- Cafe Hayek - https://cafehayek.com -

Quotation of the Day…

Tweet [1]

… is from Arnold Kling‘s superb 2004 book, Learning Economics [2] (a book my review of which will be posted later today as my next “Freeman Essay”):

One of the silliest government positions ever created was that of ‘Chief Trade Negotiator.’  There is no need to negotiate – we can do our part for free trade now.  The whole concept of trade negotiation is absurd.  It is like saying to your spouse, ‘I’ll change my underwear regularly, but only if you’ll agree to brush your teeth.’  We should eliminate our harmful trade barriers, not keep them in place just to have ‘negotiating leverage.’

DBx: I agree with Arnold completely.  I add, though, for the record, that in this imperfect world of ours in which governments everywhere presume to superintended the commercial activities of their subjects, trade agreements are often the best available way to make trade freer, if not as free as it can and ought to be.  This reality exists because of the combination of two powerful forces: (1) governments are prone to serve special-interest producer groups within their jurisdictions, and (2) most citizens are ignorant of economics.  These forces combine to create the widespread mistaken impression that international-trade’s benefits come in the form of exports while imports are thought to be the ‘costs’ that must unfortunately be paid in order to enjoy these ‘benefits.’

I informally estimate that three-quarters of all the negative feedback that I receive when I make the case for free trade is rooted in this utterly backwards understanding of the benefits and costs of trade.  Were people to understand that imports are the benefits that we get from trade while exports are the costs that we must pay in order to receive these benefits, everyone would, in turn, understand the absurdity (for Americans) of what Trump proposes to ‘negotiate’ for Americans on the trade front.  The man’s goal is to arrange for Americans to be able to export more and to import less – that is, to spend more and to get less in return.  It’s as if Trump is really a secret agent sent here by an enemy government to enrich non-Americans at Americans’ expense.

Comments