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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.
Published in General
@unsk, there is very little evidence those taking the pro-free-trade side in this debate “love China”. Rather, at issue is how much American businessmen should be put under control of the US government if these businessmen wish to take the risk of trading with companies in China.
Maybe I needed to wait a week. This article addresses some of my concerns about leaning on experts quite well:
https://amgreatness.com/2018/08/03/bill-kristol-hedgehog-king/
I am asking for the US government to help protect and defend American businesses.
Most parties win elections by promising what people want to hear, getting into office, making a look of following through, and eventually throwing their hands up and complaining that the opposition is preventing them from following through.
This actually leads to a considerably more libertarian government than the average socialist opinions of the general population. Not nearly as libertarian as I would like, but it’s something.
It doesn’t even matter if you are the best at doing these things. Outsourcing less productive tasks so you are free to create more value in your specialization is far more profitable (for everyone!) than doing everything yourself.
That is a very progressive position to take.
Midget: “Rather, at issue is how much American businessmen should be put under control of the US government if these businessmen wish to take the risk of trading with companies in China.”
First of all this is a national security issue; why are we enriching our enemies so they can threaten us and much of the free world? It is not about the right of our businesspeople to trade with whomever they want. Would you have said the same thing in the 1930’s about trading with the Nazi’s?
Secondly, those trading with China are large multinational corporations that often were founded in America but who have now a dubious allegiance to America. The reasons why they trade with China are very complex; many multinationals have made a killing that has not translated to benefits for the American people. Those in charge of multinationals often are only seeking very short term profits that will benefit themselves personally and could give a damn about the long term consequences. China is playing on the other hand a long game.
China is our enemy. We need to deal with that fact.
[Edit: Removing snarky reply. Not helpful.]
Trading and enriching ones enemies is the surest way to turn them into friends. When goods don’t cross borders, troops do.
Unsk, you seem to be agreeing with me that what is “at issue is how much American businessmen should be put under control of the US government if these businessmen wish to take the risk of trading with companies in China.” Because you are claiming that American businessmen do not have the right to trade with whomever they want, you are claiming they should be put under control of the US government in some respect if they wish to trade with companies in China. And perhaps if they wish to trade with any entity which may trade with another entity in a manner that could eventually result in information passing to China.
I am well aware a firm may be multinational, but it is the citizenship of a person working at the firm which determines which country could declare him seditious or treasonous, no? Hence my use of the term American businessmen.
For my part, I think America is built on giving its citizens strong benefit of the doubt, and on a presumption of innocence: things ought to be considered lawful unless they’re specifically declared unlawful — a free people shouldn’t have to play “mother may I” with its government. Declaring anything that’s not specifically allowed forbidden is un-American, even when the anything involves trade with non-Americans.
It’s cronyism. It lets companies that happened to be able to grow large enough to lock in their market share, preventing new, better American companies from coming into existence. This is bad for Americans, especially poor ones.
Here’s the thing. Us people who seem reflexively for free markets are also the ones who will most able to afford the increases in prices. I’m deeply concerned what will happen to the poor working class with every intervention, I’m less concerned what will happen to me. So I don’t understand why free marketers are being accused of being uncompassionate. How else should we phrase it?
From themselves? By taxing consumers?
I’m not against diplomatic action. All any of us have said is that protectionism is ineffective for those ends.
This is a very wordy way to invalidate opposition without addressing it.
Are you persuaded if I say “you are blinded by your devotion to Trump?” Because it is the same logic. Everyone thinks they are being objective. That’s why we discuss arguments, not motivation.
I am wondering if there’s even agreement on this thread about what “protectionism” means.
If you look up the definition of protectionism, it’ll say it’s an economic policy of restricting imports via various regulations, such as quotas and tariffs. (Note that by this characterization, a broad, low-level tariff whose purpose was to raise revenue while trying to avoid significant distortion of importation would not be “protectionist”.)
But it may be people have an intuitive sense that protectionism is simply protective, and therefore ought to encompass policies which protect American businesses from being defrauded or themselves defrauding the American public. In that sense, since one purpose of TPP was to protect IP, even TPP might be intuitively “protectionist” to some. And by that intuition, opposing protectionism would mean opposing any and all protections for either American businesses or the American people.
But those who criticize protectionism aren’t opposing all means of protection. Merely opposing the idea that artificially restricting imports is a generally good idea for the country.
Most people opposed to protectionism would not consider certain highly specific restrictions on imports (such as a fairly non-disruptive check to see that items aren’t an epidemic risk before permitting entry into the country) unreasonable. It’s when they sense what might on the surface seem reasonable or specific rationales getting stretched beyond the benefit of the doubt that anti-protectionists get leery.
So, I wisely bowed out of this thread a long time, but I’ve been observing.
So far, what I’ve learned is that if we trade with China, they will steal our technology, therefore, if you believe in trading with China, you must be a China lover (read as American hating). It hasn’t been said, but it seems obvious that if we trade with any other country who also trades with China, China will steal our technology. So, if must also be true that if you believe in trading with any country, you must be a China lover (read American hating).
There is only one plausible solution to the problem of China, autarky – autarky all the way. Don’t let China win, go full autarky. Make America great again, go full autarky.
We have drawn different conclusions. What I have learned is that we all agree on pretty much everything concerning free trade and protectionism. It has just taken us 466 comments to discover that we are all using our own personal and different definitions of certain words.
Hat tip to MFR’s comment #464 for my ‘light bulb’ moment.
One little more post on China, from Ace of Spades:
“A new report from the San Francisco Chronicle says a longtime former staffer for Sen. Dianne Feinstein (D-Calif.) was reportedly acting as a spy for the Chinese government.
When did Feinstein learn about the FBI investigation of her driver?
Five years ago, the FBI informed Feinstein that her personal driver was being investigated on charges of espionage.
“Dianne was mortified,” an anonymous source told the Chronicle.
The driver had been employed by Feinstein for 20 years. He also acted as a gofer in the senator’s office in San Francisco and as a liaison to the Asian-American community. In this role, he attended multiple Chinese Consulate functions on the senator’s behalf.”
Again: what does this have to do with trade?
Thanks, good sir!
But I think A-squared has a point — there’s a certain argumentation style common to politics, the politics-as-war style, and when
If one side is only arguing the downside of free trade, a logical question then becomes, where do they think that downside ends? Likewise, many kept wondering if those who were arguing the upside of free trade ever considered the downside worth disrupting trade over.
Moreover, if there’s not trust between the two sides arguing, there can be reluctance to concede anything, for fear those arguing the other side will take unfair advantage of the concession.
Much of the disagreement seems to boil down to, how skeptical are we of claims that restricting trade is justified? I tend to be skeptical. When trade has to be politically restricted, I want it to be for very good, specific reasons, and I want those reasons to be as immune as possible from mission creep and crony dealings. Others may believe that the risk of mission creep and crony dealings are far less bad than the risks of under-restricting trade.
Part of my skepticism comes from the sense that mission creep and crony dealings are just what government does, and government, in just doing things that way, threatens our freedoms. Others may believe multinational corporations or foreign states have much greater power to threaten Americans’ freedom than the US government does. Do we distrust the state and wish to hold it accountable, or do we trust the state to hold others accountable on our behalf? “A little of both” is often an honest answer, but even those who answer “a little of both” may tend to give the benefit of the doubt more to one side or to the other.
Solid that ma’am.
A both-and outlook doesn’t get as much credit as it deserves, lately.
I think Bill Kristol is mostly wrong about this. While there are certainly some people who are too unskilled or hard-headed to change their work prospects, the majority of our “real” unemployment (not just the official U3 number) stems from the fact that we simply pay people not to work through a wide variety of welfare programs. Besides, our country has some of the greatest opportunities in the World to improve oneself if someone wants to. It is hard to believe, but approximately 1/3 of all Americans get help from one of the “means tested” welfare programs available. Social Security benefits is not counted in this statistic.
I guess it is now progressive and protectionist to think that the Government of the United States of America should act, in any way, to prevent theft of IP from an American owned company. I strongly disagree. I am for defending the rights of Americans from the actions of foreign governments. I have been making that argument for pages.
Sorry, but I have been told in this thread to Read I, Pencil, and I have been show Milton Freedman. If others can appeal to authority and demand I disprove it, then so can I.
OMG – dude!
Of course it has nothing to do with trade, but @unsk has been trying to gin up hatred for China in different ways as a means to convince us not to trade wth them. While I agree with most of his criticisms of China, I don’t know if breaking off trade is going to makes things better. If we did, the Chinese people would certainly become more impoverished and probably easier to exploit by their dictatorial government. I don’t see that contributing to any human rights reforms, maybe the opposite.
I am reminded of FDR breaking off trade relations with Japan in the 1930’s so we would not enable them to further ravage their Asian neighbors. The direct result was Japan declaring war on us.
Bryan, I addressed this above in comment 464:
The “protectionism” anti-protectionists oppose is a specific thing, with a specialized meaning, not any and all protections for US companies and citizens. Anti-protectionists don’t oppose those safeguards against IP theft they believe will work. They’re just skeptical that artificially restricting imports counts as a sensible way to prevent IP theft, or that restriction of imports is generally good for any number of reasons.
Nor are anti-protectionists incapable of recognizing that national security concerns (including to the security of public health and environment) can exist. Yes, they are skeptical of many claims that restricting this or that import will actually improve national security, and they worry that “national security” is a justification subject to much mission creep and crony dealings. But that doesn’t mean they don’t want national security.
I’m not sure anybody has been making the argument that the U.S. government should not prevent theft of intellectual property. Perhaps in their zeal to endorse private sector freedoms, free-trade advocates have not underscored the value of IP protections, but I don’t recall anybody actually dismissing it.
But saying “you don’t understand because you’re stuck in a worldview blinded by theory” is more specific than just an appeal to authority (who I guess in this case would be Kahneman). It’s telling your interlocutor he’s defective, and that’s why he disagrees with you.
In this thread, some have underscored the value, and some haven’t.