Some older industrial cities do indeed remain depressed following decades of trade liberalization, but it’s hard to blame trade for that when far more of them — towns like Pittsburgh; Greenville, South Carolina; and many others — have moved on, diversified, and are today thriving. Indeed, one of the poster-child towns for the “China Shock’s” destruction — Hickory, North Carolina — was recently ranked (in two different publications!) among the best small towns to live in the country, and its legacy furniture manufacturers struggle to find people to work in the mills (and hold job fairs when a local competitor announces layoffs).
And here’s Scott’s Introduction to the Cato Institute’s new “Defending Globalization” project. A slice:
Globalization, like any market phenomenon, is imperfect and often disruptive. But the movement of goods, services, people, capital, and ideas across natural or political borders has also produced immeasurable benefits—for the United States and the world—that no other system can match.
Globalization puts everyone whose government permits it into a global neighborhood in which the price of a Samsung TV at a Best Buy in Washington is pretty much the same as in Beijing or New Delhi. Big price differences in the same neighborhood would mean that you could easily do better. For example, as a low‐price buyer, you could resell to a high‐price buyer. Or as a low‐price seller, you could advertise. Or as a high‐price buyer, you could get smarter and look around for a better deal. The deals are voluntary and therefore must benefit both buyer and seller, a little or a lot. If permitted widely in a society, gross domestic product (GDP) per head goes up, a little or a lot. It happens by arbitrage, globalization, and common sense—the natural result of people liberated to better themselves while bettering others.
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Contrary to what you might have heard, however, there’s no “Chinese model” to be seen as an intriguing if authoritarian alternative to Western economic liberalism. The Communist Party of China would like you to believe there is. Nope. After 1978, the party merely started to permit an economic liberalism of the sort partially implemented in the West in the 19th century—though of course the party did not permit anything like a corresponding liberalism in politics. The “Chinese model” is merely “the capitalist road.”
The economic result of liberty in China’s economy? China’s income per head in 1978 was then lower than Sudan’s. It’s now about 12 times higher, about the same as Mexico’s (after adjusting for purchasing power parity), which is in turn about the global average. That’s still less than a third of U.S. income per head. But if Premier Xi Jinping fails in reverting to economic anti‐liberalism with central planning and controls in prices, China’s on the way to parity in one to two generations. India likewise after 1991 opened to global prices, and as a result, if Premier Modi in India like Xi in China does not leave liberalism behind, India can expect parity with Europe and the United States in two or three long generations. Latin America and Africa cannot be far behind. Globalization, which is to say the force of arbitrage exercised by liberated people in the economy, spreads prosperity.
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A hermit could refuse to take advantage of globalization and achieve self‐sufficiency in his own little hut. It sounds lovely and brave. Grow your own wheat. Make your own accordion. But it’s been calculated that nowadays a hamburger made wholly self‐sufficiently would cost about $83. Perhaps it would be better to work a little in a market and then take the earnings to spend at the neighborhood McDonald’s. When Henry David Thoreau went to be self‐sufficient for two years from 1845 to 1847 on the banks of Walden Pond in Concord, Massachusetts, he still bought nails in town for his hut, and hoes for his crops, and books to read. Every Sunday, he went into town for dinner. Towns and trade are mighty tempting, with their low prices in production achieved by specialization and their low prices in marketing achieved by arbitrage.
Self‐sufficiency, true, charms people. But it also serves the self‐interest of monopolies sitting inside the sufficient place. Medieval market towns run by monopolizing guildsmen arranged to keep the indwellers from buying anywhere else. During the early modern period, the same policy at the level of the entire nation was called “mercantilism.” The accumulation of gold in the nation, a “positive balance of payments,” was achieved by making exports large and making imports small. Getting gold was seen as just the ticket. Wait a minute. It’s like saying that it’s good for you as a little nation to work to earn money but bad for you to spend the money on groceries. Keep money stashed away, like Scrooge McDuck.
Modern mercantilism has the same illogical logic. After 2016, both the Trump and Biden administrations in the United States tried to raise exports of airplanes and reduce imports of steel. Negotiation over “trade agreements” have the same rhetorical structure. “I’ll let your exports into the United States only if you let U.S. exports into your country.” Exports are good, the rhetoric in the negotiation says; imports are bad. Working is good; eating is bad.
Such talk is of course lunacy, though still the basis of public policy worldwide, as it was anciently. You have, after all, a balance of payments deficit with your grocer. The grocer accumulates the money. Has the deficit kept you up at night worrying? Not likely. Yet the stop‐go policy of the British state during the 1950s and 1960s was based on such mercantilist lunacy and crippled real growth. Words matter. Words like “self‐sufficiency” and “protection” and “balance of payments deficit” lead us far astray and make us poor. Better to get the economic rhetoric right, and achieve prosperity, by speaking of “arbitrage,” “efficiency,” and “globalization.”
The real question should not be if Google has been more successful than the alternatives, but whether it achieved this success through a superior product or anticompetitive means. Consumers choose Google largely because they consider it a better product, not because they have been manipulated into choosing it as their option for search. After all, one of the most popular search queries on Bing is consumers looking for Google, illustrating that it is not by force but through consumer choice that has led to its popularity.
Greg Werden explains that “the FTC lacks authority for competition rulemaking.”
Here’s Reason‘s Jacob Sullum on the 5th circuit’s recent ruling in Missouri v. Biden. A slice:
By and large, especially after Biden and Murthy accused social media companies of killing people, the platforms did what the White House wanted. They were eager to appease the president, repeatedly asking how they could work together to address his concerns. In this context, the 5th Circuit says, it is likely that the pressure campaign amounted to “coercion” and that the White House unconstitutionally shaped moderation decisions.
