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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
Are we talking about industrial espionage or when a private company willingly enters into an agreement that requires they share their IP? How far are we going to go to protect people from the choices they make?
I have been very clear what I have been talking about, around Drug company IP. I have mentioned it several times.
Can you point to an example of this actually happening?
I am for defending the rights of Americans from the actions of foreign governments. I have been making that argument for pages.
I am for using any means that work. That includes things like sanctions.
Well, now, I have been told how defective I am in this thread, so, fair is fair.
I recall several pages back you were asked why you picked pharmaceutical IP as an example of the badness of free trade, when the pharmaceutical industry is one of the most regulated, and indeed subject to considerable protectionism. As the FDA itself says,
What you quote, by the way, is not protectionism to protect the industry, it is protection of the consumer. Now we might all think the FDA is going overboard, but it is not about keeping drug prices high or protecting the industry. It is about (over)protecting Americans. Even if it were an explicit trade tarrif, none of that matters in the face of another government price fixing upon threat of IP theft.
Why is this point being avoided so strongly by everyone in this thread?
Please provide an example of another government price fixing upon threat of IP theft in the pharmaceutical industry.
Happily not one of those, anymore
These purposes cannot be neatly separated out, though. While some industries do explicitly lobby for protectionism to protect their workers, often, protectionism is couched in the language of protecting the consumer. (Over)protecting Americans is how we can expect a lot of protectionism to be implemented.
Is the intent to protect the industry more so than the consumer always explicitly deliberate? Probably not. But when an industry benefits from “national security” or “consumer safety” measures which do restrict the competition it faces — especially if the industry can use as an excuse that it’s otherwise bogged down by excessive regulatory burdens its competitors may not have to face — it becomes in the industry’s interest to keep the measures going, whether or not consumers actually benefit from the restriction more than they are harmed.
Canada, apparently? But the “stealing” Canada is doing doesn’t strike me as theft, more like a kind of regulatory arbitrage. Canada’s patent laws are different from ours, though still pretty secure, and Canada’s healthcare bureaucracy is, of course, Canada’s healthcare bureaucracy:
But then, this isn’t a problem that it sounds like our restricting imports would fix. I doubt “Let’s clamp down on trade with Canada because those Canucks are a buncha IP thieves” would get much traction.
Carving up “IP space” into “regions” of intellectual property is non-obvious, and basically honest, law-abiding nations can decide to do it a little differently. Now, maybe they make treaties with one another where they agree to do it more similarly, to cut down on regulatory arbitrage. But wherever rules differ, regulatory arbitrage is a possibility. And that’s without any jurisdiction involved actually having to have mens rea on the matter.
Nobody here believes China is as honest as Canada in these matters. It’s pretty easy to believe the Chinese government deliberately steals. But even where there is no guilty intent, these issues can arise. The question is, what fixes them, and is the fix worth the cost?
@bryangstephens you might be onto something here. I asked my wife about this. She works on lab testing pharmaceuticals for a number of drug companies. She thought China is probably the biggest infringer on drug patents, but she’s unaware that they make any demands on prices for imported drugs. They just go ahead and fabricate their own versions without asking. Most are assumed to be of inferior quality. She thought that possibly Canada(!) was making the kind of price demands in exchange for honoring patents as you have described, but she wasn’t sure,
In India, however, it is even worse. For the last several years, they have actually made a government policy of replicating patented drugs from other countries. India is actually ranked dead last by the Global Intellectual Property Center’s ranking of countries in terms of protecting patent rights.
Even more stunning may be right here in the United States. Apparently there are laws in place for the U.S. Government to ignore patent rights on pharmaceuticals and other intellectual property if it deems necessary to keep supplies flowing. I don’t know if this has ever been invoked, but it sure caught me by surprise.
For further reading on intellectual property rights in the pharmaceutical industry, read here.
That being said, I don’t have the solution for holding foreign governments to uphold patent laws, but I’m quite confident that putting tariffs on steel is not the answer.
Apparently you were talking with my wife too!
Okay there are price controls but where is the IP theft?
In the article I linked to, it says the US pharmaceutical companies who have lost patent protections in Canada before they anticipated losing them have complained their intellectual property was stolen.
Yeah, I read that and didn’t see the details of the cases involved so it’s hard to tell why they lost those protections. Its not outlandish to say that Canada engaged in that kind of extortion but I’m not going there without the details.
Showing you those things are not “appeal to authority.” It’s citation, which is pretty much the opposite, and it’s why all serious arguments contain a form of bibliography.
You didn’t appeal to authority, either. You attempted to eliminate argument by questioning motives. How many times on this thread have you been accused of “cult of personality?” Zero. People have been discussing your arguments on their own merits.
In fact, I did quite the opposite, several times. Disagreeing with the effectiveness of one’s preferred method does not equate to apathy regarding the stated goal. That fallacy has been on replay as “free-marketer” is attempted to be used as an epithet, for some reason.
note, literally nobody on my side of this argument has resorted to character or motivation attacks. I haven’t heard anyone referred to as “protectionist” in an attempt at dismissiveness. That speaks to the strength of the argument.
That is a very different argument from the thesis of your OP, fwiw.
”means that work,” though, is what we are debating. You seem to interpret “this will not work” as “I don’t care,” which misses the point entirely.
It’s not…
For what it’s worth I lean free trade with limited governmental involvement in ‘export control’ which believe it or not I was (and/ or still am. don’t know, don’t care, does not matter) under for my time working for Blackwater. Can’t really ‘talk’ much about that gig.
I would pay good money to hear about that gig, probably not as much as Blackwater though 😒
Yeah. The real world is messy. However, since everything I have said here has been assumed to support a tarriff, I am on great grounds to say this is an area which is not one. The FDA exists to protect Americans from bad drugs. Just because that mission might be distorted does not make it engaged in passing tarriffs.
Thanks for the info.
I agree that a tariff on steel is not the answer.
I don’t have a lot of links, what I have is talking to people in the industry. Those are hard to post links too.
Argument from authority (Latin: argumentum ad verecundiam), also called the appeal to authority, is a common form of argument which leads to a logical fallacy. The appeal to authority relies on an argument of the form:
Done. But could you also promise to bring me two cartons of cigarettes (1 regular & 1 menthol) every month or so for the duration in case ‘State’ decides to make an example of me and locks me up for a bit?
Yes, Bryan, I am well aware of the Definition.
nobody here has engaged in that fallacy, as your definition makes clear.
there is a huge difference between “Milton agrees with me, therefore I’m right” (which nobody has said) and “here, Milton does a great job articulating this point.”
And I have someone saying “I think Milton is wrong, and here is why.”
No difference.
Enormous difference. You have someone saying “Milton is wrong because of his blind devotion to theory.” That is not an argument, regardless of who says it. If I had a clip of Milton saying “Bryan is wrong, because of his blind devotion to Trump,” that would be a similarly bad argument. Neither are an appeal to authority, but there is a world of difference between the arguments being made. One is a fallacy, the other is not.
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.