Mr. Michael Brendan Dougherty
National Review
Mr. Dougherty:
Although I’m not on X, a friend shared with me this recent tweet of yours:
Still waiting for a response to my two sentence argument against free trade that engages with it:
A global free market is necessarily indifferent to the distribution of goods, skills, technological capacities, and power among nations. Statesmen cannot be so indifferent.
Let me end your wait.
I’m unpersuaded by your statement, not least because it’s unclear what you mean by the market being “indifferent.”
If by “indifferent” you mean that the market generates processes, and outcomes, different from those chosen by “statesmen” or preferred by pundits, then your point is true but trivial. The essence of free trade is that no individuals or groups coercively override the economic choices made by ordinary people spending and investing their own money.
But I suspect that by “indifferent” you’re making a more substantive claim. Just what that claim is, however, remains unclear.
Perhaps you mean that individuals choosing and acting in free markets are indifferent to the kinds of consumer goods and services they produce and consume – to the sorts of capital goods they create – to the varieties of worker skills they reward and develop – to the technologies they foster. If this is your meaning, then I can only disagree and wonder at your poor opinion of your fellow Americans.
Are you indifferent to how you spend your money and to how your savings are invested? Do you really believe that American business owners and managers are indifferent to the skills of their workers, to the kinds of machines and technologies they use, and to the sources of their supplies? If so, how do you explain the steady increase in real per-capita income in the U.S., the steady increase in household net worth, and the real increase in the size of the U.S. capital stock from the end of WWII through 2018 – years in which trade became freer?
Or perhaps you believe that “statesmen” – politicians and bureaucrats – empowered to override the economic choices of consumers, entrepreneurs, and investors would generate outcomes superior to the outcomes generated when these economic choices aren’t overridden. If this is your belief, can you identify the sources of information your “statesmen” would use to outperform the market? From where would they get the detailed knowledge they must have in order to perform so brilliantly? And why, if your “statesmen” possess the economic acumen, entrepreneurial genius, and access to knowledge that you presume them to possess, should they have the power to impose their economic visions on the rest of us? Wouldn’t such economic virtuosi be able, in competitive markets, to persuade investors and consumers voluntarily to invest and spend their money in ways that support these economic visions?
Those of us who support free trade have not only reams of evidence to support our case, but also a coherent theory of how free-trading economic actors access and use the information that’s necessary for economic success. You protectionists, in contrast, have much less evidence on your side, and you have absolutely no theory of how “statesmen” will get the information they must have if protectionism is to work as advertised.
I can’t accuse you of assuming this core problem away, because you give no evidence of being aware that the problem even exists.
Your tweet boils down to the claim that, were the amiable god-like creatures of your imagination available to govern us, they’d outperform free-trading human beings. Well, yes. No argument from me on that. But serious policy analyses and statements are never populated by any such deus ex machina.
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
