The Challenge of Free Trade: How Does One Side Win When Everyone Cheats?

 

I used to be a believer in Free Trade. No matter what, I thought the trade policy of America should be that there are no limits whatsoever to trade. If the other side had all sorts of restrictions, it did not matter, because it was always better for Americans on the whole to have total free trade. Why did I believe this? Because learned people said it was so, and that was good enough for me.

However, as I have aged, I have grown more an more uncomfortable with the idea that one side trading free and the other side putting up restrictions is always best for the most Americans. It is counterintuitive, to say the least. For instance, how can it be better for me as an American, that American farmers cannot sell their goods in the EU so that EU farmers are protected? How does that help Americans as a whole, exactly, when American farmers have to compete on an uneven playing field? Less competitive EU farmers get the benefits of higher prices, while American farmers have to run even leaner. How does that help the average American?

From a security standpoint, the US armed forces are buying electronics from one of our two rivals. I cannot imagine that the Chinese government is using this to spy on us somehow, but setting that aside, if we went to war with China, where will get the parts? It makes no sense to outsource a strategic industry to another nation. At least to me. I am sure it makes 100 percent sense to the Free Traders. All Free Trade, no matter what, all the time. Nothing is zero-sum, everything is win-win, even when the other partner is a geopolitical rival. Germany should not worry if it is dependent on Russia for its power, because that is the best way to get power, and if the whole Germany power industry goes down, well, that is just free trade to Russia. No worries.

So, I no longer believe in Free Trade at all times. If you are a free trader, I’d love to have my mind changed.

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  1. Steven Seward Member
    Steven Seward
    @StevenSeward

    Midget Faded Rattlesnake (View Comment):

    The writer who says Milton Friedman is wrong is appealing to motive, though, citing Kahneman to say that because Friedman was a theorist, and theorists may be over-motivated by their theories, missing stuff that doesn’t fit into them, we can therefore discount what Friedman has to say.

    The writer appealing to Kahneman is also just plain wrong to suggest that people with theories less well-developed than Friedman’s — for example, the informal theories everyone develops implicitly just by living — aren’t similarly “theory blind”. This is a vulnerability everyone has. The guys writing at AmGreatness have it, you have it, I have it… We all have it no matter how pragmatic we believe we are. As the latest neuroscience research suggests, this is just how the Bayesian brain works — tending to ignore data that doesn’t fit priors as “noise”. Well, sometimes that “noise” is not noise.

    Other times, though, the noise really is noise, and being unable to adequately discount noise in favor of established theories leads to developmental problems like autism and schizophrenia. What’s interesting is that adequate discounting of noise does seem to create some susceptibility to illusions — optical illusions, for example.

    I like your optical illusion.

    • #511
  2. Bryan G. Stephens Thatcher
    Bryan G. Stephens
    @BryanGStephens

    I have demonstrated areas where free trade does not appear called for, and at best, the arguments have been, 
    “well, that’s not trade”. I guess the bottom line is, I am for protecting the interests of America, using any tools at our disposal, even if sometimes that means there is some corruption, or sometimes, the outcome is not great for any given person today, but sets us on a path for it to be better in the future. What I see in defense of 100% all the time free trade is a shrug of the shoulders and faith that while we cannot measure it, trust us, it is better over all. 

    And I am the one it is implied and not being rational. Heh.

    • #512
  3. A-Squared Inactive
    A-Squared
    @ASquared

    Bryan G. Stephens (View Comment):

    I have demonstrated areas where free trade does not appear called for, and at best, the arguments have been,
    “well, that’s not trade”. I guess the bottom line is, I am for protecting the interests of America, using any tools at our disposal, even if sometimes that means there is some corruption, or sometimes, the outcome is not great for any given person today, but sets us on a path for it to be better in the future. What I see in defense of 100% all the time free trade is a shrug of the shoulders and faith that while we cannot measure it, trust us, it is better over all.

    And I am the one it is implied and not being rational. Heh.

    The problem is that those who support free trade believe it is the best path to a better future.  

    I think we all agree on the end goal, we just disagree on the best way to get there.

    That is true for Democrats and Republicans, free traders and central planners, Red Sox fans and Yankee fans.  

    • #513
  4. Steven Seward Member
    Steven Seward
    @StevenSeward

    I don’t know  if this thread will endure much longer, but I want to thank Bryan and everybody who participated on both sides of the debate (if you want to call it that), as I have learned a great deal.  I’ve never followed a thread that went more than a couple hundred comments, but this one is a doozy.  I’m a little irritated that I didn’t get to be commenter #500!

     

    And Squared, I’m not so sure about Yankee fans(!?)

    • #514
  5. Jamie Lockett Inactive
    Jamie Lockett
    @JamieLockett

    Bryan G. Stephens (View Comment):

    I have demonstrated areas where free trade does not appear called for, and at best, the arguments have been,
    “well, that’s not trade”. I guess the bottom line is, I am for protecting the interests of America, using any tools at our disposal, even if sometimes that means there is some corruption, or sometimes, the outcome is not great for any given person today, but sets us on a path for it to be better in the future. What I see in defense of 100% all the time free trade is a shrug of the shoulders and faith that while we cannot measure it, trust us, it is better over all.

    And I am the one it is implied and not being rational. Heh.

    Can you outline a specific policy position that falls under the high-level rubric? Also, what are the limiting principles of this philosophy?

    • #515
  6. A-Squared Inactive
    A-Squared
    @ASquared

    Steven Seward (View Comment):
    And Squared, I’m not so sure about Yankee fans(!?)

    Well, they want a better future, they just disagree with Red Sox fans on what a better future looks like. 

    • #516
  7. A-Squared Inactive
    A-Squared
    @ASquared

    A-Squared (View Comment):

    #OMyGod (View Comment):
    That being said, there is still some adamant opposition to Trump using the tariffs in this thread. If we’re all for the definition of free trade that you used, i.e. “If you are for temporary tariffs with the hope of eliminating tariff and non-tariff barriers to free trade, then you are for free trade…”, what do you make of current events regarding trade?

    I would guess most of those people don’t think Trump believes in free trade and wants the tariffs to be permanent. Trump has a long history of being an anti-free-trade mercantilist.

    A week ago, that was my firmly held position. I know Trump has tweeted a couple of times that he offered zero tariffs to Europe, but as Trump supporters always tell me, we should ignore his tweets.

    His announcement last week about negotiating toward zero tariffs with Europe on non-auto industrial products was, I thought, the first meaningful indication that he actually meant it and I celebrated it in another thread.

    This is just a tweet, but it seems to imply Trump believes the high tariffs will be permanent and will raise trillions in revenue.

    At least it’s a tax on poor people that won’t cause him to lose votes from the people most hurt by it.  In that sense, it is politics genius.

     

    • #517
  8. Steven Seward Member
    Steven Seward
    @StevenSeward

    A-Squared (View Comment):

    A-Squared (View Comment):

    #OMyGod (View Comment):
    That being said, there is still some adamant opposition to Trump using the tariffs in this thread. If we’re all for the definition of free trade that you used, i.e. “If you are for temporary tariffs with the hope of eliminating tariff and non-tariff barriers to free trade, then you are for free trade…”, what do you make of current events regarding trade?

    I would guess most of those people don’t think Trump believes in free trade and wants the tariffs to be permanent. Trump has a long history of being an anti-free-trade mercantilist.

    A week ago, that was my firmly held position. I know Trump has tweeted a couple of times that he offered zero tariffs to Europe, but as Trump supporters always tell me, we should ignore his tweets.

    His announcement last week about negotiating toward zero tariffs with Europe on non-auto industrial products was, I thought, the first meaningful indication that he actually meant it and I celebrated it in another thread.

    This is just a tweet, but it seems to imply Trump believes the high tariffs will be permanent and will raise trillions in revenue.

    At least it’s a tax on poor people that won’t cause him to lose votes from the people most hurt by it. In that sense, it is politics genius.

     

    So true!

    • #518
  9. Midget Faded Rattlesnake Contributor
    Midget Faded Rattlesnake
    @Midge

    Steven Seward (View Comment):

    A-Squared (View Comment):

    This is just a tweet, but it seems to imply Trump believes the high tariffs will be permanent and will raise trillions in revenue.

    At least it’s a tax on poor people that won’t cause him to lose votes from the people most hurt by it. In that sense, it is politics genius.

    So true!

    Double genius if he’s bluffing about the whole thing, which I concede he might be. I’m not super-optimistic he is bluffing, but bluffing also is supposed to be part of his dealmaking toolkit, and a bluff has to be convincing in order to work.

    Perhaps he’s mastered the quantum art of hovering in an undetermined state that’s simultaneously bluffing and not-bluffing.

    • #519
  10. A-Squared Inactive
    A-Squared
    @ASquared

    Midget Faded Rattlesnake (View Comment):
    Double genius if he’s bluffing about the whole thing, which I concede he might be.

    One of his inherently contradictory positions on trade must be a bluff. We just don’t know which one is the bluff and which one is the real position. 

    Unless you mean both positions are bluffs, which I suppose is a possibility.

    • #520
  11. Midget Faded Rattlesnake Contributor
    Midget Faded Rattlesnake
    @Midge

    A-Squared (View Comment):

    Unless you mean both positions are bluffs, which I suppose is a possibility.

    Yes, I consider both positions being bluffs a possibility. 

    • #521
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