Populism Is Poisonous

by Don Boudreaux on October 4, 2016

in Legal Issues, Myths and Fallacies, Trade

Here’s a letter to the president of an organization that seems to be in the grips of poisonous populism:

Mr. Rick Manning, President
Americans for Limited Government

Mr. Manning:

Your organization’s opposition to the proposed TPP trade agreement not only reflects your misunderstanding of constitutional law and of economics, but is also disappointing given that such opposition belies your organization’s name.  TPP is far from perfect, but because it would make trade freer, it would further limit government’s intrusion into American’s lives.

On constitutional law: TPP is a treaty, and treaties are expressly provided for in the U.S. Constitution.  Like all treaties to which the U.S. government is party, were the U.S. to become party to TPP the U.S. government would of course be bound by the negotiated terms of the treaty – just as our treaty partners would be so bound.  Contrary to your assertion, however, being party to TPP would no more undermine U.S. “self-determination” than you would undermine your own “self-determination” by, say, contracting to take out a mortgage on a home that you buy.  Sure, you would thereby become “bound to standards” of the mortgage contract (including to whatever dispute-resolution provisions are included in this contract), but only because you agree to be bound to these standards in return for a greater benefit to yourself.

Do you believe that you and your family would gain greater “self-determination” if you were prohibited from ever entering into binding contracts with others?  If not, you might wish to rethink your assertion that a treaty agreement undermines U.S. “self-determination.”

On economics: If it’s true, as you report, that “59 percent of Virginians agree jobs can be brought back to U.S. by reducing participation in trade deals,” then this poll shows only that 59 percent of Virginians are economically ignorant.  One of the most well-established propositions in economics is that trade has no effect over the long-run on the number of jobs in an economy. Freer trade replaces poorer jobs with better jobs, while protectionism replaces better jobs with poorer jobs.  The fact that many Americans share your economic ignorance of the effects of trade neither changes the reality of these effects nor justifies continued government interference – of the sort that you apparently endorse – with the freedom of people to trade with others regardless of which part of the globe those others happen to reside.

Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA  22030

UPDATE: A knowledgeable friend, who is an expert on the law and economics of trade, writes to offer the following correction to my letter, which I gratefully accept.

I would not call trade agreements treaties.

I only mention this because your argument could be even stronger with trade wonks (non-economists) if it said trade agreements are “like” treaties or something like that in the future. Manning’s argument may be even weaker because this isn’t even a treaty, just an “agreement” that the U.S. could leave at any time.

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