Free Trade, Unconditional

by Don Boudreaux on May 30, 2017

in Seen and Unseen, Trade

In response to this earlier post, Jeff Jacoby e-mails me:

Don — I wonder about “unconditionally.” Would you make an exception for trade in goods produced by slavery? For example, would you object even to a law barring the import of products manufactured in Soviet- or Nazi-era slave labor camps?


Here’s my response, in full and edited only slightly.  Beneath it I add further points.


I would not make that exception.  Here’s why.  First, goods produced by slaves are unlikely to be competitive in the global marketplace.  Perhaps some agricultural products might be produced at a comparative advantage, but with the enormous mechanization of agriculture over the past 150 years, slaves aren’t very competitive even at those tasks.  As for slaves being used to produce manufactured outputs or services, it’s so extraordinarily unlikely that they can do so efficiently that it’s practically unnecessary to have such an exception for slavery.

Second, slavery is today extraordinarily rare, in big part for reasons suggested in the previous paragraph.  And making genuine slavery even more rare today is the progress of mechanization. (Note the tension between worrying, on one hand, that most jobs are being destroyed by robots and other forms of mechanization, and, on the other hand, worrying also about slavery being a significant problem.)

Third, if an exception for slavery is made it is sure to be abused.  Developing-country workers whose wages are very low compared to wages in the developed world will be wrongly portrayed in the developed world as slaves and, thus, tariffs will be used to block trade with developing countries – harming consumers in the developed world as well as the very workers in the developing world who are the ostensible objects of compassion that motivate the tariffs.


Let me state unambiguously: my position on this matter is in no way an endorsement of slavery or an admission of indifference to that heinous institution.  Rather, my position is that the combination of

(1) genuine slavery being a very inefficient means of production, especially of manufactured goods,

(2) genuine slavery’s extreme rarity today, and

(3) the certainty that a slavery exception to a rule of free trade will be abused so that many low-paid workers in developing countries will be classified in western countries as “slaves,”

makes a slavery exception a bad idea.  In practice, this exception will be used not to punish slavers and to put pressure on governments to eliminate slavery but, instead, as camouflage for rent-seeking producer groups to win protection from competition.

If and to the (incredibly small) extent that products for export are today produced with actual, genuine slave labor, I leave it to individuals to be guided by their moral compasses to avoid buying outputs produced by slaves.  You do not need the state to force you to behave ethically.  (In fact, if you behave ethically only because the state compels to so behave, then you are not an ethical person.)  If you really believe that widgets from Ruritania are produced with genuine slave labor, don’t buy such widgets.

Companies, too, have incentives to avoid selling slave-produced outputs (even if these outputs are less expensive because they are produced by slaves).  The likes of Wal-Mart, Ikea, and Ford would suffer great damage to the value of their brandnames if it became known that they retail slave-made products or use such products as inputs in the production of their outputs.  Therefore, we can depend upon private companies to police against the importation of slave-made products.

It’s true, of course, that it’s easy to imagine such policing by private companies to work only imperfectly.  Indeed, it would in fact work only imperfectly.  But I submit that private companies have better incentives to police against the importation of genuine-slave-made products than do governments.  Governments are forever grasping for excuses to protect politically powerful producer groups from competition.  And experience proves that governments are utterly shameless in latching on to any excuse, no matter how absurd, to restrict the freedom of consumers in order to inflate the revenues of powerful producer groups.

In summary, to have a slavery exception to an otherwise hard and fast rule of unilateral free trade would be to have an exception that (1) attacks a virtually non-existent problem, and (2) would quickly expand to such an enormous size that it would make a mockery of the country’s alleged commitment to free trade.


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