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Sunday, July 15, 2012

Mailvox: the best defense

In which the self-appointed champion of free trade doctrine, Unger, demonstrates that he literally does not know what he is defending:
Free trade does not require the free movement of labor, dumbass. If I buy a hamburger, I don't have to move in with the cook, or vice versa. Maybe it works differently on Planet Stupid, where the Superintelligent natives can't so much as buy a stick of gum without inviting comparisons to U-haul-driving lesbians; here on Earth, it thankfully ain't so.
Free trade most certainly does require the free movement of labor. This is self-evident because it does so by its very definition. An immigration limitation is, quite obviously, a restraint on trade every bit as restrictive as a tariff or a control on capital. Unger here demonstrates that he knows absolutely nothing about the doctrine he is so dogmatically and so ineptly defending. I don't mind being called childish names by such an interlocutor, indeed, I would be more concerned if anyone so intellectually hapless claimed to follow my reasoning, let alone agree with it.

Contra his illogical and incorrect insistence that free trade does not require open immigration, I cite Ludwig von Mises in Liberalism: "Under a system of completely free trade, capital and labor would be employed wherever conditions are most favorable for production.... Capital and labor tend to move from areas where conditions are less favorable for production to those in which they are more favorable. But the migration of capital and labor presupposes not only complete freedom of trade, but also the complete absence of obstacles to their movement from one country to another."

Once more, we see that the defenders of free trade aren't merely anti-American, they are either ignorant of their own doctrine or astonishingly intellectually dishonest. And it is beyond irony to see a free trader present an appeal to how things work on Earth in the real world.

Labels: ,

104 Comments:

Anonymous Noah B. July 15, 2012 4:13 AM  

A bit unfair, Vox. I'm no free trader, but I've been having this debate for about 20 years now, since NAFTA began to gather steam. Perhaps it would be better to say that they are unaware of the consequences of the doctrine they support, although that is perhaps only a subtle difference from being ignorant of their own doctrine. They do make some good ideological points, but they consistently fail to demonstrate the success of their ideas in the practical realm.

The interesting point -- which was entirely new to me -- was PB's argument posed a couple of days ago which suggested that specific individual rights could conflict with one another.

To me, this was a new concept. The logic seemed entirely sound -- yet, in some sort of Hilbert moment, it also seemed clear that something critical was missing. I had only thought of individual rights as conflicting with the rights of others, not with one's own rights. Thus, as the argument based on property rights would suggest, an unfettered individual right to property ownership cannot harmoniously coexist with an unfettered individual right to free association (free trade).

Blogger Vox July 15, 2012 4:37 AM  

Perhaps it would be better to say that they are unaware of the consequences of the doctrine they support, although that is perhaps only a subtle difference from being ignorant of their own doctrine.

I don't see how that's possible. The free movement of labor is intrinsic to the doctrine. It's not a consequence. In fact, the full benefit of the positive consequences of the doctrine obviously cannot be realized if labor is prevented - by guns and badges! - from going to the locations where the capital is being most effectively utilized.

Any so-called "free trader" who supports immigration restrictions is no more a legitimate free trader than one who supports tariffs or capital controls.

Anonymous Castaigne July 15, 2012 4:45 AM  

Unger is incorrect and Von Mises, as always, is totally correct. But free trade isn't anti-American - it's perfectly American. It's what the REAL Founding Father of America, Thomas Jefferson, was for, free trade without intervention by government in any form whatsoever. Jefferson envisioned a united States where all would be Free Men On The Land, trading with whom they would when they would how they would. It was only with the betrayal of the statists Madison and Hamilton and their so-called communistic "Constitution" (which Marx was such a fan of) that we lost this idyllic vision. It is instead the idea of tariffs being administered by Commissars of the STATE that is far more unAmerican. This is why all such controls and regulations should be completely eliminated in order to more perfectly implement the vision of the True Founding Father.

Anonymous map July 15, 2012 5:01 AM  

Look, the focus needs to be on how exactly free trade was promoted in this country and what was promised to people if free trade was implemented.

Basically, free trade was promoted by politicians as a way of moving Americans up the food chain in value-producing goods and services. What would be "outsourced", so we were told, would be all of the "low-value" scut-work, while the "high-end" production would remain here and be done by Americans transitioning to this higher-end work.

In other words, politicians and economists were selling the general public on the magic of Ricardian Equivalence: even if a nation is the best at making everything, it would still make sense to trade since that nation can focus on making on the highest-value stuff.

Has Ricardian Equivalence panned out for the average American? NO! Ricardian Equivalence is a failure and does not operate in the real world because nations have absolute advantages and not merely comparative advantages.

Ricardian equivalence should've been abandoned as a theory informing free trade policy. Instead, Americans are berated for being lazy, or for picking the wrong college majors, or for being "entitled." In reality, David Ricardo was wrong because the conditions of comparative advantage no longer operate. Absolute advantages in winner-take-all markets are what matter.

Anonymous Roundtine July 15, 2012 5:36 AM  

This here is the killer: But the migration of capital and labor presupposes not only complete freedom of trade, but also the complete absence of obstacles to their movement from one country to another.

It assumes a world without government or a one world government, which is where the libertarians cross over with the communists and international socialists. The world is moving in this direction whether you like it or not, the leaders of almost all the nations are trannies (transnationalists). Listen to the people pushing for the EU government, the elite in the US think the same way as them, as do the leaders in most countries. You see pushback from Russia and China, but their main beef is that they don't have enough influence on the emerging global system, not that they have a fundamental problem with it. The Arabs are a natural opponent, but only because they have their own vision of global government.

If you run into people from the global elite, you'd have a hard time pinpointing their country of origin based on their political thinking. They spend more time with each other than with their countrymen. They are not even part of a nation, they've created a ruling phyle.

Anonymous Clay July 15, 2012 5:50 AM  

Give it up, VD. He wants your cute booty.

Anonymous TheExpat July 15, 2012 6:52 AM  

He wants your cute booty. Give it up, VD.

Anonymous Mr Green Man July 15, 2012 7:02 AM  

If not completely contradictory, the call for a return to grounding in facts is a unique strategy for someone who, about the same time as saying he hates most Americans in favor of "dot-not-feather Indians" (who we later learned are all named Patel) who make up his real community of choice:

Unger: History proves nothing, because no historical data can ever tell you what would otherwise have happened. History can tell us that Americans generally did okay with tariffs; history can say nothing to the question of whether they generally would have been better off without them. Only economic theory - 'pie in the sky hypotheticals' - can answer such a question.

When you confronted free trade theory with facts from the last many years, Unger demanded hypotheticals and unfettered logic. When you provide pure logic, Unger demands to snap on the shackles of recent world history. Unger spins like a glittering ball of confusion.

What do free trade doctrinaires think the Mexican immigrant wave is a part of if not the increased liberalization between America and Mexico (e.g., NAFTA)? It is only in a post-NAFTA world that the Mexican president could call our biggest city an outpost of his nation.

Anonymous But July 15, 2012 7:03 AM  

The Heckscher–Ohlin model, used to "prove" that free trade is advantageous, explicitly assumes that labor and capital are immobile between countries. Possibly this is what he means by "Free trade does not require the free movement of labor".

Sure, those assumptions don't hold in real life, but neither that nor the fact that Ricardo's assumptions don't hold in real life prevents free traders from insisting we'll only impoverish ourselves if we don't permit free trade.

Anonymous Mr Green Man July 15, 2012 7:16 AM  

Castaigne:

It's what the REAL Founding Father of America, Thomas Jefferson, was for, free trade without intervention by government in any form whatsoever.


We should be careful of making a saint out of just another political sinner. Now, Mr. Jefferson was good, but he often contravened his principles. That he repented later does not change that, in the crucible, he did not hold up those principles.

As it comes to the Constitution, if Jefferson rejected it, one has trouble calling him the real father of the nation if he did not join the Anti-Federalist, state to state. This "true founding father" didn't do as much for the cause of that vision of Judges-era government than Patrick Henry, Samuel Adams, or George Mason, who fought the fight and lost. Perhaps if Jefferson had weighed in, the Constitution would have been reconsidered to not included phrases like "supreme law of the land".

Jefferson by his actions and words understood the difference between internal free trade and trade between nations, and he most certainly was not for unregulated trade between nations:

In his second inaugural address, Jefferson noted with triumph and satisfaction that federal taxes were "being collected on our seaboards and frontiers only, and incorporated with the transactions of our mercantile citizens."

First, Jefferson raised taxes. In early 1804, Gallatin and Jefferson proposed increasing the tariff duties by 2.5 percent and by adding an additional duty of 10 percent on all goods imported via foreign vessels.

http://mises.org/daily/4473/

Anonymous Mr Green Man July 15, 2012 7:22 AM  

One final quote from Jefferson -- same source -- at least that "free trader" did not despise his fellow Americans, and seemed to know who they were. On arguing for the Louisiana purchase, this sure sounds like a man who realizes that trading "within the tribe" is better:

"[I]s it not better that the opposite bank of the Mississippi should be settled by our own brethren and children, than by strangers of another family? With which shall we be most likely to live in harmony and friendly intercourse?

Anonymous bob k. mando July 15, 2012 7:42 AM  

gosh. Vox Popoli is Planet Stupid?

wow. that's convincing. i've never seen such an obvious fact stated so lucidly before. PZ should take notes.

Anonymous Salt July 15, 2012 8:23 AM  

U-haul-driving lesbians? Tell us more. Inquiring minds and all.

bwahahahahaha

Blogger Nate July 15, 2012 8:49 AM  

And all of this stems from your refusal to acknowledge that many free trade defenders are not defending Utopian Ricardian Free Trade.

Blogger W.LindsayWheeler July 15, 2012 9:01 AM  

I found this quote over at iSteve by a poster called "Thursday":

"Edmund Burke was complaining about the same sort of thing over 200 years ago:

The age of chivalry is gone. -- That of sophisters, economists, and calculators, has succeeded; and the glory of Europe is extinguished forever. Never, never more, shall we behold a generous loyalty to rank and sex, that proud submission, that dignified obedience, that subordination of the heart, which kept alive, even in servitude itself, the spirit of an exalted freedom. The unbought grace of life, achieved defensive nations, the nurse of the manly sentiment and heroic enterprise is gone! It is gone, that sensibility of principle, that chastity of honor, which felt a stain like a wound, which inspired courage while it mitigated ferocity, which ennobled whatever it touched, and under which vice itself lost half its evil, by losing all its grossness."

I think this is apropo. The whole conversation and narrative are now driven by sophists and economists. The only thing of importance is economics. Yes, the West is dead.

Blogger Nate July 15, 2012 9:11 AM  

"I don't see how that's possible. The free movement of labor is intrinsic to the doctrine."

Is it really such a difficult concept to grasp that one may think the doctrine is total bunk... and still think its unwise to allow the government to regulate commerce?

Blogger Nate July 15, 2012 9:14 AM  

"Jefferson by his actions and words understood the difference between internal free trade and trade between nations, and he most certainly was not for unregulated trade between nations: ..."

And one wonders if Jeffereson would've rethought that position if he'd seen how the federal government employed trade regulation to rip the country apart and cause the most bloody war fought on american soil.

Anonymous unger July 15, 2012 9:16 AM  

Vox, you illiterate fool. Exactly where does that snippet say that free movement of labor is required for free trade to work - that is, that free movement of labor is required in order for free trade to provide gains over autarky? Nowhere. In that snippet, Mises is quite clearly saying nothing more than that - wait for it - if everything were completely free, such that all the factors of production could be used where they were most productive, labor and capital would move as freely as traded goods.

To shore this up, let's take a look at something else Mises had to say, in a book that was not about policy suggestions, but cold hard economic theory. A book you've never read, even though you claim to be an authority on Mises: Human Action, chapter 8, section 4 - which is charmingly entitled 'The Ricardian Law of Association'. You know, the one that you and that Fletcher fairy claim presupposes all sorts of nonsense, and doesn't work otherwise. It has a subsection written just for you - or at any rate, people who make errors similar to yours, but who can actually read: 'Current Errors Concerning the Law of Association'. Since you can't read, this is doubtlessly a waste of my time, so far as I'd like to get anything done, but you're entertaining and cheaper than a movie.

Anonymous unger July 15, 2012 9:17 AM  

(post separated for length)
Mises therein writes:

Ricardo's first aim in expounding this law was to refute an objection raised against freedom of international trade. The protectionist asks: What under free trade will be the fate of a country in which the conditions for any kind of production are less favorable than in all other countries? Now, in a world in which there is free mobility not only for products, but no less for capital goods and for labor, a country so little suited for production would cease to be used as the seat of any human industry.... But Ricardo deals with a world whose conditions are determined by settlement in earlier days, a world in which capital goods and labor are bound to the soil by definite institutions. In such a milieu free trade, i.e., the free mobility of commodities only, cannot bring about a state of affairs in which capital and labor are distributed on the surface of the earth according to the better or poorer physical opportunities afforded to the productivity of labor. Here the law of comparative cost comes into operation. Each country turns toward those branches of production for which its conditions offer comparatively, although not absolutely, the most favorable opportunities. For the inhabitants of a country it is more advantageous to abstain from the exploitation of some opportunities which--absolutely and technologically--are more propitious and to import commodities produced abroad under conditions which--absolutely and technologically--are less favorable than the unused domestic resources. The case is analogous to that of a surgeon who finds it convenient to employ for the cleaning of the operating-room and the instruments a man whom he excels in this performance also and to devote himself exclusively to surgery, in which his superiority is higher.

[technical explanation of the Ricardian theory omitted for brevity]

It has been asserted that Ricardo's law was valid only for his age and is of no avail for our time which offers other conditions. Ricardo saw the difference between domestic trade and foreign trade in differences in the mobility of capital and labor. If one assumes that capital, labor, and products are movable, then there exists a difference between regional and interregional trade only as far as the cost of transportation comes into play. Then it is superfluous to develop a theory of international trade as distinguished from national trade....

Ricardo, however, starts from the assumption that there is mobility of capital and labor only within each country, and not between the various countries. He raises the question what the consequences of the free mobility of products must be under such conditions. (If there is no mobility of products either, then every country is economically isolated and autarkic, and there is no international trade at all.) The theory of comparative cost answers this question. Now, Ricardo's assumptions by and large held good for his age. Later, in the course of the nineteenth century, conditions changed. The immobility of capital and labor gave way; international transfer of capital and labor became more and more common. Then came a reaction. Today capital and labor are again restricted in their mobility. Reality again corresponds to the Ricardian assumptions.

However, the teachings of the classical theory of interregional trade are above any change in institutional conditions. They enable us to study the problems involved under any imaginable assumptions.

Anonymous unger July 15, 2012 9:17 AM  

Oops. What was that you were saying, jackass? You can agree or disagree with Mises as you please, but don't bloviate about being an expert on Austrianism, and then fucking tell people Mises or Ricardo ever said that free trade requires free movement of labor, because they in fact very explicitly said the exact opposite - that free trade benefits trading partners even if labor is not internationally mobile

Anonymous Joe Doakes, Como Park July 15, 2012 9:32 AM  

Unger, if free trade doesn't mean moving labor, how do you explain results like Michigan and Texas? MIchigan is losing businesses and people, Texas is gaining them. Isn't it perfectly obvious that labor follows capital?

Where do you think we got the expression "Write when you get work"?

Anonymous Megan Mortenson July 15, 2012 9:34 AM  

Unger, would this be a fair summary of your point:

"Actual free trade may result in labor movement, but the intellectual doctrine of Fair Trade does not REQUIRE labor movement. Fair trade could happen without labor movement."

Anonymous unger July 15, 2012 9:35 AM  

Oh, and. Just to REALLY hammer home the point: you didn't even read 'Liberalism'. If you had read it and understood it, you would've grasped the importance of what immediately followed that snippet you posted.

This was far from being the case at the time that the classical free-trade doctrine was first developed. A whole series of obstacles stood in the way of the free movement of both capital and labor. Because of ignorance of conditions, a general insecurity in regard to law and order, and a number of similar reasons, capitalists felt reluctant about investing in foreign countries. As for the workers, they found it impossible to leave their native land, not only because of their ignorance of foreign languages, but because of legal, religious, and other difficulties. At the beginning of the nineteenth century, it was, to be sure, generally true that capital and labor could move freely within each country, but obstacles stood in the way of their movement from one country to another. The sole justification for distinguishing in economic theory between domestic and foreign trade is to be found in the fact that in the case of the former there is free mobility of capital and labor, whereas this is not true in regard to the commerce between nations. Thus, the problem that the classical theory had to solve may be stated as follows: What are the effects of free trade in consumers' goods between one country and another if the mobility of capital and labor from one to the other is restricted?

This, of course, was followed by a short and non-technical outline of the Ricardian law, and an explanation of how free trade works just fine when labor or capital or both are internationally immobile.

Anonymous unger July 15, 2012 9:40 AM  

Doakes: um, capital and labor are mobile within nations; that's the whole point of the distinction between intranational and international trade. In the former they are; in the latter, there are obstacles in the way - usually legal and cultural, sometimes geographic.

Megan: Pretty much. Vox seems to think that free trade doesn't work unless you assume that labor and capital are mobile, and worse, seems to think that Ricardo and Mises made that assumption. Neither are true.

Anonymous Salt July 15, 2012 9:49 AM  

Vox is merely pointing out the black and white of the issue.

"Under a system of completely free trade, capital and labor would be employed wherever conditions are most favorable for production Mises

How does Unger interpret that?

Exactly where does that snippet say that free movement of labor is required for free trade to work - that is, that free movement of labor is required in order for free trade to provide gains over autarky? Nowhere.

That's not what Mises was referring to, free trade to provide gains.

In that snippet, Mises is quite clearly saying nothing more than that - wait for it - if everything were completely free, such that all the factors of production could be used where they were most productive, labor and capital would move as freely as traded goods.

The fact that trade is not completely free does not invalidate the requirement of free labor movement to take it to absolute completion - described as "completely free".

Unger wants to argue completely free as something less.

Anonymous Salt July 15, 2012 9:56 AM  

Free Trade does not exist in the real world. Best scenario might approach it, but it will never exist in reality unless imposed by force. But if it's forceful how then might it be described as free?

There are free traders who believe it should exist in reality, and that is what makes them one world globalists.

Anonymous unger July 15, 2012 10:12 AM  

Salt: All I was saying in the post Vox quoted is that, contra Vox's repeated insistence, free movement of labor is not a Ricardian, and definitely not a Misesian assumption, on which the theory of comparative advantage depends, and without which it fails to work. As for the rest, I can only point you towards what I wrote immediately after that post. Perhaps you'll see why Vox didn't include that in his quotation?

Blogger IM2L844 July 15, 2012 10:12 AM  

And it is beyond irony to see a free trader present an appeal to how things work on Earth in the real world.

This is where the argument ends, in my opinion. Free trade doesn't exist and can never exist in the real world except within the narrowest of conditional parameters, but those parameters necessarily constrain so, even then, it really isn't free trade, but, as Salt points out, something less (Free Trade Light).

Anonymous bob k. mando July 15, 2012 10:15 AM  

unger July 15, 2012 9:16 AM
Exactly where does that snippet say that free movement of labor is required for free trade to work



so, your assertion is that laborers do NOT trade their labor for wages?

so, your assertion is that holders of capital do NOT trade the use of their capital for what they evaluate to be the 'best' possible return on investment?

because, you see,
IF
you place limits on the trade ( movement ) of labor and/or capital
THEN
you do NOT have 'Free' trade at all.

rather, you have trade which is 'more' or 'less' Restricted Trade than some other comparative regulatory scheme.

Anonymous Yorzhik July 15, 2012 10:19 AM  

Yes, labor should be invited into a country as long as there is work to do. It's like a barn raising; you want as many people as possible. However, there is no obligation to invite any particular people you know as trouble-makers.

So the answer to our immigration problems: wide gates.

Then we can politically close the rest of the border, and we can identify everyone that goes through the gate. We get the labor we need, and we stop the bad ones. It's a win-win.

Anonymous Salt July 15, 2012 10:19 AM  

The rub of it is that without completely free trade (thus including mobility) one cannot, over the long haul, enjoy completely free trade in goods and services without altering one's standard of living.

Thus tariffs become necessary, even desirable.

Anonymous Yorzhik July 15, 2012 10:35 AM  

Salt; That isn't correct. A country will benefit from free trade regardless of the response from another country.

As to altering one's standard of living (downward in the context you are talking about I assume) is corrected by adding value to your exchange. If your manufacturing job has left, the needs of your fellow workers are still there, and there are new needs by the workers in the country where your manufacturing went. So the total value for work went up because of higher demand, which should allow you to regain your standard of living.

Anonymous VD July 15, 2012 10:39 AM  

And all of this stems from your refusal to acknowledge that many free trade defenders are not defending Utopian Ricardian Free Trade.

In which case they're not free trade defenders. They're still prostitutes, they're just putting a different price on it.

Is it really such a difficult concept to grasp that one may think the doctrine is total bunk... and still think its unwise to allow the government to regulate commerce?

It's not difficult at all. But that's not necessarily even an economic argument. It's tangential.

Vox, you illiterate fool. Exactly where does that snippet say that free movement of labor is required for free trade to work - that is, that free movement of labor is required in order for free trade to provide gains over autarky? Nowhere. In that snippet, Mises is quite clearly saying nothing more than that - wait for it - if everything were completely free, such that all the factors of production could be used where they were most productive, labor and capital would move as freely as traded goods.

I'm not the illiterate one here, Unger. Neither am I the fool. You haven't understood either me or Mises. We are saying that free trade IS the free movement of labor. Of course labor won't move if there is no advantage to it moving, but the free movement of labor has to be permitted or free trade does not exist.

Oops. What was that you were saying, jackass? You can agree or disagree with Mises as you please, but don't bloviate about being an expert on Austrianism, and then fucking tell people Mises or Ricardo ever said that free trade requires free movement of labor, because they in fact very explicitly said the exact opposite - that free trade benefits trading partners even if labor is not internationally mobile

You still don't understand what I'm saying, or how you've simply shown that Mises was talking out of both sides of his mouth. Your position is incorrect because Mises was uncharacteristically careless in distinguishing between "free trade" and "completely free trade". All I have ever discussed on the subject is "completely free trade".

First, Mises supports my central point here: Now, in a world in which there is free mobility not only for products, but no less for capital goods and for labor, a country so little suited for production would cease to be used as the seat of any human industry....

Second, he is explicitly using a different definition of free trade here: In such a milieu free trade, i.e., the free mobility of commodities only, cannot bring about a state of affairs in which capital and labor are distributed on the surface of the earth according to the better or poorer physical opportunities afforded to the productivity of labor.

Than he is here: "Under a system of completely free trade, capital and labor would be employed wherever conditions are most favorable for production."

The arguments for and against the free movement of capital and labor are no different than those for and against the free movement of goods. And I tend to very much doubt Unger, or any other free trader, would agree that instituting harsh capital controls is perfectly consistent with free trade, as his appeal to the goods-only Misean definition would require.

Anonymous VD July 15, 2012 10:41 AM  

All I was saying in the post Vox quoted is that, contra Vox's repeated insistence, free movement of labor is not a Ricardian, and definitely not a Misesian assumption, on which the theory of comparative advantage depends, and without which it fails to work.

And where did I say that it was? Please provide the quote or retract your claim.

Anonymous unger July 15, 2012 10:47 AM  

Salt: Wrong. (Props for having the name 'Salt' and saying 'the rub of it', though.) Free factor mobility is indeed the economic ideal: production will indeed be highest if factors can be employed wherever they are most productive. But even without free factor mobility, there are gains from free trade in consumption goods. Factor mobility is not critical to to the theory of trade. Vox says otherwise, and moreover, says that Ricardo and Mises say otherwise, and he's wrong about the former (because the theory is correct) and laughably wrong about the latter (because R&M said the exact opposite).

Anonymous VD July 15, 2012 10:48 AM  

Just to make things simple, here are the Ricardian assumptions that I cited from Fletcher on my 2011 column on the subject. Where is "free movement of labor" on that list? And where did I ever identify a single Misean assumption?

1) The comparative advantage is sustainable.

2) There are no externalities.

3) Production factors move easily between domestic industries.

4) The trade does not change the ratio of income inequality.

5) Capital is not internationally mobile.

6) Short-term efficiency causes long-term growth.

7) The trade does not improve foreign productivity.

Unger, you have repeatedly failed to understand that the discussion of free trade is not entirely limited to David Ricardo's 19th century conception of it.

Blogger cavalier973 July 15, 2012 10:51 AM  

Free trade alters one's standard of living upward, because trade always creates wealth. Barriers to trade (tariffs, import quotas) necessarily adjust standards of living downward. They reduce the amount of goods and services available for consumption.

A low revenue tariff is preferable to the income tax system under which we currently labor as a means to finance the central government, but even that would lower standards of living.

Free trade does not "require" free movement of labor, though it may allow it.

*Yes, labor should be invited into a country as long as there is work to do.*
It is a truism that resources are scarce, while human wants are unlimited. There is, in fact, always work to do. There is always some unfulfilled human desire or need to be met. A "jobs shortage" is entirely attributable to government interference in the economy: minimum wage laws, laws that give disproportionate power to trade unions, tariffs, import quotas, etc.

Anonymous VD July 15, 2012 10:55 AM  

But even without free factor mobility, there are gains from free trade in consumption goods.

I have never denied that there can be.

Factor mobility is not critical to to the theory of trade. Vox says otherwise,

No, I do not. I simply understand that Ricardo's conception of a world where capital and labor don't move is outdated and irrelevant.

and moreover, says that Ricardo and Mises say otherwise, and he's wrong about the former (because the theory is correct) and laughably wrong about the latter (because R&M said the exact opposite).

I don't say that either.

Anonymous VD July 15, 2012 10:59 AM  

Free trade does not "require" free movement of labor, though it may allow it.

Of course it does. What you mean to say is that a free trade in goods does not require a free movement of labor or a free movement of capital. But it is stupid to claim that this is actually free trade, because free traders always claim that inhibiting the free movement of capital is protectionist and anti-free trade, and because services are considered trade.

Anonymous Salt July 15, 2012 11:00 AM  

But even without free factor mobility, there are gains from free trade in consumption goods. Factor mobility is not critical to to the theory of trade.

Free Trade /= Theory of Trade.

You really should stop.

Anonymous VD July 15, 2012 11:11 AM  

Free Trade /= Theory of Trade

Unger's central issue, besides his emotional incontinence, is that he can't distinguish between "free trade in commodities only" and "completely free trade in products, capital goods, services, capital, and labor". He doesn't appear to have noticed that Mises doesn't even include capital goods in his restricted definition of free trade.

And given that "Capital is not internationally mobile" was listed more than a year ago as one of the faulty core assumptions of Ricardo's theory of comparative advantage, it should have been completely obvious that I did not think Ricardo declared free trade requires free movement of labor.

Blogger Bob July 15, 2012 11:14 AM  

All this yadda yadda over theory...

What I see is: Having given away vast sections of our manfacturing capability along with hard earned and very valuable intellectual property to nations that are taking huge advantage of us, and then having our hands tied by mind-numbingly stupid agreements made by compromised federal agencies and employees, is a bad thing for us and getting worse - much worse.

It seems very simple to me:

We keep this crap up... we lose.

You want you and your kids living in one-room wood shacks, or mud brick structures, or grass huts, or teepees? Maybe on plantations growing cotton or manufacturing mud bricks for the new "Pharoahs"?

That's what losing this so-called "free trade" war will do to us.

The time to argue fancy theories is past. It's time to stare reality in the face.

It's them or us. Always has been. Who do you vote for?

Anonymous Yorzhik July 15, 2012 11:14 AM  

Vox writes: Of course it does. What you mean to say is that a free trade in goods does not require a free movement of labor or a free movement of capital. But it is stupid to claim that this is actually free trade, because free traders always claim that inhibiting the free movement of capital is protectionist and anti-free trade, and because services are considered trade.

This isn't entirely true. One country might have free trade, while the reciprocating country does not. Thus, there cannot be free movement of labor even though a country has completely free trade.

Anonymous Salt July 15, 2012 11:14 AM  

But even without free factor mobility, there are gains from free trade in consumption goods.

To which gains from free trade in consumption goods, applied to the domestic population subjected to outsourced goods and services and the capital which found a better environment overseas, are you referring?

Blogger Positive Dennis July 15, 2012 11:14 AM  

Hoppe in Democracy the God that Failed argued that you could have Free trade with restricted immigration. Sorry but it has been too long, does anybody remember the argument he used?

Anonymous 11B July 15, 2012 11:15 AM  

I have a question for Unger. Regardless of what you think the official definition of free trade is, do you personally support the free movement of labor across international lines? Why or why not?

Blogger cavalier973 July 15, 2012 11:17 AM  

Again, free trade does not require the free movement of labor. It allows for it. I purchase things from China; I have never been compelled to travel there to work.

You seem to be arguing that, if a nation doesn't allow for the free movement of labor, then even if it were to allow for the free movement of goods and capital, it does not truly have free trade, and therefore free trade theory fails on this point. You further argue that were the nation to open itself to the free movement of labor, and thus enjoy "real" free trade, then the nation will be overtaken by immigrants.

The segments of Mises' argument on the subject helpfully provided upthread by unger make the point that there can be barriers to the free movement of labor apart from government laws. Language and cultural barriers, out of pocket expenses, family and other personal ties, will keep a person from moving permanently to another nation. These barriers do not invalidate Free Trade theory. The free movement of labor is allowed, but not required.

Anonymous Salt July 15, 2012 11:29 AM  

if a nation doesn't allow for the free movement of labor, then even if it were to allow for the free movement of goods and capital, it does not truly have free trade, and therefore free trade theory fails on this point.

Assume all capital flows to a country having a better financial / production environment (from country A to B). All goods and services are now produced there (B).

If the population (A) is not permitted to follow, with what are they free to trade with? Bank Credit?

Anonymous scoobius dubious July 15, 2012 11:31 AM  

"Language and cultural barriers, out of pocket expenses, family and other personal ties, will keep a person from moving permanently to another nation."

And yet, somehow............... wait for it..........

They don't.

Actually, in reality, despite all of that, they do indeed move here, a LOT, and then they bring their entire feckin extended family along with 'em. A LOT.

I wonder why they do that.

I wonder who supports them in doing that.

And I wonder, a lot, about the motives of those who support them in doing that.

Anonymous VD July 15, 2012 11:33 AM  

free trade does not require the free movement of labor. It allows for it. I purchase things from China; I have never been compelled to travel there to work.

You're still making the same mistake I previously noted. If the free movement of labor is not permitted, there is no free trade. Your counterpoint is irrelevant.

You seem to be arguing that, if a nation doesn't allow for the free movement of labor, then even if it were to allow for the free movement of goods and capital, it does not truly have free trade, and therefore free trade theory fails on this point. You further argue that were the nation to open itself to the free movement of labor, and thus enjoy "real" free trade, then the nation will be overtaken by immigrants.

Note that whenever you use the term "you seem to be" here at VP, you are almost always wrong. You went wrong at "therefore". Free trade theory does not fail because a nation does or does not truly have free trade. It depends upon the nation, but in the case of the USA or other wealthy Western nations, the free movement of labor would definitely cause them to be swamped by immigrants, as they already are despite not presently allowing for it.

The segments of Mises' argument on the subject helpfully provided upthread by unger make the point that there can be barriers to the free movement of labor apart from government laws. Language and cultural barriers, out of pocket expenses, family and other personal ties, will keep a person from moving permanently to another nation. These barriers do not invalidate Free Trade theory. The free movement of labor is allowed, but not required.

Of course there are extralegal barriers that do not invalidate free trade theory. But again, your logic goes awry when you try to cite this as evidence that "the free movement of labor is allowed, but not required." You have failed to understand a) the free movement of labor is intrinsic to completely free trade, though not to "free trade in commodities" and b) "in a world in which there is free mobility not only for products, but no less for capital goods and for labor, a country so little suited for production would cease to be used as the seat of any human industry".

Anonymous VD July 15, 2012 11:37 AM  

If the population (A) is not permitted to follow, with what are they free to trade with? Bank Credit?

This points to a good way to use free trade doctrine to disprove the assumption that free trade leads to peace....

Anonymous unger July 15, 2012 11:40 AM  

Vox: As we've already noted, Unger, that's because you're stupid. FREE TRADE ABSOLUTELY REQUIRES THE FREE MOVEMENT OF PEOPLES. Therefore, trade policy is immigration policy. There is no free trade without unlimited immigration and emigration.

Let's list just a few of the obvious falsehoods some of them keep repeating: [...] 2. Free trade does not involve the free movement of labor.

This is why dishonest advocates of free trade falsely attempt to claim that the free movement of labor is not part of the free trade doctrine. They know that no one will support free trade once the understand that it intrinsically necessitates the large-scale export of their friends, relatives, and neighbors to other markets, and quite possibly their own expatriation.

If all you really meant by that was that without legal factor mobility, conditions aren't perfectly free, that's true - but almost totally uninteresting. You can say there's no such thing as free trade without factor mobility if you like, but you do it at the expense of saying that Ricardo wasn't talking about free trade at all, since he was presenting a theory of international trade that explicitly assumed that factors were internationally immobile, and that Mises wasn't talking about free trade at all, even in a book chapter subtitled 'Free Trade'. In which case, you are the one who needs to do some retracting - well, in addition to the retracting you still haven't gotten around to doing - since you've been attacking a theory, naming it 'free trade', when, per Ricardo and your idiosyncratic (and idiotic) redefinition of the term, it isn't.

So which is it? Either you were saying that, per Ricardo and Mises, the benefits of international trade exist only insofar as there exists factor mobility, in which case you're simply wrong, because they said the dead opposite, or you were saying that the Ricardian theory doesn't describe truly free trade, in which case your claim that "All I have ever discussed on the subject is 'completely free trade'" is stinking horseshit, because virtually every essay you've written has attacked theories that very explicitly claim benefits in factor-immobile cases - i.e. in international trade, not just intranational trade.

Either way, you're talking out your ass.

And I'll note that in today's episode of Vox's Context-Free Quotations, you thought it'd be funny to ignore everything I wrote after that post, pointing out that there's no reason whatsoever to think that labor must move anywhere and everywhere, dissolving every culture in the way, in the absence of legal restrictions on it. Typical.

Blogger cavalier973 July 15, 2012 11:43 AM  

Salt @ 11:29

Granting your assumptions, they would have nothing with which to trade, and would therefore turn to domestic manufacturers.

The assumption is silly, though, since no one country will ever be capable of producing every good for every person for the entire earth. Even were the impossible possible, and China, say, becomes capable of producing 100% of the world's needs, it hardly follows that it will do so. See comparative advantage, and analogies of lawyers who can flawlessly type 100 words a minute.

*Actually, in reality, despite all of that, they do indeed move here, a LOT, and then they bring their entire feckin extended family along with 'em. A LOT.*

For certain groups (and I'm assuming that you refer to Mexican immigrants), the benefits of permanent relocation outweigh the costs, of course. Something of which I'm curious, though: given that "all our jobs are moving to China", why aren't Mexicans moving there, instead? I suspect that prohibitive costs account for some of that. And the language barrier.
Perhaps there are as well factors beyond available work which entice Mexicans (and all other groups) to move here. I would argue that dismantling the welfare-warfare state would do more to solve our immigration "problems" than restricting the freedom of American citizens to dispose of their property as they see fit.

And while I speak of immigration, allow me to offer my solution to illegal immigration: private citizens purchase all the land along the borders, and fill it with pit bull and doberman puppy farms.

Anonymous unger July 15, 2012 11:55 AM  

My solution to illegal immigration: ignore it, but give no state benefits to non-citizens, allow Americans who don't like Messicans (legal or illegal) to discriminate against them (or anyone else) freely, conduct government in Engrish only, and don't naturalize immigrants without a really good reason. The immigrants who come and stay will be useful and assimilable; the ones who aren't will leave. The policy, even in attenuated form (mostly with regard to naturalization), worked well enough in pre-FDR America.

Anonymous scoobius dubious July 15, 2012 11:58 AM  

"Something of which I'm curious, though: given that "all our jobs are moving to China", why aren't Mexicans moving there, instead? I suspect that prohibitive costs account for some of that. And the language barrier."

Aaaagh, the stupid! It burns! It buuuurns!!

You're almost as bad as Professor Wendy-Nate-Wendy.

Blogger cavalier973 July 15, 2012 12:02 PM  

What VD said: "Note that whenever you use the term "you seem to be" here at VP, you are almost always wrong."

What I said: "You seem to be arguing that, if a nation doesn't allow for the free movement of labor, then even if it were to allow for the free movement of goods and capital, it does not truly have free trade, and therefore free trade theory fails on this point."

What VD said: " If the free movement of labor is not permitted, there is no free trade."

So...I was right.

*You have failed to understand a) the free movement of labor is intrinsic to completely free trade, though not to "free trade in commodities"*
So...why do you oppose the free movement of commodities, and not just the free movement of labor and capital?

Blogger Vox July 15, 2012 12:06 PM  

So...I was right.

No, you were wrong.

This part was correct: "You seem to be arguing that, if a nation doesn't allow for the free movement of labor, then even if it were to allow for the free movement of goods and capital, it does not truly have free trade"

This part was not: "and therefore free trade theory fails on this point"

Anonymous scoobius dubious July 15, 2012 12:12 PM  

"My solution to illegal immigration: clackity glackity flabbity glabber jibber jabber jum."

It doesn't matter what your theoretical solution is, you jackass. Chaco is already here. So are his hermanos, y his hermanas, y his tios, y all his tias. And all of Maria's tios y tias y hermanas. Chaco's two eldest daughters, both only teenagers, are already pregnant with their latest little greasies. You're paying for all of it. All of them are represented by a very powerful and entrenched political party which hates you and your interests, and wants you to be exterminated from this continent. (For once, I think they may have a point.)

The landscape as it already exists is already real, and you and all your copies of Ayn Rand's flapdoodle can't stop the cabal that's been marshaled against you. Not that I think you even want to stop it. Personally, I think you're part of it.

One last time: if you throw a rock against a plate-glass window, the window will break if the rock is big enough and you throw it hard enough. If it isn't big enough and you don't throw it hard enough, then the window won't break. At no point, however, will the rock stop in mid-arc, rotate of its own accord, and begin to tell tales of ancient valor in perfect Attic Greek.

FFS, it won't even expound the scripture of the sacred Mises. It'll just hit the window, which will then either break or not break, depending on utterly boring and predictable real-world factors. Which don't care, not at all, what Mises thinks.

Anonymous unger July 15, 2012 12:14 PM  

Well, glad you cleared that up. Now you should make a disambiguation page for the 'free trade' tag, with one link to 'free trade, as the term is understood by all economists and most laymen', and another to 'free trade, as I idiosyncratically define it' (which will cough up a 404 error unless you write something new).

Blogger cavalier973 July 15, 2012 12:18 PM  

VD: Why do you oppose the free movement of goods, instead of limiting your opposition to the free movement of labor and/or capital only?

Blogger Vox July 15, 2012 12:22 PM  

If all you really meant by that was that without legal factor mobility, conditions aren't perfectly free, that's true - but almost totally uninteresting.

No one cares what you find interesting or not. That's precisely what I meant. You have been repeatedly shown to be completely wrong in part because you've been arguing with a strawman of your own imagination. It's hardly my fault that you lack basic reading comprehension in addition to emotional continence; almost everyone else has understood what I was saying all along. Of course, the fact that you don't understand the significance of that "almost totally uninteresting" aspect doesn't speak well for you.

You can say there's no such thing as free trade without factor mobility if you like, but you do it at the expense of saying that Ricardo wasn't talking about free trade at all, since he was presenting a theory of international trade that explicitly assumed that factors were internationally immobile, and that Mises wasn't talking about free trade at all, even in a book chapter subtitled 'Free Trade'.

That's precisely what I'm saying about Ricardo. That's why I have kept pointing out that his theory is outdated and irrelevant as well as incorrect. It's as stupid to claim Ricardo's "free trade" is not only meaningful, but dispositive, today as to claim that a hypothetical "free trade" doctrine developed in a world without transportation capacity would be meaningful in Ricardo's world. As for Mises, he was discussing both Ricardian "partial free trade" as well as genuinely free trade in which capital and labor were also mobile.

Ricardo wasn't a broad spectrum thinker so it should come as no surprise that his concept of free trade was too limited. Reducing arguments to tautologies was his stock in trade. It should never be forgotten that he also argued that profit was determined by the price of wheat.

You can say there's no such thing as free trade without factor mobility if you like, but you do it at the expense of saying that Ricardo wasn't talking about free trade at all, since he was presenting a theory of international trade that explicitly assumed that factors were internationally immobile, and that Mises wasn't talking about free trade at all, even in a book chapter subtitled 'Free Trade'.

The answer is obvious. Ricardo wasn't talking about free trade at all due to his inability to conceive of a world where capital, labor, and capital goods were as mobile as commodities. Ricardo was talking about partial free trade, as Mises implicitly acknowledges. This is precisely why Fletcher points to the mobility of capital as a disproof of Ricardo and I point to the mobility of labor as another one.

Either way, you're talking out your ass.

Perhaps, but it is readily apparent that even my ass is well over your head.

Anonymous Salt July 15, 2012 12:29 PM  

Granting your assumptions, they would have nothing with which to trade, and would therefore turn to domestic manufacturers.

How can one have domestic manufacturing where there is no capital, it all having flowed overseas?

Blogger Vox July 15, 2012 12:30 PM  

Why do you oppose the free movement of goods, instead of limiting your opposition to the free movement of labor and/or capital only?

Because a) Ricardo was wrong, and b) pretty much the same arguments pro and con apply across the board.

Blogger Positive Dennis July 15, 2012 12:35 PM  

My 9 year old daughter might help Unger here. She told me this morning over her smoked salmon sandwhich. "Daddy, you can put sugar in black coffee." "Yes" I told her,"you can. But if you do it is no longer black coffee."

All Vox seems to be saying that classic free trade allows the free movement of goods, capital and labor. If you do not then what you have is not free trade. This is almost a tautology so I can see why he is frustrated.

Can you have a restriction in one of the three

Blogger Positive Dennis July 15, 2012 12:36 PM  

Yes you can, but it is not free trade.

Anonymous Salt July 15, 2012 12:38 PM  

Fin!

Anonymous unger July 15, 2012 12:41 PM  

Does that mean you're going to retract the totally false assertion you made, that all you have ever discussed on the subject is 'completely free trade'?

Rhetorical.

And god dammit, you just did it again! Did you just say that the mobility of labor is a disproof of Ricardo? I quote: "This is precisely why Fletcher points to the mobility of capital as a disproof of Ricardo and I point to the mobility of labor as another one." Holy fucking shitballs, you did. If that isn't asserting that the Ricardian theory depends on labor mobility, and if it isn't claiming to conclude "and therefore free trade theory fails on this point", what the hell is it? Do you have some strange new definition of 'disproof'?

Blogger cavalier973 July 15, 2012 12:42 PM  

*How can one have domestic manufacturing where there is no capital, it all having flowed overseas?*

Wow. It "all" flowed overseas?

This is another reason why your assumption (that I clearly stated was silly) is silly. You can't seriously be arguing that no more clothes can be made in the bereft nation because all the needles, sewing machines, cloth, and other materials were shipped out along with factories and industrial looms. There are also other factors, such as the knowledge, skills, and abilities of the population. Even were no domestic capitalist present with the necessary resources to rebuild the domestic industrial infrastructure, there are certainly entrepreneurial foreigners (or expats, etc.) who would see profit potential in such a situation.

Anonymous unger July 15, 2012 12:55 PM  

11B: I support the legalization of labor mobility, and have no principled opposition to immigration, and absolutely oppose all controls on emigration. I do not think the State has any natural right to control who may buy from whom or who may sell to whom, and that this precludes the State forbidding people to sell to, rent to, or employ foreigners. I think American history is instructive, in that where the State has controlled selling, renting, and employing, it has done almost nothing to restrict people who wish to invite foreigners, but a great deal to restrict people who wish not to invite them, and I draw from this two conclusions: first, that all questions of rights aside, entrusting the State with such authority is suicidal madness; and second, that as a practical matter, permitting free association is unlikely to lead to a massive influx of undesirables, simply because Americans seem to want them here a great deal less than the government does.

Does that answer your question?

Blogger Vox July 15, 2012 12:59 PM  

Does that mean you're going to retract the totally false assertion you made, that all you have ever discussed on the subject is 'completely free trade'?

No, because it isn't false.

And god dammit, you just did it again! Did you just say that the mobility of labor is a disproof of Ricardo? I quote: "This is precisely why Fletcher points to the mobility of capital as a disproof of Ricardo and I point to the mobility of labor as another one." Holy fucking shitballs, you did. If that isn't asserting that the Ricardian theory depends on labor mobility, and if it isn't claiming to conclude "and therefore free trade theory fails on this point", what the hell is it? Do you have some strange new definition of 'disproof'?

You really are stuck in some simplistic mental ruts. Citing the mobility of labor is neither "asserting that the Ricardian theory depends on labor mobility" nor is it "claiming to conclude 'and therefore free trade theory fails on this point'". It is a demonstration of the irrelevance of the Ricardian theory of comparative advantage to the global economy.

However, now that I think about it, although Ricardo didn't explicitly assume the immobility of labor, as he did with capital, he must have implicitly assumed it give his citation of British and Portuguese labor costs. I'm going to look more closely at this in a future post before concluding that labor mobility is not an actual disproof as well as an indicator of irrelevance.

Anonymous salt July 15, 2012 1:07 PM  

You can't seriously be arguing that no more clothes can be made in the bereft nation because all the needles, sewing machines, cloth, and other materials were shipped out along with factories and industrial looms.

All capital flowed overseas.

There are also other factors, such as the knowledge, skills, and abilities of the population.

Without capital there is no production no matter how knowledgeable one is.

Even were no domestic capitalist present with the necessary resources to rebuild the domestic industrial infrastructure, there are certainly entrepreneurial foreigners (or expats, etc.) who would see profit potential in such a situation.

Exactly, which is why in the beginning all capital flowed overseas to begin with; better profit via cheaper labor and resources. Want to keep some at home to begin with? Use tariffs where appropriate.

Anonymous unger July 15, 2012 1:11 PM  

If labor mobility makes the Ricardian theory irrelevant to the modern world, then yes, you are very explicitly saying exactly what I claimed you said, and my objection applies in full force. I win, as usual.

Blogger IM2L844 July 15, 2012 1:22 PM  

I'm going to look more closely at this in a future post...

Because I suspect that you don't actually posses the patience of Job, I can almost see a wry grin cross your face as you write this in anticipation of future entertainment.

Anonymous unger July 15, 2012 1:23 PM  

Arguing with you is like arguing with a woman. 'X!' 'Nuh uhh, I didn't say X!' 'X!' 'I didn't really say X, but X!'

At least now, there's a very definitive answer to your challenge, a few posts ago.

All I was saying in the post Vox quoted is that, contra Vox's repeated insistence, free movement of labor is not a Ricardian, and definitely not a Misesian assumption, on which the theory of comparative advantage depends, and without which it fails to work.

And where did I say that it was? Please provide the quote or retract your claim.


You just said it. "It [labor mobility] is a demonstration of the irrelevance of the Ricardian theory of comparative advantage to the global economy." Unless 'irrelevance' also has some strange new meaning, you're undeniably claiming that the theory - and thus, the gain from trade it posits - depends on labor immobility, and is nullified by labor mobility.

Let's see you weasel out of this one. P(you just ignore it) = 0.9.

Blogger cavalier973 July 15, 2012 1:25 PM  

*All capital flowed overseas.*

Unless the whole population moved as well (thus refuting your proposition), all capital certainly did not flow overseas.

*Without capital there is no production no matter how knowledgeable one is.*

Human knowledge IS capital; in fact, it is the most important form of capital.

*Exactly, which is why in the beginning all capital flowed overseas to begin with; better profit via cheaper labor and resources.*

Your example is incredible. All capital would not flow overseas "in the beginning"; i.e., at the same time. There are logistics involved in packing up machinery and other materials, and transporting them to a new location. As the industries leave, the available supply of labor would increase relative to the amount of labor demanded, and the price of labor would fall, making the bereft nation more attractive for some of the industries considering relocation.

Blogger Vox July 15, 2012 1:30 PM  

Wow, I stand corrected. While Ricardo did implicitly assume the immobility of labor, adding it into the equation renders some surprising results. The post is already scheduled and will be up in 90 minutes, so I'll be interested to see if anyone can correctly anticipate the results.

Blogger Vox July 15, 2012 1:32 PM  

Your example is incredible. All capital would not flow overseas "in the beginning"; i.e., at the same time. There are logistics involved in packing up machinery and other materials, and transporting them to a new location. As the industries leave, the available supply of labor would increase relative to the amount of labor demanded, and the price of labor would fall, making the bereft nation more attractive for some of the industries considering relocation.

No, his example is correct. Time is not a factor in comparative advantage. You're not playing by the rules here. If you're not going to include the trade logistics, you can't include the capital mobility logistics either. You haven't read your Krugman.

Blogger cavalier973 July 15, 2012 1:39 PM  

"...what immigration restrictions is a free trader and free marketeer logically compelled to uphold and promote? The guiding principle of a high-wage-area country’s immigration policy follows from the insight that immigration, to be free in the same sense as trade is free, must be invited immigration."

http://mises.org/journals/jls/13_2/13_2_8.pdf

"The reason for citing the model of an anarcho-capitalist society is that by definition no such thing as forced integration (uninvited migration) is possible (permitted) within its framework. Under this scenario, no difference between the physical movement of goods and the migration of people exists. As every product movement reflects an underlying agreement between sender and receiver, so all movements of immigrants into and within an anarcho-capitalist
society are the result of an agreement between the immigrant and one or a series of receiving domestic property owners."

Anonymous 11B July 15, 2012 1:43 PM  

11B: I support the legalization of labor mobility, and have no principled opposition to immigration, and absolutely oppose all controls on emigration.

Then why not embrace labor mobility as part of free trade?

As I noted on an earlier post, I'd always seen labor mobility as part and parcel of free trade. The wiki entry used to include it, but recently was amended to exclude labor mobility. I also noticed this year on other blogs free traders fighting tooth and nail to claim free trade does not include free movement of labor. Instead they argued that common markets, not free trade, included free movement of labor.

Now I am no economist, but I have only seen this rejection of labor and capital mobility come up in 2012. That is when the wiki page was edited as well.

Anyways I chalked it up to free traders not wanting to get stuck to the tar baby of third world immigration. But you seem to have no problems with immigration, so I don't understand why are you fighting so hard to separate free movement of labor from free trade.

Blogger cavalier973 July 15, 2012 1:49 PM  

"No, his example is correct. Time is not a factor in comparative advantage. You're not playing by the rules here. If you're not going to include the trade logistics, you can't include the capital mobility logistics either. You haven't read your Krugman."

No, his example is incorrect, to a hideously embarrasing degree, and you show yourself the buffoon for not seeing it. He claims that "all capital" has left the land. Presumably, we have in his scenario a group of people standing naked on the shore, watching forlornly as the magic ships of Protectionistland instantly move from the bereft land to the home port, having absconded with every single possession of the people of the bereft land, including their clothes. It is necessary for him to propose such a preposterous situation because human wit and practicality can turn just about any object into a tool, a form of capital (and, considering that, the magic ships return and take every loose rock and branch, as well) He wants to exclude the very real human capital of knowledge, skills, and abilities, from his definition of "capital" because otherwise, the ships would leave with the people, too, and his argument falls apart for the ridiculous nonsense that it is.

Blogger Nate July 15, 2012 1:59 PM  

"It's not difficult at all. But that's not necessarily even an economic argument. It's tangential."

And this is by no means strictly an economic topic. Otherwise your points about immigration have no meaning. Econ takes no stance on culture.

Blogger Vox July 15, 2012 2:01 PM  

At least Unger has read some of the economic literature. You clearly have absolutely no idea what the rest of us are discussing or how economic modeling works. If it is reasonable for Ricardo to assume complete capital immobility, then it is just as reasonable for Salt to assume its complete mobility.

As you would know had you troubled to visit Wikipedia, capital in this sense refers to "already-produced durable goods that are used in production of goods or services". It is also often used to refer to the money that can be freely exchanged for said capital goods. "Human capital" is labor.

Anonymous unger July 15, 2012 2:18 PM  

11B: The only reason I'm fighting to separate labor mobility from the general theory of free trade is that, so far as economic theory is concerned, it's simply irrelevant to the theory of free trade. It may be relevant to a more general theory of freedom, but we can, and for many purposes, must, consider free trade apart from that more general theory. You get efficiency gains from international trade regardless of whether labor (and capital, for that matter) are internationally mobile. Now yes, you do get even more economic efficiency gains if factors can move as freely as they do intranationally, but the core theory of comparative advantage applies even to cases where factors can't move at all - be it a pair of countries with labor and capital controls, or even a pair of people, where factor mobility means U-hauls and turkey basters (i.e. is contextually senseless).

As far as the third-world tar-baby goes: Don't get me wrong. I don't like third-worlders who bring third-world ideas and habits any more than you like them. I just don't think immigration restrictions are necessary to keep them out. Third-world immigration seems to me to be a State-driven phenomenon. They aren't enticed here by ordinary people; they're enticed here (and often downright shipped here) by the government, and given every protection from everyone here who would otherwise be inclined to say 'no' to them. And I draw an important distinction between immigration and naturalization: I see much less problem with simply having foreigners here as guests with no say in our laws than I do with giving political privileges to the unassimilated.

Anonymous unger July 15, 2012 2:25 PM  

Vox: Salt isn't just assuming its complete mobility; he's assuming, without reason, that it totally disappears. Yet another important distinction lost on you.

I also can't help but point out that while Ricardo did indeed assume capital immobility, he did so only in the context of showing what the protectionists of his era denied: that there exist gains from trade even where nations restrict international capital flows. To say that the theory of comparative advantage itself depends on capital immobility is simply wrong, and between Mises and Bastiat, you've now been given, and of course have ignored, two specifically Austrian (or the case of the latter, proto-Austrian) outlines of the theory that make no reference whatsoever to factor mobility.

Anonymous unger July 15, 2012 2:28 PM  

Also, let me guess the results: when you take away labor immobility, despite the fact that it's really irrelevant, the losses from trade, by your calculations, are OVER 9000!!!!!!!!!!!!!!11111111.

Do I get a cookie?

Blogger cavalier973 July 15, 2012 2:38 PM  

*At least Unger has read some of the economic literature.*

You're not the boss of me.

*You clearly have absolutely no idea what the rest of us are discussing or how economic modeling works.*

You clearly have absolutely no idea how to argue without using hyperbole.


*If it is reasonable for Ricardo to assume complete capital immobility, then it is just as reasonable for Salt to assume its complete mobility.*

Except that it's not reasonable in the slightest. Capital immobility can be a reasonable proposition: factories tend to remain where they are, and are difficult to move. Complete capital mobility requires one to rely on magical forces that can instantly whisk away all buildings, machinery, and whatnot.

*It is also often used to refer to the money that can be freely exchanged for said capital goods.*

In which case, Salt's argument is an illogical construct, and therefore invalid. One can't both receive capital (in the form of money) in exchange for capital (in the form of already-produced durable goods) and also be in the situation of having "no capital whatsoever". Unless, of course, Salt (and you) are arguing from the unstated premise that every single person in the nation immediately spend every bit of the money acquired from the sale on consumables.

Anonymous Salt July 15, 2012 2:50 PM  

Salt isn't just assuming its complete mobility; he's assuming, without reason, that it totally disappears.

How in the **** did you come to that conclusion?

Anonymous Salt July 15, 2012 3:01 PM  

Capital immobility can be a reasonable proposition: factories tend to remain where they are, and are difficult to move. Complete capital mobility requires one to rely on magical forces that can instantly whisk away all buildings, machinery, and whatnot.

No, it requires no such thing. Witness Detroit, MI or Camden, NJ. Factories tend to stay where they are provided it is economical for them to. Given sufficient time and impetus the whole of a country could look like Detroit. It may be unreasonable, and I'd agree, but not impossible.

Blogger Vox July 15, 2012 3:09 PM  

Salt isn't just assuming its complete mobility; he's assuming, without reason, that it totally disappears. Yet another important distinction lost on you.

You're wrong again, Unger. You really have serious reading comprehension issues. Overseas != "totally disappears".

Do I get a cookie?

Not so much.

I also can't help but point out that while Ricardo did indeed assume capital immobility, he did so only in the context of showing what the protectionists of his era denied: that there exist gains from trade even where nations restrict international capital flows.

And wrong again. He outright states there is no basis for trade in the case of free international capital flows because there would be no difference in the price of commodities.

" ... if capital freely flowed towards those countries where it could be most profitably employed, there could be no difference in the rate of profit, and no other difference in the real or labor price of commodities, than the additional quantity of labor required to convey them to the various markets where they were to be sold."

Blogger Vox July 15, 2012 3:12 PM  

Except that it's not reasonable in the slightest.

Wow, we have a True Ricardian here. So long as you are permitted to wave your hand and dictate all the variables and the constants, you can argue your case. Very impressive.

Blogger cavalier973 July 15, 2012 3:16 PM  

*No, it requires no such thing. Witness Detroit, MI or Camden, NJ. Factories tend to stay where they are provided it is economical for them to.*

The problems of the cities you name derive from poor management by an overbearing government, not from trade.

I'm guessing that there are empty factory buildings there, right? If so, then all the capital hasn't left Detroit or Camden. Buildings are a form of capital, after all. On Bereft Island, an empty building can be used to warehouse goods (as in an entrepot), or turned into housing facilities for tourism purposes. But you allow no capital whatsoever in your construct (not even money, apparently), so what you have described is not a nation destroyed by trade; that is, by the free exchange of goods and services. Your scenario more closely resembles a land destroyed by military conquest.

Anonymous Salt July 15, 2012 3:21 PM  

The problems of the cities you name derive from poor management by an overbearing government, not from trade.

Are you serious?

Elvis has left the building.

Blogger cavalier973 July 15, 2012 3:24 PM  

*Wow, we have a True Ricardian here. So long as you are permitted to wave your hand and dictate all the variables and the constants, you can argue your case. Very impressive.*

I don't subscribe to the "labor theory of value".

Blogger cavalier973 July 15, 2012 3:25 PM  

*Are you serious?
Elvis has left the building.*

To be called unserious by someone who constructs illogical economic models is no shame to me.

Anonymous scoobius dubious July 15, 2012 4:06 PM  

The examples of Camden and Detroit are special cases, as it were, far better addressed by Paul Kersey over at SBPDL than by the theories of assclowns Ricardo and Mises.

Again, that real world, it's really a pain in the arse to navigate in the Good Ship Theory, innit.

Anonymous paradox July 15, 2012 4:27 PM  

I'm betting Unger is also an atheist. Libertarian atheist are some of the most arrogant conceited people you can meet. They believe atheism (i.e. Adam Kokesh) is the only logical conclusion of Libertarianism.

Anonymous unger July 15, 2012 10:43 PM  

paradox: And you'd be wrong. Quite the contrary: I think libertarianism is the only logical political conclusion of Christianity. Which, if you read what I'd posted in other threads, you'd know - and you'd also know that a lot of your little pals here think the State is God, and that the 'necessity' of keeping their standard of living excuses them not only of every Christian ordinance of decency, but the Decalogue as well.

Vox: 'totally disappears from its original nation' - and you knew that perfectly well. Don't play stupid.

As for the Ricardo bit: you didn't quote the immediately preceding part of that sentence (sec. 7.18), which explained what that snippet of yours meant: "In that case, the relative value of these commodities would be regulated by the same principle, as if one were the produce of Yorkshire, and the other of London:" So you're cutting out whole halves of sentences now just to find a context-free fragment to support your nonsense? You're really grasping now, flailing madly, and it's getting pathetic. At any rate, all Ricardo was actually saying was that trade under conditions of factor mobility are indistinguishable from intranational trade between regions. Unless, of course, you think Ricardo was saying that London and Yorkshire don't benefit from trading with each other - which, so help me, you might.

Anonymous cherub's revenge July 16, 2012 12:18 AM  

...and that the 'necessity' of keeping their standard of living excuses

So are you saying that restricting some international free trade can maintain standards of living?

Or if it lowers the standards of those who restrict it, what do you care? They're getting their just desserts then.

You've already made clear your disdain for America and Americans, so what's your beef, if by your theory, they would hurt themselves by protectionism?

Anonymous unger July 16, 2012 1:21 AM  

By restricting international free trade, some people definitely can maintain (or even improve) their standards of living. No economist denies this. But this boon comes at the cost of their countrymen, not just foreigners.

As for my beef: I don't have any problem at all with protectionists 'protecting' themselves. By all means, buy only American, or better yet, be Self-Sufficient (tm) - get some land and then make absolutely everything you need yourself, which, I have no doubt, will make you rich beyond the dreams of avarice, and keep you safe from foreign invasion until the sun goes cold, so try it and let me know how it works.

My 'beef' is, first of all, that you wish to 'protect' me, whether I like it or not. So I turn the question 'round on you: if free trade ruins those who do it, what do you care? I'd be getting my just deserts. (Not desserts, btw, unless I'm to be ruined by key lime pie or something, which doan' sound so bad, come to think of it.) And second, since I see the preaching of protectionism about the same way I see the preaching of Scientology, I think I have some small obligation to heckle the false prophets, and present some truth to the people who are being sold a bunch of pretty-sounding but ultimately destructive lies.

Anonymous VD July 16, 2012 5:28 AM  

Vox: 'totally disappears from its original nation' - and you knew that perfectly well. Don't play stupid.

No one is playing stupid. You're demonstrably so careless that you have failed to distinguish "immobility" from "mobility". Those who play pedant don't receive any leeway for semantical flexibility. You will be nailed on even the slightest inaccuracy, just as you attempt - usually incorrectly - to do to others.

Furthermore, even if one was inclined to grant you the benefit of the doubt, Salt's point was correct and your objection to it was incorrect anyway. As I have pointed out repeatedly, you are an overly emotional and careless commenter and you conceal your blunders beneath other blunders.

Anonymous joe doakes July 16, 2012 9:13 AM  

With the banter over "free trade" and "completely free trade," the argument sinks to No True Scotsman. I move to ajourn.

Blogger Vox July 16, 2012 10:45 AM  

With the banter over "free trade" and "completely free trade," the argument sinks to No True Scotsman. I move to ajourn.

No worries, I booted Unger. We can hope for a more intelligent discussion of the subject in the future.

Blogger cavalier973 July 16, 2012 12:33 PM  

Salt's point was illogical, and therefore wrong. The people who sold every single scrap of capital equipment still retained capital since they (presumably) received cash in exchange for their capital--which is a form of capital, as you pointed out.

Blogger Vox July 16, 2012 3:00 PM  

The people who sold every single scrap of capital equipment still retained capital since they (presumably) received cash in exchange for their capital--which is a form of capital, as you pointed out.

Salt's point still stands. The cash got sent overseas too. You understand what "capital controls" are, right? It is when a country passes laws to prevent money from being sent out of the country, Venezuela being the most recent example.

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