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Monday, February 24, 2014

Free Trade is global fascism

I worked that out on my own, but it turned out to be unnecessary. This document from the 1967 Congressional Record should suffice to demonstrate that conservatives who favor free trade are being played like Ronald Reagan signing the 1986 Immigration Amnesty under the belief that it would reduce future immigration from Mexico:
“For the widespread development of the multinational corporation is one of our major accomplishments in the years since the war, though its meaning and importance have not been generally understood. For the first time in history man has at his command an instrument that enables him to employ resource flexibility to meet the needs of peopels all over the world. Today a corporate management in Detroit or New York or London or Dusseldorf may decide that it can best serve the market of country Z by combining the resources of country X with labor and plan facilities in country Y – and it may alter that decision 6 months from now if changes occur in costs or price or transport. It is the ability to look out over the world and freely survey all possible sources of production… that is enabling man to employ the world’s finite stock of resources with a new degree of efficiency for the benefit of all mandkind.

But to fulfill its full potential the multinational corporation must be able to operate with little regard for national boundaries – or, in other words, for restrictions imposed by individual national governments.

To achieve such a free trading environment we must do far more than merely reduce or eliminate tariffs. We must move in the direction of common fiscal concepts, a common monetary policy, and common ideas of commercial responsibility. Already the economically advanced nations have made some progress in all of these areas through such agencies as the OECD and the committees it has sponsored, the Group of Ten, and the IMF, but we still have a long way to go. In my view, we could steer a faster and more direct course… by agreeing that what we seek at the end of the voyage is the full realization of the benefits of a world economy.

Implied in this, of course, is a considerable erosion of the rigid concepts of national sovereignty, but that erosion is taking place every day as national economies grow increasingly interdependent, and I think it desirable that this process be consciously continued. What I am recommending is nothing so unreal and idealistic as a world government, since I have spent too many years in the guerrilla warfare of practical diplomacy to be bemused by utopian visions. But it seems beyond question that modern business – sustained and reinforced by modern technology – has outgrown the constrictive limits of the antiquated political structures in which most of the world is organized, and that itself is a political fact which cannot be ignored. For the explosion of business beyond national borders will tend to create needs and pressures that can help alter political structures to fit the requirements of modern man far more adequately than the present crazy quilt of small national states. And meanwhile, commercial, monetary, and antitrust policies – and even the domiciliary supervision of earth-straddling corporations – will have to be increasingly entrusted to supranational institutions….

We will never be able to put the world’s resources to use with full efficiency so long as business decisions are frustrated by a multiplicity of different restrictions by relatively small nation states that are based on parochial considerations, reflect no common philosophy, and are keyed to no common goal.
Fascists are always all about "efficiency". If the thought of global efficiency doesn't put a shiver down the spine of a God-fearing free trader and cause him to rethink his position, well, there isn't much hope for him. Note that "the idea behind getting rid of these barriers wasn’t about free trade, it was about reorganizing the world so that corporations could manage resources for “the benefit of mankind”"

Corporate resource management in the name of freedom. That's what "free trade" is.

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65 Comments:

Anonymous Idle Spectator February 24, 2014 3:04 PM  

Human resources can suck my unidle stick.

Anonymous MrGreenMan February 24, 2014 3:12 PM  

I got booted out of an honors econ class once because I asked, "Why is efficiency always the right goal?"

Anonymous Idle Spectator February 24, 2014 3:15 PM  

Was that in high school? Because I think any economist with his not up his ass would be happy to discuss issues like that. It is what they live for. And charts.

Anonymous Maximo Macaroni February 24, 2014 3:30 PM  

Somebody - OK, it was Evola - said this "The economic factor exercises a hypnosis and a tyranny over modern man." Anissimov quoted it over on "More Right". What if the goal of man's modern life, as in ancient days, was something different from what capitalism and communism assume? Something weird, like, oh, I don't know, just to pick something at random - say, "Eternal salvation"?
Wouldn't this choice of goals change the "economic calculus"?

Blogger Jake February 24, 2014 3:52 PM  

Evil people will take their self-serving designs and disguise them behind the pretense of doing something genuinely beneficial or at least something most are sympathetic towards.

Global imperialism is called "spreading democracy"

Divorce courts "protect women"

Impoverishing the middle class and creating a new currency bubble for Goldman Sach and co to net billions off in the form of carbon credits is called "protecting the environment"

Imprisoning children for ~20,000 hours of their childhood, subjecting them to indoctrination, psychological experimentation, and cruelty from teachers and students alike is called "education".

So it is here. I have no desire to see the world re-organized for the benefit of anyone. I'm under no illusions that anything our government does is going to benefit me or mine in any way, but I don't see how any of that leads to "people should be told who they can and cannot do business with". If that is what you're saying.

Government imposed "free trade" is obviously a contradiction in terms. If it's being coerced, subsidized, taxed, or restricted by the government it's clearly not free. It's just another example of liars and cheats corrupting language to suit their ends.

Anonymous Steveo February 24, 2014 3:58 PM  

Benefit all mankind... more like "To serve mankind" ala Rod Serling's Twilight Zone episode

Anonymous AlteredFate February 24, 2014 3:59 PM  

"Merchants have no country. The mere spot they stand on does not constitute so strong an attachment as that from which they draw their gains."

...the love of money is the root of all evil.

Anonymous Anonymous February 24, 2014 3:59 PM  

Do people realize that "efficiency," where business and trade are concerned, means making sure no one gets one more penny than absolutely necessary? Because that's what it means. A business is running at maximum efficiency when it is getting as much productivity out of its workers for as little cost as possible. "Global efficiency" would mean that every business is getting its labor and materials as cheaply as possible, and selling its goods as cheaply as possible.

So if you want to ask for a raise or get a better-paying job so you can save up for a bass boat -- sorry, that's not efficient. The most efficient thing is for you to work for just enough wages to continue to feed yourself and buy some necessities at Wal-Mart to hold up your end as a consumer. If you don't like being an efficient cog, there's some third-world person who will be glad to take your position.

Anonymous FUBAR Nation Ben February 24, 2014 4:01 PM  

If I'm not mistaken, Karl Marx was for free trade because it breaks down nations.

Anonymous Anonymous February 24, 2014 4:07 PM  

Government imposed "free trade" is obviously a contradiction in terms. -- Jake

I used to tell people that it shouldn't take more than one page to write up a free trade agreement. One sentence, really: "There shall be no restrictions or tariffs on trade between our citizens." The 4000 pages of NAFTA and 10,000 pages of GATT were a long list of restrictions on free trade and sweetheart deals for connected lobby groups.

Blogger Jake February 24, 2014 4:09 PM  

http://en.wikipedia.org/wiki/Free_trade

"Socialists frequently oppose free trade on the ground that it allows maximum exploitation of workers by capital. For example, Karl Marx wrote in The Communist Manifesto, "The bourgeoisie... has set up that single, unconscionable freedom – free Trade. In one word, for exploitation, veiled by religious and political illusions, it has substituted naked, shameless, direct, brutal exploitation." Nonetheless, Marx favored free trade solely[32] because he felt that it would hasten the social revolution. To those who oppose socialism, this becomes an argument against free trade."

Anonymous kh123 February 24, 2014 4:12 PM  

"...it was about reorganizing the world so that corporations could manage resources for “the benefit of mankind”"

But remember, the speaker isn't bemused by utopian visions! Especially when it comes to supranational institutions overseeing antitrust policies.

Anonymous Noah B. February 24, 2014 4:21 PM  

"The 4000 pages of NAFTA and 10,000 pages of GATT were a long list of restrictions on free trade and sweetheart deals for connected lobby groups."

Pay no attention to that giant sucking sound you hear.

Anonymous Salt February 24, 2014 4:25 PM  

"Free Trade, Bitches!"

Anonymous Krul February 24, 2014 4:28 PM  

I love the way this is written; it's beautifully explicit. This is from a time when people said what they meant on occaision. Nowadays they tend to bury their actual beliefs and goals under suffocating layers of 'plausible deniability'.

Blogger James Dixon February 24, 2014 4:51 PM  

> "Global efficiency" would mean that every business is getting its labor and materials as cheaply as possible, and selling its goods as cheaply as possible.

Uhm, no. Yes, it's getting its labor and materials as cheaply as possible. But its not selling its goods as cheaply as possible. It's selling its good at the highest possible price. Remember that goal of being efficient is to make money, and you don't do that by selling as cheaply as possible.

Anonymous Quartermain February 24, 2014 4:54 PM  

Patrick J. Buchanan said the two parties are separate wings of the same bird of prey.

He hit the nail on the head when he said that.

Anonymous redsash February 24, 2014 5:02 PM  

Globalism is Treason. One valley's villages can provide for a man's needs from cradle to grave. In middle Tennessee Nashville made the Marathon automobile, Barrett still makes the Rec 7 in 6.8 caliber, Vanderbilt still heals and educates, textiles were made, produce grown, farming equipment forged. From around 1820 to the 1930s middle Tennessee produced the more equipped and complete Southern Man. A man who knew that he was a spiritual being living in a physical body for a very brief moment. Go and ask the Vanderbilt Agrarians.

Anonymous TJ February 24, 2014 5:09 PM  

And who owns these corporations?

Blogger K February 24, 2014 5:16 PM  

Going after free trade, particularly with China could be the basis of an agreement to keep the unions out of the 2016 election. Unfortunately that would take a bold vision and some guts. Qualities which are unfortunately in short supply right now.

Anonymous Anonymous February 24, 2014 5:48 PM  

Uhm, no. Yes, it's getting its labor and materials as cheaply as possible. But its not selling its goods as cheaply as possible. It's selling its good at the highest possible price.

Yes, if you're just talking about an individual business. But for the "global economy" to be maximally efficient, all businesses have run both costs and prices as low as possible while making just enough profit to stay in business.

That's why they talk about needing more top-down control and "common goals." They can't have individual businesses or nations being "inefficient" by trying to profit more than others. Everyone has to be held to a lowest common denominator -- determined by themselves, of course -- to create the greatest efficiency for all.

Anonymous tungsten February 24, 2014 5:53 PM  

Makes me think of a speech from the 1970's movie, Network. Not the famous one with the TV anchor being fed up and not taking it anymore; but, one that occurs later in the movie and is given to the TV anchor by the network's Chairman of the Board after the TV anchor incites his national audience to phone Washington D.C. and defeat some pending pro-business legislation.


"You have meddled with the primal forces of nature, Mr. Beale, and I won't have it! Is that clear? You think you've merely stopped a business deal. That is not the case! The Arabs have taken billions of dollars out of this country, and now they must put it back! It is ebb and flow, tidal gravity! It is ecological balance! You are an old man who thinks in terms of nations and peoples. There are no nations. There are no peoples. There are no Russians. There are no Arabs. There are no third worlds. There is no West. There is only one holistic system of systems, one vast and immane, interwoven, interacting, multivariate, multinational dominion of dollars. Petro-dollars, electro-dollars, multi-dollars, reichmarks, rins, rubles, pounds, and shekels. It is the international system of currency which determines the totality of life on this planet. That is the natural order of things today. That is the atomic and subatomic and galactic structure of things today! And YOU have meddled with the primal forces of nature, and YOU... WILL... ATONE! Am I getting through to you, Mr. Beale? You get up on your little twenty-one inch screen and howl about America and democracy. There is no America. There is no democracy. There is only IBM, and ITT, and AT&T, and DuPont, Dow, Union Carbide, and Exxon. Those are the nations of the world today. What do you think the Russians talk about in their councils of state, Karl Marx? They get out their linear programming charts, statistical decision theories, minimax solutions, and compute the price-cost probabilities of their transactions and investments, just like we do. We no longer live in a world of nations and ideologies, Mr. Beale. The world is a college of corporations, inexorably determined by the immutable bylaws of business. The world is a business, Mr. Beale. It has been since man crawled out of the slime. And our children will live, Mr. Beale, to see that... perfect world... in which there's no war or famine, oppression or brutality. One vast and ecumenical holding company, for whom all men will work to serve a common profit, in which all men will hold a share of stock. All necessities provided, all anxieties tranquilized, all boredom amused."

Anonymous DNW February 24, 2014 6:08 PM  

Strange that the left seems blind to the core notion of fascism; always imagining that it cannot exist apart from an ethic basis or without torchlight parades and overt militarism.

They miss the entire bundled fates bit.

Anonymous civilServant February 24, 2014 6:21 PM  

Why is efficiency always the right goal?

Those economic activities that are more efficient achieve greater profits than those which are not (all other things being equal). Whether this is right or not is immaterial as more efficient activities drive out less efficient activities. Every right-thinking freedom-loving libertarian capitalist should understand this. Those who fail to understand are driven from the marketplace - unless of course they are supported by government decrees enforcing support for their pet inefficiencies.

Anonymous Big Bill February 24, 2014 6:34 PM  

"Today a corporate management in Detroit or New York or London or Dusseldorf ..."

Detroit. That is so cute!

Blogger Brad Andrews February 24, 2014 6:37 PM  

One business' output is the input to another business or consumer, thus it really is all about lowest price in that case.

====

So someone always has to manage trade? Why do we trust the ones who can't manage free trade to manage managed trade? Seems like an inherent contradiction with no simple answers.

Blogger Brad Andrews February 24, 2014 6:37 PM  

This comment has been removed by the author.

Blogger SkarnkaiLW February 24, 2014 7:17 PM  

Economic efficiency, is somewhat different than what most businesses, engineers, or politicians use, generally. A lot of equivocation happens due to that. Economists try and use a welfare metric, like Pareto Optimality, to derive optimal outcomes. This is different than "efficiency" or wringing every cent of productivity out of workers, or what have you. Anyways, as both sides benefit ex ante from any voluntary trade, free trade really only required the government to back off. Which of course it never does, as there is too much money and power to be had in "managing" trade. For the Greater Good, you know.

Blogger Kallmunz February 24, 2014 7:20 PM  

The biggest problem with free trade is that it punishes governments that desire to increase regulations and taxes. Also, corporations that do not wish to compete are able to make political deals in order to seek protection from foreign competition which allows them to raise prices and of course profits. The only loser in the deal is the public especially those who earn lower incomes, but you know, for the good of the country and all.

Anonymous Earl February 24, 2014 7:23 PM  

"...Implied in this, of course, is a considerable erosion of the rigid concepts of national sovereignty... I think it desirable that this process be consciously continued... business decisions are frustrated by a multiplicity of different restrictions by relatively small nation states that are based on parochial considerations..."

Except when those small nation states enforce corporate property laws. Then we need to keep those antiquated government thingies in tact to protect us from the loonies who will shoot out the power lines and blow up the auto factories or sell unauthorized replicas of my products. I guess the alternative is that the multinationals can just provide their own security forces themselves, if need be.

Blogger James Dixon February 24, 2014 7:29 PM  

> ...all businesses have run both costs and prices as low as possible while making just enough profit to stay in business.

You're overlooking that those making the decisions are the primary beneficiaries of the money those companies make. They don't get those benefits from companies making "just enough profit to stay in business". Unless you're counting the cost of providing those benefits as one of the costs of doing business, of course.

Anonymous Mike M. February 24, 2014 7:30 PM  

I think a distinction must be drawn between free trade with peer and non-peer states.

Free trade with peer states is a good thing. Peer states have similar workplace laws, similar standards of living. Free trade merely allows access to a larger marketplace. More competition drives up efficiency for items produced in large quantities, the larger market allows small businesses to prosper in niche markets. The customer wins.

Free trade with non-peer states can be harmful, especially in large doses. A non-peer has a lower cost of living, much lower workplace standards. You export manufacturing jobs, especially jobs manufacturing commodity items (go find a plate or fork NOT made in China). As a result, your own people lose employment - particularly the people on the left side of the IQ Bell Curve. They get forced down-market, or onto welfare. At the same time, the country you are buying from has a harder time developing their own high-end industries, since it's cheaper to trade for high-tech items. The only people who benefit are the owners of the firms doing the trading.

Anonymous Anonymous February 24, 2014 7:38 PM  

Why is efficiency always the right goal?

The more efficient a machine is, the more bang you get for your buck -- more miles per gallon, the more widgets built per hour, whatever. So in theory, the more efficient an economy is, the more "stuff" we get out for what we put in. More efficiency means more stuff for less work: more prosperity for all.

But I thought everyone understood by now that large economies are far too complex to be controlled efficiently from afar, and that command-and-control economies actually end up with huge inefficiencies as a result. The people best able to judge what a business or community needs to be prosperous are the ones working and living in it, not distant experts.

These people may have different methods, but their goals and attitudes are no different from those of Soviet Communists. Are our memories really that short?

Anonymous Pseudo-Nate February 24, 2014 7:43 PM  

http://motorsportstalk.nbcsports.com/2014/02/21/richard-petty-ready-to-come-out-of-retirement-to-race-danica-patrick/

I don't follow NASCAR, but this seems like it has Holtgren-Curie written all over it. Either that or I hope she's so humiliated by losing the animated corpus of Richard Petty that she leaves Sprint Cup

Anonymous wcu February 24, 2014 8:21 PM  

We'll git it right this time! Utopia is right around the fuckin corner...can't you just see it? Feel it? Believe it slaves!...err...human resources...

Blogger Outlaw X February 24, 2014 8:30 PM  

Note that "the idea behind getting rid of these barriers wasn’t about free trade, it was about reorganizing the world so that corporations could manage resources for “the benefit of mankind”"

This is a simple concept at first look, but the more I think about it the more complex the statement is. Vox (or anyone with strength in world economy), would you say that "free trade" is responsible for most of the wars and civil disruption of the populace than any other factor? I need to think about this some more.

Anonymous E. PERLINE February 24, 2014 8:57 PM  

Free trade means avoidance of government regulation.

Corporate survival means management be allowed to prosper or fail, according to the quality of its decision making.

I know production has has been developed unevenly over the planet, but if the above changes were allowed it might lead to increased parity worldwide.





Anonymous Idle Spectator February 24, 2014 9:16 PM  

Corporations are so 20th century.

Blogger James Dixon February 24, 2014 9:39 PM  

> Corporations are so 20th century.

Actually, you are quite correct. Their time is passing, at least in their current form.

Anonymous Richard February 24, 2014 9:55 PM  

I heard the story (can't confirm the source anymore), that during World War II, the SS running the Awuschwitz concentration camp (that portion of it that included a complex of industrial factories) did a study that concluded that if they fed the Jews more, they would be more productive before they were worked to death. I.G. Farben rejected the recommendation because it would have had a negative effect on their bottom line profits.

Those who use 'efficiency' as a yardstick for measuring 'goodness' morally blind.

Anonymous Idle Spectator February 24, 2014 10:01 PM  

Actually, you are quite correct. Their time is passing, at least in their current form.

Yeah. I usually am.

The Songs of the IBM

That's not gay, at all.

That was in 1959. Goodbye 20th century.

Anonymous Idle Spectator February 24, 2014 10:14 PM  

Ever Onward IBM

Those hippies are making much more sense now.
If I had to put up with that everyday, I'd probably grow my hair long and drop copious acid too.

Anonymous Jason Roberts February 24, 2014 10:47 PM  

No wonder Hal Lindsey and co. believed global government would usher in the reign of antichrist. Any second thoughts on his predictions?

Blogger Chris Ritchie February 24, 2014 11:19 PM  

This comment has been removed by the author.

Blogger Chris Ritchie February 24, 2014 11:32 PM  

Here was my question during a recent Mises Academy course, Austrian Economics for Managers:
"Why does Labor get so poorly compensated when compared with Stock Holders and Management? I don't think I'm subscribing to the labor theory of value as Marx proposed. I know that all 3 are needed in a firm. But why do stock holders - capital providers - get paid in perpetuity (stock dividends and the like) while the Labor that actually produces the goods and services people are paying for get only a pittance by comparison?

I read Michael Rozeff's blog post today on Lew Rockwell about manufacturing and China. He spoke as if it were a good thing that the labor market in China is now producing the goods. I don't see how that is a rising tide raising all ships. On the contrary, we are all being pulled to the lowest common denominator. Our standard of living is shrinking to match the slave labor in China. Don't you have to have free flow of labor across borders to have a truly free market? We don't have that with China do we? And that leaves out the very real problems of an economy that ravages its own natural resources for the sake of profit. And I'm not sure the rule of law applies equally to all in China either."

Here was his reply: "Your second question is a good one but, if you don’t mind, I’ll defer answering until week 5 – that’s one of the main topics of that week’s discussion! And a little for week 6 too. "

When it wasn't really covered in week 5, I asked again: "The real question is how did we arrive at the concept that initial capital owners are always the final owners? Isn't this a construct of our current corporate system? What if corporate and contract law emphasized groups of employees as owners instead of the Capitalists?"

It was kind of brushed aside. Another poster ended with the Golden Rule: "He who has the gold makes the rules."

So, am I right? Am I off base? I've put a copy of Ian Fletcher's book, Free Trade Doesn't Work, in my Amazon cart. What else do the folks here recommend?

Blogger Unknown February 24, 2014 11:38 PM  

Vox , you are quite hot : )

Anonymous Conservative February 24, 2014 11:51 PM  

I like what Trump said on Michael Savage's radio program, He's not into "free trade" but fair trade.

Anonymous bob k. mando February 25, 2014 12:08 AM  

Pseudo-Nate February 24, 2014 7:43 PM
I don't follow NASCAR, but this seems like it has Holtgren-Curie written all over it. Either that or I hope she's so humiliated by losing the animated corpus of Richard Petty that she leaves Sprint Cup



it's been 22 years since Richard has been in a race car and he's +70 years old. he's got nothing to lose.

on the other hand, the modern Sprint Cup car is VERY different ( aero effects honed to a knife edge and BBSS suspensions ) than anything Richard ever drove. that actually gives Danica an 'unfair' advantage.

if Tony Stewart wants to reclaim his ballsack, is what he needs to do is have Richard and Danica grudge match dirt late models at Eldora ( the track Tony owns in New Weston, OH ). Danica has driven a LM there ... once? and Richard has won many a race on dirt.

that would be as 'fair' as a race could be for a ~30 year old to be challenging a ~70 year old.

as far as Holtgreen-Curie, Richard is a lot more frail than Danica simply due to age. an impact which won't bother her ( and wouldn't have bothered him 40 years ago ) may seriously hurt him.

Anonymous Boetain February 25, 2014 12:26 AM  

Yes, free trade sucks. Just look at how North Korea is doing so much better than Singapore.

Anonymous Toby Temple February 25, 2014 3:19 AM  

Yes, free trade sucks. Just look at how North Korea is doing so much better than Singapore.

If you check the pure libertarian definition of free trade, then you will know that Singapore is a bad example.

Blogger IM2L844 February 25, 2014 8:15 AM  

"The real question is how did we arrive at the concept that initial capital owners are always the final owners? Isn't this a construct of our current corporate system? What if corporate and contract law emphasized groups of employees as owners instead of the Capitalists?"

I'm not sure I understand the questions. Maybe if you describe a sample company's beginning to end scenario with widgets using your alternative corporate laws and contract laws. Otherwise, I don't really see the issue. AFAIK, nothing prohibits groups of employees from becoming owners and running the show. They do it all the time.

Blogger SkarnkaiLW February 25, 2014 9:31 AM  

Initial owners are final owners, because of property rights. Assuming no other transactions. A worker could save his money and buy shares of stock, or save and buy his own capital directly and start his own firm. This is how capital initially is formed to begin with. As for the share of the surplus of production, how the shares end up are based upon bargaining position, market power, and unfortunately legislation. Labor by itself is very unproductive, an capital alone has a productivity of zero. When combines they produce a large amount for a given set of inputs. Workers and capitalists share this. Workers generally want money up front in the form of wages, however, and lose out some of of the time value of money, as well as the other costs involved in getting a product to market. For a worker to gain "the full product of his labor" per Marx, he has to buy the capital, raw materials, make the item himself, and then find a someone willing to buy it. This was true of the artisan class, and to some extent the farming class as well prior to the industrial revolution.

Anonymous E. PERLINE February 25, 2014 9:39 AM  

I don't know Singapore's position on free trade, but I know Hong Kong's. They have the lowest Gov't. restrictions, and therefore they have the most free trade.

The trouble with the US is that the number of restrictions on free enterprise have crossed the line. This applies to European nations also.

Now I'm afraid that it will take nothing less than the restoration of a wild west economy to turn things around.

Anonymous Dr. Kenneth Noisewater February 25, 2014 11:22 AM  

Lest you think corporate theme songs are passé..

http://www.youtube.com/watch?v=yXUhQnOYR54

Anonymous Boetain February 25, 2014 12:54 PM  

Somebody should let Singapore know that what they think of as free trade is not free trade because some libertarian said so

Anonymous JJ February 25, 2014 3:21 PM  

There is no free trade today. Hasnt been for 40+ years since the world wen off the gold standard. In order for countries to practice protectionism previously, they had to have tariffs, import quotas, and export subsidies. The problem of course is that this was blatant and countries would immediately retaliate in kind. Today, none of that is necessary. Countries around the world are engaging in trade wars against the US through exchange rate manipulation.

And the American political class not only doesnt mind, but encourages it. They love being able to rack up endless debt at low interest rates. And they dont want the party to ever end. It doesnt matter at all that the living standards of Americans are falling. In fact, for Democrats, its even better because it increases dependency on the state, which is always good for more votes. And since Republicans today are just the PR firms for multinationals, its good for them too. Its also why they pay lipservice on immigration enforcement. US Chamber of Commerce wants illegal labor, and thats the priority of Republicans.

If the gold standard is restored for the global economy, exchange rate manipulation goes out the window. Protectionism can then be dealt with straight on, and countries like China that want to engage in it would be met with steep tariffs. As it is today, the only country practicing free trade is the US. Everyone else is protecting their own workers.

Anonymous Toby Temple February 26, 2014 3:05 AM  

Somebody should let Singapore know that what they think of as free trade is not free trade because some libertarian said so

Somebody does not know the meaning for free trade and yet bothered to have an opinion about it.

Here, let me help that somebody out:

Free Trade noun
The unrestricted purchase and sale of goods and services between countries without the imposition of constraints such as tariffs, duties and quotas.

Anonymous Boetain February 26, 2014 1:13 PM  

Toby:

How about come to earth and do some observation here? You would find that some countries have policies which are more aligned to free trade. Other countries have policies that are less aligned to free trade. Would you agree that Singapore is more aligned to free trade than North Korea? I would answer yes. I also observe that countries that rank high in free trade criteria are, on average, doing better than countries that rank low in free trade critieria. Maybe the planet you are on has a country with absolute pure free trade and you can enlighten us on how that is going, but I cannot observe it.


Anonymous Boetain February 26, 2014 3:06 PM  

Heritage.org 2014 rankings of trade freedom (USA scored 86.8 for comparison):

Top five (all tied with a score of 90):
Hong Kong
Liechtenstein
Macau
Singapore
Switzerland

Bottom 5 (not counting N/A's):
North Korea 0
Seychelles 33.4
Iran 41.4
Maldives 43.8
Vanuatu 48.0




Anonymous WaterBoy February 26, 2014 6:56 PM  

Boetain: "Yes, free trade sucks. Just look at how North Korea is doing so much better than Singapore."

You might have a point if free trade was the only thing determining how well each respective country was doing (in the absence of such things as political-economic systems, individual liberty, etc.).

But we all know that's not the case, don't we?

Blogger SkarnkaiLW February 26, 2014 7:28 PM  

All things being equal, free trade is a net benefit over all, due to reduced costs. However, dealing in aggregates hides some of effects. On net there is a loss of producer surplus due to increased competition, and a corresponding increase in consumer surplus. As people are generally both the increase in total surplus dominates. However, as men are generally producers and women consumers, free trade (especially managed/forced open markets per the WTO) can act as a subsidy to women. Normally, this is not a problem, if they are spending their own income, but as well all know, our government on net transfers wealth from men to women. As well as from the productive to consumers. So the net effect is more of a mixed bag, due to government intervention. The abuse of the reserve currency status of the US also aggravates this process. The net result is, I suppose, capital flight, and declining returns to producers.

A similar effect happens with monetary/credit expansion. Economists say in the middle-run/intermediate run and the long run, the effect of monetary policy is zero, as prices will adjust. But this aggregation hides the Cantillion effects, in which those who receive the money early are able to buy goods before prices can adjust, and thus see an increase in purchasing power, while those who receive it last or not at all, see a decline in purchasing power. This effect also inflates asset values, in nominal terms. So the stock market makes new highs, without an increase in real value in the economy as a whole.

Anonymous WaterBoy February 26, 2014 7:38 PM  

Boetain: "Heritage.org 2014 rankings of trade freedom
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.
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North Korea 0
"


Also bear in mind that this low ranking is not due so much to interior trade barriers like tariffs and duties, but is mostly the effect of exterior sanctions by other countries and the UN. It doesn't mean it's any less of a barrier, but it isn't the same thing as when a country voluntarily imposes its own barriers.

Anonymous Boetain February 26, 2014 9:27 PM  

Waterboy:

Is it coincidence that all of the countries that score well on trade freedom are also wealthy and successful? It must be due to other factors right? Like let's say Hong Kong cut back on trade freedom but kept other policies the same. They would be doing just as well right?

What about if Singapore had been protectionist for the last 50 years? They did have a choice and they chose free(r) trade. I don't think that city would be quite as shiny these days if they had made a different choice.

You trade protectionists need to look up from theory and note what is actually happening in the real world.

Anonymous WaterBoy February 27, 2014 5:05 AM  

Boetain: "Is it coincidence that all of the countries that score well on trade freedom are also wealthy and successful?"

It's uncertain; there are certainly disparities. For instance, Liechtenstein and Macau rank high in both Trade Freedom and GDP/capita. But Georgia and Mauritius -- though both rank high in Trade Freedom -- are far below the US in GDP/capita.

*GDP/capita as one example measurement; others may yield different results.

"It must be due to other factors right?"

It could certainly be influenced by other factors, yes. The overall Economic Freedom Index is measured according to ten separate factors, any of which could impact a nation's economic success.

"Like let's say Hong Kong cut back on trade freedom but kept other policies the same. They would be doing just as well right?"

Possibly. However, Trade Freedom is also affected by policies of other nations, so it would also depend on how other nations reacted. This is included in the factor NTBi in the formula below (source):

Trade Freedomi = (((Tariffmax–Tariffi )/(Tariffmax–Tariffmin )) * 100) – NTBi

Any given country can have a higher raw score than another, yet end up with a lower Trade Freedom score based on those NTB factors.

Furthermore, if Hong Kong cut back on trade freedom in response to barriers enacted by other countries, thereby convincing those other countries to remove their own barriers, it could conceivably increase their score.

"What about if Singapore had been protectionist for the last 50 years?"

See above; same thing.

"You trade protectionists need to look up from theory and note what is actually happening in the real world."

I did, and it isn't as clear cut as you are trying to make it appear.

Blogger Galt-in-Da-Box February 27, 2014 10:03 AM  

There's always a "good" excuse to do evil (just ask the LIARarchy of the Roman CULT where the end ALWAYS justifies the means) and the welfare of humanity is ever the alibi of tyrants.

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