This is an exceptionally good article by Peter Smith at Quadrant Online whose title provides little insight into what is to come: In Determined Pursuit of Unhappiness. It’s about the way in which our political class is attempting to demonstrate a virtue signalling globalist agenda by selling out the people who put them into office. This is near the start but is only a prelude, but an important prelude to what comes after.
There is a fetish with free trade among globalists. Only heretics object. The General Agreement on Tariffs and Trade took effect from the beginning of 1948. It was succeeded by the World Trade Organization from the beginning of 1995. From around 10 per cent of world GDP in 1948, international trade has since burgeoned to be now around 25 per cent. The free trade agenda has been driven primarily by the libertarian-cum-classical-liberal side of the political divide. Let me be heretical. There is no well-based rationale for free trade. Unless, that is, you think that maximising the availability of cheap stuff outweighs all other considerations.
Free trade brings significantly reduced industrial diversity within nations. It brings a loss of skills. It brings entrenched regional unemployment and despair. It brings long and vulnerable supply lines which threaten national security. International trade is like cabbage, broccoli and other leafy greens. Some is an essential ingredient of a balanced diet; yet more is very good for you. But they don’t make for a complete eating regime. Let me be clear, the issue is not one of trade versus protection. It is about the extent to which the interests of all of the citizens of a nation are brought into account by their political representatives when they are eliminating trade barriers. The wholeness, integrity and security of the nation-state should not be bartered away for a mess of pottage.
But that is only part of what he is trying to explain. This comes closer, found towards the end:
Globalisation is well on the way to bringing us to ruin. In principle, the remedy is simple. We, the people, need to elect politicians whose overriding goal is to create the conditions which preserve and nurture the life, the liberty and the happiness of the citizens of their nation-state; who will always promote their country’s claims over the claims of others; who, even though President Trump has said it, will always put their country and its citizens first. However, in practice, there is a sting in this tale (to corrupt an idiom). Perhaps, in this current age, most difficulty lies not with a paucity of potentially sound-thinking politicians or would-be politicians. Maybe it lies with “we, the people”.
Seriously, you should read it all.
Should Australia become a third world country? Or keep our own identity? We can trade but always to our advantage.
Out of pure self-interest, you’d reckon globalist politicians would get a clue about how to win elections and guarantee their long-term future.
But, no. They’re living in the past.
Like lemmings, they continue running towards the cliff to oblivion. (graph h/t IPA).
The people who support globalism are too dumb or dishonest to admit it only ever had a single aim: to destroy capitalism and the wealth of the West. It might as well have been designed by the Chinese Communist Party.
Only the citizenry understand what’s going on — and, apart from Trump and the Brexit Party in Europe, they’re utterly leaderless.
Get a clue, ScoMo.
Free trade is bad because …
… refugees?
… immigration?
… climate change policy?
I am absolutely astonished – gob smacked – that you thought that confused mish-mash is an article worth reading.
Here are some fine thoughts on free trade:
Admittedly from the first edition of Free Market Economics.
Other than a couple of top-tier human rights, yes increasing production outweighs most other considerations, especially the indulgence of the producers.
In defending that statement I could assume at step 1, as I do, that the purpose of the economy is not to provide people with jobs. The purpose of the economy is consumption of valued widgets by people who think it makes their lives better to do so. However that might leave me open to accusation that I’m smuggling my preferred conclusion into the definition of the question. Let me try a consequentialist argument instead.
The proof by contradiction that affordable consumption outweighs producer security is to look at what must happen if the relative priorities are reversed.
• Firstly you must fight against natural market forces to do this, as globalization is nothing more than having trade occur in a global market. That in itself should give any classical economist pause for thought.
• Secondly, by the efficiency that the producers have, the producers are greatly outnumbered by the consumers. If people vote with their wallets, the consumers would win.
Wow, nice way to avoid supporting your case, since it is ultimately and practically an issue of trade versus protection.
• Thirdly, as protectionism is the only way to slow down market forces, a small number of politicians and well-connected captains of industry will then decide which sectors, or which companies in particular sectors, will be awarded sinecures, while the rest continue to accept risks of world market demand. This is central planning, with all the attendant flaws.
• Fourthly, this stands in the way of the market forces that have helped millions of people escape poverty in producing goods in low wage countries that are paid for by consumers in richer countries. When the price of the foreign made alternatives are forced upwards, less people are going to buy it, and less voluntary transfers of wealth to poorer countries occurs.
• Fifthly, it also necessarily increases the prices of goods in the home country because if it were possible to provide the same quality at the same price from a local source people would already be doing it, therefore no import tariff can ever allow the local product to be sold at the same price as the foreign product previously had been (it is not a straight swap), meaning less people in the home country can afford to enjoy that class of product.
• Sixthly, the knock-on effect is people’s wages are now worth slightly less than they were before since it buys less stuff, contributing to a spurt of currency devaluation which may be brief until it equilibrates but is worth mentioning.
• Of course to avoid perceptions of bias, the politicians will try to stick tariffs on everything, leading to even greater currency devalution, meaning the only way to avoid perceptions of screwing some producer classes is to screw all consumer classes.
• (So many reasons, I’ve lost count.) As the nominal price of raw materials being imported by the non-targeted sectors will also go up, plus there is artificial labour market pressure to shift workers out of unprotected jobs into tariff-protected jobs, this screws all producer classes other than those protected, meaning favouritism is unavoidable.
• Am I to believe my car and an armoured personnel carrier are in the same category? This pro-statist suggestion that national security can be invoked to get anything you want is (yes!) a slippery slope to head down. As you haven’t respected the spending choices of the general public to date, you are unlikely to respect their choice to not buy enough of the localised product to keep that business afloat. So it may be that again “in the interests of national security” that whole sector will then be nationalised and, quite aside from your capitalist buddies being screwed out of their shares, the whole country will be on the road to a banana republic as everybody is required to pay for everything no matter how little they value it. Discretionary spending would shrink and yet this is not supposed to be the pursuit of unhappiness?
• We had “Australian made and Australian owned” campaigns in the 1980s and 90s. People have voted with their wallets on this issue for over 20 years. There is no need for a non-market mechanism of assigning value to local “industrial diversity”, as we already have the observable democratic end result: people would rather have affordable goods made anywhere than higher priced goods made by Barry down the street. The market has spoken.
• The other result is not a total loss of skill, but a transfer of skill into the foreign importer and a substitution of skills of new types in the home country as labour demands shift. And the skill never completely disappears because customers can always pay more for the local version if they really want to… and they don’t.
• Finally, if the protectionism is done by outright bans instead of tariffs, this still has most of the same deleterious effects on the home country yet the effect on the foreign producer is worse, and depending on quality differences it can prompt counterfeits, gray-market imports, home government corruption, or in the very worst historical cases an actual shooting war.
And for all of these costs and risks on everybody, by a Great Big Tax On Everything aka tariffs, who benefits? A small number of politicians who award power undoubtedly in exchange for certain post-parliamentary corporate fringe benefits, and a few local producers who are indulged in turning their favourite hobby into a job despite having been so relatively inefficient at it that they had never succeeded in the market before. ie- Because Capitalists.
Obviously capital is an important factor of production, but we already have ways and means of deciding whose capital investments get rewarded versus who has to take a spoonful of concrete and a haircut, and to a large degree that has been the democracy of the market, not the oligarchy of the “Trade Exposed Industries”.
And the most ridiculous thing is, you know all of this already. What has prompted you to set aside the wisdom of the ancients?
Free movement of people is not equivalent to free trade in goods.
If I buy a Japanese car, that means someone in Japan voluntarily sold it to me and also it means I voluntarily decided to pay the asking price. Voluntary at both ends … both sides are happy.
In the case of refugee resettlement, it means the United Nations decided who is a refugee, then told my government to take them and my government decided where to settle them … I never got asked and my opinion on the topic is unwelcome. Not a voluntary agreement by any means.
https://mises.org/library/case-free-trade-and-restricted-immigration-0
That said, people using phrases like “the interests of all of the citizens of a nation are brought into account” are always full of it because inevitably all possible systems involve some winners and some losers, and there is no such thing as the national interest (what did you do, ask the entire nation??)
If your job is on the line, then for you losing your job is a bad thing. For other people it might be a good thing to get access to cheap goods. This never was about national interest, it’s about the interests of some people vs other people.
You mean the WTO is a natural market force? I kind of doubt that.
How about the way countries like Australia are under pressure to adopt global Intellectual Property treaties so we can “harmonize” our law in order to keep the larger nations happy. Is that a natural part of the market? Seems a lot like other people leaning on us and telling us what to do.
Do you think that a large number of people would naturally just happen to decide they should need to follow a bunch of bonehead European environmental laws like removing all lead from circuit boards? Perfectly normal thing to do … or not.
What about all the central banks and their allegiance to the Bank of International Settlements. Seems perfectly natural that no one would be allowed to open up alternative channels of international payment. Do we get to call that a “natural monopoly” ?
Yemen learned that lesson the hard way, when many of their farms converted from being local food supply over to cash crops on the international market. That worked fine while they had access to shipping in the Gulf or Aden and operational facilities in the Port of Aden. A quick bombing campaign put paid to that, and threw the entire country into famine for several years.
Australia of course is fully self-sufficient for food, but not self-sufficient for fuel and since our entire agricultural sector is mechanized, we also would be facing starvation, sitting and looking at wheat in the field but having no way to collect it and no workable transport. Something to think about on those economic supply and demand diagrams.
We hope their won’t be a war. Lots of people have hoped for that … over the centuries. The people of Yemen are probably still hopeful from time to time.
Surely the issue is fair trade.
Unadulterated free trade is a hypothetical construct that will never exist in the real world.
It is a utopian fantasy akin to world peace that will only ever exist in the pages of academia.
Prisoner’s dilemma. Stag hunt?
Where are our political (and economic) realists?
Well said Tel. Sinc is probably trolling, as an educated adult he knows that free trade has absolutely nothing to do with refugees, immigration or climate change policy (globalism).
Ok Professor Kates, please explain how welfare is maximised by preventing me entering into a voluntary, mutually beneficial arrangement withe another person whereby I exchange something of value to him (say, cash) for something of value to me (say, manufactured goods). That is exactly what anyone advocating trade barriers is advocating.
I know for reasons inexplicable you are in love with President Trump, but you don’t have to defend every moronic policy he implements.
Tell me which consumer is not also producing something?
It sounds like you have found a way around Say’s Law, so I’m interested to know how that works.
Tel, sorry, but that reads like a bunch of whataboutisms and strawmen about the WTO rather than addressing my actually stated position.
Assuming you are not advocating for Tesla-brand Harvesters here, where exactly do you propose Australia get its oil from instead? Plenty of gas and coal all over the shop, but not so much in the way of oil IIRC.
Given the value of oil as feedstock for transport, either we have oil that strategically isn’t being used, or we don’t have enough oil. In the latter case, neither market forces nor nationalist fiat can conjure oil out of dry holes.
Coal-to-liquid is rather expensive but, just as in WW2 Germany, could be done in a pinch when nothing else is handy. We would not expect the market to create such a facility when it is not cost effective.
Have our central planners in the DoD been so asleep at the wheel that in the event of war they have no workable plans, or could it be that you just aren’t privy to them? One would hope the goal was to win that war and re-establish supply lines. To prepare for Fortress Australia – with its undefendable coastline – is to assume against all likelihood of protracted war rather than a relatively swift victory by one side or the other.
So to summarise your position, to justify nationalist protectionism on petrol you are demanding a resource that is simply not available locally to nonetheless be produced locally somehow by more expensive methods in preparation for the most unlikely outcome of a hypothetical event that is itself both unlikely to be triggered in Australia and being studiously avoided by all potential participants precisely because in a globally interconnected world everyone has some skin in the game and nobody can afford to start a major war here.
If the only circumstance that justifies economic protectionism is war, then my case is made for me, as war is the continuation of politics not the market.
Is there a coherent argument for economic protectionism in peacetime? Because I haven’t heard one.
Firstly, WTF is “whataboutism”? Is that an English word? I don’t think so. Does it even have a meaning?
But getting to the point, your claim was that trade is automatically a natural thing. Now you are rejecting counter examples because you don’t like them contradicting your claim. You use weird recently-invented words as if that was an argument.
Many rules are imposed on us from outside because we are told it’s “good for trade”. This includes international treaties all over the place. These are not the products of democracy, because we never got to vote on any of them, nor are they any natural outcome of Australian culture. Here’s a specific example (not the only one).
https://dfat.gov.au/about-us/publications/trade-investment/australia-united-states-free-trade-agreement-guide-to-the-agreement/Pages/17-intellectual-property-rights.aspx
So Australians were signed up to a whole bunch of changes to property rights, because the USA said it was a good idea. Did the Australian people request this? Explain how it is “natural” for these rules to exist. Why not some other rules? Why can’t Australians come up with our own way to do things?
That’s ridiculous, any peacetime could become a war. Every war started between countries that were previously peaceful. The argument for planning ahead during good times is that you never know when the bad times are coming. It’s an argument that never goes away, unless you can demonstrate your mystic crystal ball powers.
As for war not being “the market” that’s contradicted by the history of every empire that has ever existed on the planet so far. Everywhere the British went they sent traders and also sent military ships and marines to back up their trade routes. Who is the biggest trade empire today? The USA. Who has the biggest and most powerful Navy by far? Oh wait… same people.
Who build roads all over Europe? The Roman Empire. What did the roads get used for? Moving legions and goods in equal measure. Economics does not exist outside of history, and it never will do.
There’s a deeper problem here. Suppose one cautious and enterprising Australian prepper did happen to store a big shed of food and fuel “just in case” you know. Then the worst happened and Australia did get cut off from the world. Would this far sighted individual become immediately wealthy? Of course not … the government would declare war powers and take the lot.
Talking about good articles this one about the Green New Deal was quite an eye opener for me. It covers every aspect of what’s really intended, the difference being that it is now out in the open, rather than under the radar.
Also, I don’t have the link, but I saw a short clip on Twitter of Trump’s motorcade in Japan going through an intersection with people shouting loudly and continuously – We Love Trump!
We Love Trump
Bullshit. That is exactly what it is. And even if the motives of the instigator were pure, the rent seekers would arise and give a test cheer, and lobby their corporatist ways in a millisecond.
Free trade is bad because …
There’s no such thing as free trade.
There’s only free exploitation of people under an oppressive government
and free exploitation of people who have traded their jobs to the other because of regulation from an oppressive government making them non competitive.
Free trade, what a load of BS!
Bingo!
We have a winner!
Come on down!
https://www.garynorth.com/public/9621.cfm
https://www.garynorth.com/public/9621.cfm
Globalisation is a good thing, but it is being destroyed by free trade and open borders dogma. As countries like Japan, South Korea and Taiwan have shown, the proper way to engage in the global economy is with tight border controls and strategic tariffs. Open borders actually lowers productivity as we have seen with the EU’s falling GDP per capita growth over the past 25 years.
So if we are to save globalisation, we must decouple the concept from free trade and immigration, and follow the highly successful policies of Japan.
You’re funny Fisky.
why not?
Murray Rothbard:
If it is sound to erect a barrier along our national boundary lines, against those who see greater opportunities here than in their native land, why should we not erect similar barriers between states and localities within our nation? Why should a low-paid worker … be allowed to migrate from a failing buggy shop in Massachusetts to the expanding automobile shops in Detroit. … He would compete with native Detroiters for food and clothing and housing. He might be willing to work for less than the prevailing wage in Detroit, “upsetting the labor market” there. … Anyhow, he was a native of Massachusetts, and therefore that state should bear the full “responsibility for his welfare.”
Tariffs are the greatest wealth creating mechanism ever known to mankind, second only to immigration restriction. As we saw during the 19th Century, high tariffs turned the US into an industrial powerhouse overnight. Free trade is for soy-drinking low-growth homos.
“Tariffs are the greatest wealth creating mechanism ever known to mankind,”
Tariffs is a tax — you are saying to get rich to tax ourselves — hurrays
The historical reality is that illegal immigrants are now entitled to government benefits, which earlier waves of immigrants were not. Furthermore, the demand for low-skilled labour is collapsing thanks to the automation revolution. So immigration is just another big government welfare program, supported by “libertarians”!
You can’t teach these people Fisky. Their sacred text books are infallible… except in the real world – a place no libertarian has ever ventured.
When I was a lot younger I borrowed a first year economics text book from a friend and read it. Most of what I read is no longer clear in my mind, but I can still quote one sentence nearly word perfect. TARIFFS ARE A TAX ON EXPORTERS. Since a tariff is a tax, we should ask about where the incidence falls. Also experience tells us that a protected industry will need more and more protection as time goes on. Then there is the effect on the currency exchange rate, which may negate the hoped for effect. Tariffs rely on the few gaining much from the contributions of the many.
Fisk
There was virtually no income tax when the US had high tariffs. Stop!
Government revenue should come from tariffs not personal taxation.
It’s a great system. Tax foreigners not domestics.
I don’t have a huge problem ,artie. I hazard to guess though that tariffs would have to be 3 billion % to satisfy the ravenous welfare state. There wouldn’t be enough money raised by this caper.
US imports total $2.5 trillion annually. Imports would collapse and there would be no money.
I know you hate libertarians these days, artie. But your system would would only work in a libertarian small government state, where little money is required to run the money guzzler.
Bu11sh1t:
https://en.wikipedia.org/wiki/Chinese_Exclusion_Act
The Cayman Islands have this.
Richard Bender (7.20pm). here’s my business and trade model…..
I grow vegetables for sale at the Saturday growers market. To supplement this I also go out every Friday night and steal stuff from parked cars, so that my Saturday market stall has a wide variety of items for sale; the vegies, and all sorts of other stuff…. and all so cheap! My customers voluntarily part with their cash, and I voluntarily give them vegies and other stuff in return. As you so eloquently note, this is free trade at it’s finest.
And so what if some of the customers reckon they recognize the “other stuff” on sale to have been stolen from their cars the night before, All’s really really OK by you, so how dare the local copper….a certain Constable Trump…..get involved, eh?
So long as Customer A is happy to buy Customer B’s laptop which disappeared from the car-boot the night before….and Customer B is happy to buy Customer A’s down jacket which went from his station wagon., it’s fair and free trade., eh? and oh-so-cheap!
Well….is this not fair and free; your childishly inane, anti-Trump, preferred position?
BTW; Shouldn’t your screen-name be Richard Bendover…in mandarin?
Nixon messed up many things, one was pushing gender equality the other was expecting that free market capitalism would convince chicoms to abandon communism.
shifting the supply chain away form china is now a more crucial than ever.
nothing wrong with let say 5% tax on all imports and exports — same law for all of us — but no one want same law for all of us .
tariffs are tax that is paid by Australian people not foreigners
The useless deranged homosexuality obsessed quislings have only ever had one workable plan (if it could be dignified with such a term) – screeching loudly at the US to step in and save our sorry arses.
As for discussing the merits or otherwise of free trade, one of the key concepts I studied when obtaining my economics degree was that of comparative advantage and nations (or entities) trading on that basis. Australia has many comparative trading advantages, most of which have been hobbled by the idiocy described below.
It is regrettable that we no longer have any manufacturing capacity in this country, but that is entirely due to staggeringly stupid and destructive policies shoved down our throats over a century by our beloved politicians. Think exorbitant minimum wages, long term subsidisation of unviable industries, jacking up power prices to be the highest in the western world, myriad taxes on production, burdensome regulation, unnecessary credentialism, etc.
That said, we know what happens to people, especially men, when they don’t have work or are shut out of the labour market for reasons such as those identified above.
It is a mighty dilemma.
Nob
Yes Nob, one of the bigoted and racist laws that no free lowing American is proud of today and which enemies of western civilisation like to use to smear western believe in freedom and rightness
Max,
one of the bigoted and racist laws that no free lowing American is proud of today
That maybe so, but Nob’s criticism of your information source holds true.
America get rich and mighty because of freedom.
freedom means responsibility, if something is no good it is not fault of Chinese or muslim or any one else it is us.
no income taxes, no standing armies no standing police, no regulations or license needed to start job/business, no minimum wage laws, no welfare, no social security, no medicare
basically from 1620 – 1913 taxes/tariffs where less than 5%
When it comes to the immigrants of yesteryear – especially Irish immigrants to America’s shores
Wow. Never expected to see such a blatant anti-free trade post here at Catallaxy.
Of course, I should have the freedom to trade an item or service with anyone else, anywhere else. Trading increases my utility and the utility of the person on the other end of the trade. Obviously, there can be some logical restrictions (paying currency in return for violence, buying/selling nuclear weapons etc).
Freer trade and globalisation is leading to consistent economic growth, decreased misery and rising living standards for literally billions of people. The OP is arguing a section of the population is suffering because of it, but its an insanity to make the entire population suffer due to protectionism for the benefit of a subset of the populace. Indeed, it isn’t an either/or, you can have free trade and then offer other solutions (subsidies for work, education vouchers etc) for those negatively impacted.
I have some sympathy for the argument that globalisation of rules and laws may be bad. I.e. that diversity drives competition, or big companies will lobby for rules that crush small businesses and so forth. However, globalisation isn’t inherently good or bad – it really depends on the commonsense and intelligence of the people setting them.
LOL, if you say so.