aliens October 21, 2011 at 6:45 pm

We built the pyramids, and now Krugman is begging us to start a war with you…

This is why you can’t have nice things.

brotio October 22, 2011 at 12:40 am

LMAO!

Sam Grove October 22, 2011 at 3:11 am

Oh yes, muirgeo believes people get rich in order to enslave people rather than people enslave people in order to get rich.
Thus, the Normans bought up England in order to enslave the Saxons.

Methinks1776 October 22, 2011 at 8:17 am

YASAFI asks: Who is Norman?

kyle8 October 21, 2011 at 5:43 pm

Exactly, and so it was just a colossal Keynesian public works project.

At least they had something to show for it. Unlike after our colossal stimulus.

anthonyl October 21, 2011 at 10:14 pm

Do the unemployed need someone to tell them what to make?

Jon October 21, 2011 at 2:05 pm

If you ever want a fun time, walk into a Starbucks (preferably with a friend) and say “I don’t like buying ‘fair-trade’ coffee. I feel like I am supporting global poverty.” The dirty looks you get are fantastic. I have been banned from Starbucks in both Concord, NH and Manchester, NH :)

jjoxman October 21, 2011 at 2:07 pm

Doin’ it tomorrow!

Jon October 21, 2011 at 2:10 pm

Oh, I’ve been banned from Framingham, MA Starbucks, too. My goal is a ban in each New England state.

jjoxman October 21, 2011 at 2:28 pm

Just for talking sense to them? Or is there public indecency involved?

Jon October 21, 2011 at 2:32 pm

Well, if you’re lucky, you get one customer who is really self-righteous. They’ll usually start shouting at you about the horrors of what you said, etc etc etc. At that point, the manager will ask you to leave and not come back. The idea is not to do anything illegal, but just cause a little mischief.

Price B October 21, 2011 at 6:47 pm

Hahahaha… I think I’ll ask them if they have any unfair trade coffee.

I’ll tell them I don’t think their prices are fair for me.

EG October 21, 2011 at 2:16 pm

Sounds like the case for Occupy Wall Street: “Hey man! Why can’t we all help each other out? Pay my tuition!”

Not a good argument, in my opinion. It may be true, but it isn’t sufficient.

Jon October 21, 2011 at 2:25 pm

There’s a difference between helping someone out and free rides. What we are talking about is “let me brew your beer if you bake my bread.” What we are objecting to are barriers that prevent that from occurring.

Voluntary exchanges occur only when both sides benefit. What most people object to, I think, is the fact that these exchanges are not done for purely charitable reasons. And that is seen as greed, although it is not. Starbucks doesn’t brew your coffee to slake your thrust but to make money. Even the kindly old lady who bakes cookies for me has an “greedy” motive (I shovel her driveway). She and I help one another: she gets a clear driveway and I get hot cocoa and warm oatmeal-raisin cookies on a snowy day. Everybody wins! What’s so terrible about that?

vikingvista October 21, 2011 at 2:33 pm

It isn’t fair that I’m not getting any of those cookies, cocoa, or shovelling services. You and the old lady are greedy selfish capitalists, and I’m lobbying my Congressman to confiscate the cookies and shovelling that you stole and distribute them fairly.

Jon October 21, 2011 at 3:35 pm

1% of monsters consume 99% of the world’s cookies. This message brought to you by: Occupy Sesame Street.

Don Boudreaux October 21, 2011 at 5:37 pm

:-)

Greg Webb October 22, 2011 at 1:07 am

LOL!

Randy October 22, 2011 at 3:16 pm

+1 LOL

Methinks1776 October 21, 2011 at 5:32 pm

What’s so terrible about that?

The cold, snowy day :(

vikingvista October 21, 2011 at 6:53 pm

It’s always sunny in Texas! Do us Texans a favor, and move here!

Methinks1776 October 21, 2011 at 9:03 pm

I do love Dallas!

Greg Webb October 22, 2011 at 1:12 am

I love Austin! Also, my fiancée currently lives there and, if this winter is particularly bad, we’re going to make our home there.

Greg Webb October 22, 2011 at 1:13 am

Vike, you live in Amarillo, don’t you?

vikingvista October 22, 2011 at 2:13 am

Not Amarillo. Never even been there. But where I do live (in Texas) is the best placed I’ve ever lived. At least that’s what I tell people like you and Methinks. I tell people like muirde that it’s a barren muirdehole that makes me want to kill myself.

Greg Webb October 22, 2011 at 1:09 am

Agreed! Cold, snowy days suck.

EG October 21, 2011 at 5:47 pm

Oh I know. I’m saying this 2 sentence explanation is not sufficient to make a point. Its vague and meaningless enough, that it could be found on the signs of any number of OWS baboons.

People don’t do things to “help each other out”. I have no interest in helping you out. I have, however, if I benefit from it.

And thats what makes free trade work…both sides benefit. But “helping” is a byproduct, not the aim. Adam Smith made that point quite easily.

What he should have said is…the more people benefiting from each other, the better.

Krishnan October 21, 2011 at 2:19 pm

People helping each other without being told to do so? Impossible.
People selling what they can make efficiently and buying what they need from others? Cannot allow that.
People making choices in the market and sending signals to producers and innovators? That cannot be allowed. Why should some benefit at the expense of others by making a profit.

Time to go back to self sufficiency. Everyone should be forced to grow what they want to eat, make their own clothes, design and build their own machines and so on … All this free trading amongst people has caused global poverty to explode. People today are poorer than they were in the stone age. People used to live for 150 years in the stone age and today they die at 35. Ban trade. Ban innovation. Ban fuel used for transportation. Ban all attempts by any one, any group to provide any help to anyone asking for help – watch as paradise descends on earth.

Jon October 21, 2011 at 2:26 pm

A college friend tried the self-sufficiency route. Lasted a week.

vikingvista October 21, 2011 at 2:27 pm

You are missing one key ingredient for utopia–equipping a few sanctimonious smart people with a powerful army and dictitorial powers.

Jon October 21, 2011 at 2:28 pm

Yes, a good strong dictator sounds good. Preferably an eccentric one. The Greater Good is more important than the individual good.

vikingvista October 21, 2011 at 2:38 pm

Yep. Each individual must be sacrificed for the good of society. You know, just like each tree must be logged for the good of the forest.

kyle8 October 21, 2011 at 5:49 pm

Well that is an easy one, The wealthy nations you named stole all their wealth and oppressed the other nations, and they exploited their workers, so naturally they are rich!

Oh wait!

Jon October 21, 2011 at 2:43 pm

One thing I find interesting about this whole debate is one simple fact: countries that do not trade (or who’s trade is very limited), such as North Korea, pre-1970′s China, the former Soviet Union, are/were among some of the poorest countries in the world. By contrast, countries with open trade (US, EU, Canada) are among some of the wealthiest (I am talking standard of living). From where does the argument for protectionism come?

I understand the concern about jobs, but other than that, what is the objection?

Dan H October 21, 2011 at 3:11 pm

It comes from the static analysis of a flawed equation:

GDP = C + I + G + (X-M)

Ken October 21, 2011 at 3:39 pm

Jon,

Dan H points to one thing, but that equation is relatively new. Bastiat wrote a very insightful essay talking about the seen and unseen. Layoffs of a couple people are seen, while the lower prices all enjoy largely remain unseen or are ignored or are dismissed as unimportant. Protectionism also has to do with a small vocal minority (people being laid off) and everyone else for whom there is no one who speaks up. The Forgotten Man is simply forgotten, but he is always made to pay.

Regards,
Ken

Jon October 21, 2011 at 3:42 pm

Good point, Ken. As a strong free-market economist, I find the objections to trade mind-boggling.

nailheadtom October 21, 2011 at 3:14 pm

But is free trade “helping each other out”? Do we give the baker money in exchange for bagels so he can send his daughter to Skidmore or because our own kids want some with breakfast? Personally, I don’t care what happens to the money I give someone in a transaction and it wouldn’t matter if I did. They’ll probably spend it on stuff that I think is dumb anyway. I’m helping me, not them.

vikingvista October 21, 2011 at 3:16 pm

It is helping them, whether that is the intent or not.

Jon October 21, 2011 at 3:28 pm

Right, Viking. The idea is that by being self-interested (buying your kid breakfast) you are also helping him (sending his kid to Skidmore), although that was not your intention (and probably only crossed your mind as a novelty).

To expand this to a global scale, by buying lost-cost Chinese manufactured goods (a self-interested act), you are helping to raise the standard of living in China (the ‘helping’ act), although that is not your intention.

nailheadtom October 21, 2011 at 4:57 pm

OK, maybe it’s a semantic issue, but as we all know, voluntary exchanges presumably benefit both parties or they would not take place. Ergo, when one party helps himself he’s also helping the other, even though that’s not his intention. However, nobody knows for sure if the result of a transaction will ultimately be beneficial to both parties. I might trade my Mom’s cow for some magic beans. Hard to say what the outcome of that might be.

Jon October 21, 2011 at 5:02 pm

True, but you would not have made that trade if you did not perceive the benefits of the magic beans to outweigh the costs. That, and you have imperfect information, which is a form of market failure (much like buying a lemon car).

vikingvista October 21, 2011 at 5:09 pm

It is not hard to say in large numbers what they will mostly be.

kyle8 October 21, 2011 at 5:51 pm

Also, the money you give the baker he might use it to buy hookers and blow. But that is OK because it is his choice, and at least he can earn the money for his habits and does not have to steal for it.

vikingvista October 21, 2011 at 6:56 pm

You have something against hookers and blow? Goods and services, it’s all part of the economy.

Nikolai Luzhin, Eastern Promises October 21, 2011 at 3:18 pm

a recently fired manufacturing employee (job and equipment sent to China) remarked, with Friends like this, who needs enemies

House of Cards October 21, 2011 at 3:24 pm

Funny! That’s what the fired buggy-and-whip manufacturer said about the new automobile makers.

I guess those who offer people the future are not friends to those who would keep them stuck in the past.

kyle8 October 21, 2011 at 5:53 pm

A friend I know make a huge amount of money last year buying and reselling things from China. If only you had better quality of friends.

Price B October 21, 2011 at 7:02 pm

Better idea: Let’s all cut off our right hands.

Then we’ll only be HALF as efficient. Manufacturers will need TWICE as many employees and we’ll DOUBLE aggregate demand for prosthetics. We’ll be soooo rich.

Even better: let’s just murder 50% of humanity. Manufacturing that equipment will make us rich, fewer people to be unemployed, less competition for labor, less efficient labor, so why stop there? 75%? 99%? It’s all for the greater good.

“Foreigners should have the freedom to sell what they can and buy what they wish” – Milton Friedman

With friends like YOU who needs enemies?

muirgeo October 21, 2011 at 3:53 pm

Global Cooperation? I think you mean Global Corporation.

Jon October 21, 2011 at 5:02 pm

Ah, the famous ad hominem defense!

muirgeo October 21, 2011 at 5:37 pm

Yeah because global corporation have nothing to do with it… you trade with people from China when you fly your magic carpet to their markets everyday…. Don’t stop believing.

HaywoodU October 21, 2011 at 5:36 pm

And I am sure you do not engage in any trade with global corporations.

muirgeo October 21, 2011 at 5:41 pm

It’s impossible NOT to some degree and still survive…. and that’s my concern. I don’t feel free or liberated so dependent on what they put out on the markets they’ve monopolized. You see cheap stuff and shout for joy. I see control and oppression and rigged markets.

You may see at as liberating to work for one of these huge corporations … I see it as selling out and joining the mafia or an authoritarian regime.

I see much better ways to make money then what I am doing but have have a problem going to the dark side to do so. I’d rather fight the good fight.

kyle8 October 21, 2011 at 5:54 pm

You are just not trying hard enough luddite.

Dan J October 21, 2011 at 5:57 pm

China is calling for you Muirgeo….. They want to tell you a liitle something about isolationism.

Jon Murphy October 21, 2011 at 6:49 pm

I consume the products that bring me the most pleasure/utility for the cost. Where they come from is not a major concern for me.

I’m not sure I understand your concern for oppression? There is no force for me to purchase items from China. No one is holding a gun to my head forcing me to buy trinkets. I make these choices myself. How is limiting my choices freeing me from oppression? Please explain.

muirgeo October 21, 2011 at 8:41 pm

They are holding guns to Chinese consumers and not allowing THEM to purchase our things.

It doesn’t strike you as hypocritical to be a so-called capitalist buying things made by unfree communist labor? All you are telling me is that for a price you’ll sell any principles you might have. And I am telling you THAT IS THE problem. Yet you make selling yourself out sound so easy…. I’m not impressed.

Methinks1776 October 21, 2011 at 8:57 pm

Muirdiot is just advocating tyranny in the name of freedom.

Don’t you see? Don’t you see?

Jon Murphy October 21, 2011 at 9:55 pm

But even at that price, Muirego, the Chinese factory worker is making a great living (by their standards). If this were not the case, the workers would not leave their families and take the long journey to the cities to work. If I were not to buy these items (or we were to launch punitive tariffs), it would decrease demand and put Chinese workers out of work.

All your argument is saying is Americans are the only ones that matter; ethnocentrism and ultranationalism. Ironically, two principles President Roosevelt led us against in WWII.

Trade makes everyone better off. Trade has lifted more out of poverty than anything else (see China, Brazil, Africa, Southeast Asia, America!). When we establish barriers, we are promoting poverty, not just in foreign countries but here in America, too! The data is crystal clear on this matter.

Look, I care about the Chinese workers. I spent some time in China this past winter. By our standards, they make shit, but by their standards they live quite comfortably. The cost of living is totally different in China than here. A taxi ride from one end of Shanghai to the other costs about $3. You can buy a decent amount of food for a family for about $10.

Look, you’re a good man, Muirgeo. You care about other people, which is commendable trait. But I think you make the mistake of applying American standards to Chinese problems. It just doesn’t work.

Dan J October 22, 2011 at 12:08 am

Taxes and regulations are the answer to everything for liberals. Yet, they don’t solve problems. They only exacerbate the current problem and create new one’s. All America needs to do is make US atmosphere more business friendly. By means of taking away DC’s ability to hand out advantages and then lower taxes, regulations, litigation, and govt imposed employment costs then the opportunities for profits in US grow.

Greg Webb October 22, 2011 at 1:05 am

I see, Methinks1776! I just thought George was rambling incoherently again.

muirgeo October 22, 2011 at 12:52 am

Global Cooperation…. Yeah Europe is on the verge of complete collapse…. like a panicking drowning person about to pull us under as well… but don’t worry bout those minor details. This cooperation is working out soooo we’ll.

Greg Webb October 22, 2011 at 1:03 am

Europe is not on the verge of complete collapse. The EU may be dismantled, and many of those social democratic countries will be required to pay for their socialistic follies. But, that is good. After all social democracy is only fun till other people’s money run out. And, a healthy dose of reality, especially economic reality, will help those coddled European children to grow up to become responsible adults.

muirgeo October 22, 2011 at 9:54 am

No Greg, it was not their socialist follies that sent their economy off. That;s just you saying things that have no basis in reality just to prop up your failing world view. It’s non-sense unrelated to reality. It was allowing our free market complex financial derivatives and the unethical big bank pushers to infest their economy.

Did you say you work for Goldman Sachs? I tought you said you worked for one of those parasitic companies but can’t remember which… they are all the same to me unpatriotic criminal mafia organizations…anyway….

http://www.youtube.com/watch?v=FKCR2k4keMQ

Greg Webb October 22, 2011 at 12:04 pm

LOL, George! Your argument is that the lender is responsible for the folly of the borrower.

George, are you a deadbeat borrower? Your illogical arguments about banks infers that you may have invested heavily in California real estate using debt at the peak of the market. Are you unable to repay your loans and are you hiding out from your creditors at OWS in Boston?

The EU may collapse because it is a silly attempt to make its member states into one nation. It works in good times…and as long as Germany was willing to subsidize its economically weaker member states. But, in bad times the cost gets unbearable to the responsible member states.

Greece, and many other EU members, benefitted from joining the EU because their historically high cost of borrowing fell to that of the EU’s strongest member state Germany. Then, Greece, Italy, Ireland, Portugal, Spain, Belgium, etc borrowed heavily during the good times. Greece’s national debt is over 120% of GDP. Now, that much debt is always irresponsible.

And, Greece, among other foolish expenditures, spent the money so that Greek workers could retire at 55, which does not sit so well with Germans who work longer and harder than the Greeks and are being asked the finance much of the bail out of the EU. The EU elite want to bail out Greece and the other member states because they want to keep the silly dream of a united Europe alve. But, the responsible people (Germans, Dutch, Slovenes, etc) do not wish to be members in an EU where they are asked to bail out the irresponsible (Greeks, Italians, Spanish, Irish, Portugeese, Belgians, etc). I think that Greece will be kicked out of at least the monetary union as a partial solution, but the whole EU may fall apart. The mst recent estimate I’ve seen is that it will take 2 trillion euro to bail out the weaker EU members. We will see what happens.

Deadbeat borrowers always blame theIr creditors when they cannot repay their loans. It is a normal human failing. But, responsible adults keep their agreements.

My impression is that you invested heavily using debt during the good times and are looking to blame your creditors for your past follies rather than accepting responsibility for your own poor decisions. As a result, you have a deep seated emotional need to convince others, like the patrons at Cafe Hayek, that banks And bankers are evil.

But, you know that is not reality, which is why you work so hard to try to convince a group of responsible adults that its the banks who are guilty for letting you borrow so much. If you can only convince responsible adults then you can finally absolve yourself of the guilt you feel in being a deadbeat borrower whon made so many poor investment decisions.

I feel bad for you, George. But, you won’t get rid of your guilty feelings until your repay your loans. So, quit playing in Boston, go home, work long hard hours, and repay the creditors that you are victimizing by not repaying your loans.

You said, “Did you say you work for Goldman Sachs?”. No, I have never worked for Goldman Sachs or any other investment bank. I did, however, call Goldman Sachs a crony capitalist who, like you, made irresponsible investment decisions then ran to their patrons at the federal government to get bailed out by taxpayer money. My position is the same as Anna Schwartz, Milton Friedman’s co-author in writing “A Monetary History of the United States, who said, “Let them fail!”

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