Here’s a letter to a thoughtful Café patron:
Mr. E__:
Thanks for your e-mail and kind words about Café Hayek. They mean much.
You write: “One question often in my mind when reading your posts is, ‘but what about the fact that the CCP are brutal dictators driven by an evil ideology?’ Seems this should color an otherwise purely economic analysis, e.g., on free trade vs tariffs with China.”
Your question is excellent, but it has, I think, no sober answer that can’t be soberly challenged. The difficulties that prompt it are purely pragmatic, and so too must be the considerations in dealing with these difficulties. I have no firm answers, only some thoughts. Here are three.
First, the extent of the Chinese people’s integration into the global economy is a good, although not perfect, measure of their de facto economic freedom. For the Chinese economy to continue to produce outputs that Americans want to buy, and to do so in ways that enrich rather than impoverish China, producers there must have some minimum amount of at least de facto property rights in inputs and be largely free to respond to market signals. If they have too few of these property rights or too little of this freedom, then on-going economic activity in China will make the Chinese people ever poorer.
As awful as the situation is today under Xi, under Mao the CCP was far more repressive and hostile to markets. The Chinese under Mao were, to put it mildly, not successful exporters. As the CCP moves China further back in the direction of Maoism, China will itself reduce its people’s ability to trade with the west.
Second, the Chinese people aren’t the CCP and the CCP isn’t the Chinese people. The vast majority of Chinese people, I’m sure, are decent individuals with the misfortune of being ruled by a brutal thugocracy. When the U.S. government restricts Americans’ trade with the Chinese, it therefore makes both Americans and innocent Chinese people poorer. On the other hand, such restrictions also reduce the resources available to the Chinese state, potentially diminishing its ability to wage hot wars. Reasonable people can disagree about the weights to be attached to each of these effects, but reasonable people cannot deny this trade-off or conclude a priori that even the smallest negative impact of U.S. trade restrictions on the Chinese state is worth whatever are the negative impacts of these restrictions on ordinary Americans and Chinese.
Third, while no one should be so foolish as to suppose that trade eliminates all prospects of hot shooting wars, trade does reduce these prospects – and, hence, trade restrictions increase them. I think that Dan Drezner was correct when he wrote last September that “the geopolitical benefits of interdependence have been underestimated. Even in 2023, China’s interdependence with the Organisation for Economic Co-operation and Development economies has acted as a constraint on its foreign policy behavior.”
There are no guarantees. Trade enriches the people of trading nations and, hence, enriches their governments. The former consequence is unambiguously good; the latter not nearly as much. But history is crystal clear that economic nationalism fuels both domestic impoverishment and international conflict. The strong presumption should be in favor of keeping trade with China free.
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
