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Quotation of the Day…

… is from pages 224-225 of the 1936 English-language edition (translated from German by Alfred Stonier and Frederic Benham) of Gottfried Haberler’s classic 1933 volume, The Theory of International Trade With Its Application to Commercial Policy (original emphases):

The aim upon which the argument for Free Trade which we have developed is based, is the maximisation of the social product or national income. The income of which group of persons? In this connection, some serious misunderstandings must be avoided. We are constantly told that the Free Trader adopts a cosmopolitan standpoint, that he takes account of the welfare of the whole world, and that in cases of conflict he is prepared to sacrifice the interests of his own country. That is not correct; a cosmopolitan aim is in no way essential to the Free Trade postulate, although it must be admitted that it is easier to explain the advantage of unrestricted exchange of goods if one takes account of the whole world rather than considers only the interests of the particular country. Moreover, there is an easily explicable psychological affinity between Free Trade and internationalism. But these two are not inevitably bound together; the economic case for Free Trade shows that all participating countries gain by it, but it does not show that the profit of one implies a loss for another. Thus a nationalist may be a convinced Free Trader just as well as a pacifist and internationalist may be one.

DBx: Writing nearly 90 years ago, Haberler’s words are as true and as relevant today as they were when first penned. We advocates of free trade today continue to encounter non-stop the accusation – very often explicit, although sometimes implicit – that we “care about foreigners” more than we “care about fellow citizens,” or that our “case for free trade is one for maximizing global well-being at the expense of our nation’s well-being.”

Because the classic case for a policy of free trade has always been one that shows that each nation that adopts freer trade thereby gains, I recall years ago being genuinely surprised when a protectionist accused me of “putting the welfare of non-Americans above that of Americans.” When after a few minutes I realized that this protectionist presumed that my case for free trade was one that takes the global economy rather than the American economy as the relevant unit whose welfare is to be assessed, I could not determine if this protectionist held this false belief sincerely or if his expression of this belief was a cheap debating ploy meant to bias the discussion against me. (To this day I do not know if this protectionist was sincere in his presumption that free traders – or, at least, free traders from wealthy countries – favor free trade despite the net damage that protectionists mistakenly believe that it does to the home country. I do know, though, that this presumption of his is utterly mistaken.)

I proudly admit to being cosmopolitan. I proudly proclaim that I see no reason to count the welfare of my fellow human beings who live in the United States more highly (or more lowly) than I count the welfare of my fellow human beings who live in the United Kingdom or China or Guatemala. I recognize also that if the U.S. government adopts policies more in line with free trade, there will be benefits to the global economy.

Yet I cannot recall a single occasion on which I’ve argued for the U.S. government to adopt a policy of free trade, or to move closer to free trade, when my argument did not explicitly attempt to demonstrate that free trade is a net benefit to Americans (or to refute the protectionist assertion that free trade inflicts net harm on Americans).

And I know for certain that I’ve never argued for free or freer trade in the U.S. on the grounds that the result would be higher global welfare but lower American welfare. The reason is that I know of no argument that shows that a policy of free or freer trade in the U.S. will plausibly on net do economic damage to Americans.

In short, those people who accuse free traders of ignoring or discounting the welfare of their fellow citizens are either ignorant of the case for free trade or they intentionally distort it in order to score cheap debating points.