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Thursday, July 18, 2019

Gladstone on free trade

A reader sends an informative quote from the great 19th-century British advocate of free trade, Prime Minister William Gladstone:
Advocacy of Free Trade goes back to the United Kingdom of 1846-1860.  However, what William Gladstone actually said as a defense of free trade is "It is a mistake to suppose that the best way of giving benefit to the labouring classes is simply to operate on the articles consumed by them. If you want to do them the maximum of good, you should rather operate on the articles which give them a maximum of employment."

However, in 1846-1860 English manufacturing was the best in the world, though America had surpassed them in some fields. Free trade meant far larger markets abroad for English goods, and cheaper foodstuffs at home, meaning that the English labouring classes had more money to spend on their own manufactures.

For precisely the same reason, the French have rigorous protections of their somewhat inefficient agriculture, namely it creates a maximum of employment.

For the United States of 2019, our labor is relatively expensive, so in many areas our industries are not competitive with places where labor costs little. Gladstone's rationale for free trade thus indicates for us that protectionism, not free trade, is to our advantage.
Translation: it is a fundamental mistake for economists to focus on providing the US population with access to cheap imported goods instead of jobs that permit them to pay for more expensive domestic goods.

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26 Comments:

Blogger McChuck July 18, 2019 8:31 AM  

What is the point of cheap Chinese crap if you still can't afford it because you don't have a job?

What sense is a life without purpose?

Blogger camcleat July 18, 2019 8:46 AM  

McChuck wrote:What is the point of cheap Chinese crap if you still can't afford it because you don't have a job?

(1) The socialists will say "government assistance will cover it."

(2) The usurists will say "Let us loan you the money."

Blogger Whitecloak July 18, 2019 8:51 AM  

He isn't wrong. Shame, though, that the elite by and large do not care what benefits the people of the nation. Hell, most of them deny there is a nation.

If America is everything to everybody, and thus nothing, what is there for the elite to be loyal to? That would be racist.

Blogger Stilicho July 18, 2019 8:58 AM  

National trade policy should benefit the people of the nation. This really should not be a revolutionary concept in the 21st century.

Instead, we have America's largest corporations conducting a trade war against Americans. The banks use the trade war as an opportunity to enslave Americans. Americans will demand blood when the reckoning occurs and they will get it.

Blogger Avraham July 18, 2019 8:59 AM  

I think that Hobhouse made a similar point. He had written a book on free markets [or liberalism as it was called in those days] and also said this exact point. That there is a limit to free markets. His point was also to show a proof from English history in the 1800's. [I recall that he might have mentioned Gladstone.]

Blogger Miguel July 18, 2019 9:14 AM  

Well summed up, VD.

We want more money to buy the things we build not the things China builds.

Blogger Brett baker July 18, 2019 9:35 AM  

But muh retirement income!

Blogger MATT July 18, 2019 9:42 AM  

Especially cheap Chinese crap that doesnt last, so you have to buy another one.

Blogger Daniel July 18, 2019 9:47 AM  

Cheap imports have driven up the cost of living in the US.

Blogger VFM #7634 July 18, 2019 9:50 AM  

Especially cheap Chinese crap that doesnt last, so you have to buy another one.

It's entirely possible that Chinese crap isn't in fact cheaper, if you consider the time dimension.

Something Chinese-made for $10 that lasts 1 year is actually more expensive than something American-made for $80 that lasts 10 years.

Blogger Dan in Georgia July 18, 2019 9:53 AM  

McChuck wrote:What is the point of cheap Chinese crap if you still can't afford it because you don't have a job?

(1) The socialists will say "government assistance will cover it."

(2) The usurists will say "Let us loan you the money."

How about that? (1) and (2) are the same people!

Blogger Tars Tarkas July 18, 2019 10:20 AM  

Not to mention the precipitous drop in quality.
Nothing lasts anymore. Aside from cars, nothing is really built well anymore, even commercial equipment.
Low prices don't matter if you don't have a job.

Blogger Whitecloak July 18, 2019 10:26 AM  

@12 The low prices aren't even low even if you kept a job. Thanks to mass migration, the other side of the unfettered market economy, prices on static goods and services provided at home go up, up, up, far faster than wages.

So we get shitty products -and- unaffordable major goods and services. What a (((win))).

Blogger David Ray Milton July 18, 2019 10:31 AM  

Free Trade: Where you buy foreigners’ products who won’t buy your product in return.

Blogger Damelon Brinn July 18, 2019 10:43 AM  

@10, Yep. The last Chinese-made item I bought was a $5 laundry basket that started cracking into pieces within the first week. My next one will be American-made if that means I have to make it myself.

Blogger [Redacted] July 18, 2019 10:51 AM  

"If you want to do them the maximum of good, you should rather operate on the articles which give them a maximum of employment."

The Amish and the self-sufficient rural community wins again. But can they make a ship to land the moon!? Oh wait...

Blogger Ominous Cowherd July 18, 2019 11:16 AM  

People on the right of the bell curve have an obligation to people on the left of it to form a society in which the dummies can be self-supporting, productive members of society. If you are one of the smarties, your obligation isn't to the shareholders or the foreigners or your own pocketbook, your obligation is to your nation.

That's Gladstone's point: take care of your own.

Blogger FrankNorman July 18, 2019 11:23 AM  

William Gladstone's belief that trade policy should be one that is to the benefit of all of the people of the country, not just to a small wealthy elite would not go down well today among either the so-called left or right.

Blogger Balam July 18, 2019 11:26 AM  

Ominous Cowherd wrote:If you are one of the smarties, your obligation isn't to the shareholders or the foreigners or your own pocketbook, your obligation is to your nation.

But what will rootless cosmopolitans who gather in mega cities with foreigner cosmopolitans like themselves do? More importantly what shall be done with them?

Blogger DourCdn July 18, 2019 11:38 AM  

@McChuck, 100%, mic drop, nuff said, why can't economists accept this. Everything has a time and place.

Blogger Dave Dave July 18, 2019 11:44 AM  

I've been reading Steve Keen's criticisms of various free trader neoclassicals, and some have justified the economic theory, particularly behind the aggregate demand, saying that the theory works supposing that a central authority allocates resources evenly. In other words, we establish efficient free markets with communist redistribution of wealth. It's all a sham.

Blogger Nate73 July 18, 2019 1:47 PM  

@17: That obligation is claimed by people these days to be UBI or something similar, to which people from the libertarian side will say why should economic winners support economic losers? Just send in the police and pinkertons!

Blogger Ominous Cowherd July 18, 2019 2:28 PM  

Nate73 wrote:@17: That obligation is claimed by people these days to be UBI or something similar, ...

No, we must enable them to be self supporting and productive, not useless welfare drones.

Nate73 wrote:... to which people from the libertarian side will say why should economic winners support economic losers?

Yet another reason not to tolerate the Godless among us. Godless commies, Godless libertards, they're all the same. Godless people will destroy any society. It's what satan does.

Blogger Hammerli 280 July 18, 2019 7:27 PM  

In Dr. Pournelle's hands, this was the argument that turned me against unlimited free trade about a decade ago. Yes, you get cheaper consumer products, but you also have to pay more taxes to provide welfares to the people who used to make those goods domestically.

I'm a supporter of free trade of goods, provided that it IS on an equitable regulatory/tax basis, among peer states. Not merely on the grounds that competition is good, but on the grounds that a larger market supports specialization. Which is very good for small businessmen - especially today, with global communications and shipping.

Blogger Ominous Cowherd July 18, 2019 7:31 PM  

Hammerli 280 wrote:Yes, you get cheaper consumer products, but you also have to pay more taxes to provide welfares to the people who used to make those goods domestically.

Much worse than the taxes, the welfare for the economic losers buys you a resentful, dependent underclass with no purpose in life. You destroy your society from the bottom up to get landfills overflowing with of cheap Chinese schlock.

Blogger Joel Oafsteen July 18, 2019 8:01 PM  

"Much worse than the taxes, the welfare for the economic losers buys you a resentful, dependent underclass with no purpose in life."

A.K.A. The American Blacks and soon to be the Border Jumping Central Americans and their spawn. Will they clash over the Gibs eventually after they've bled Whitey dry or will Uncle Cracker just print up another 10 or 20 Trillion?

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