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Tuesday, June 21, 2016

Free Trade debate podcast

Tom Woods has posted Episode 684 Debate on Free Trade, with Bob Murphy and Vox Day, on his site. Below is part of my 10-minute presentation opposing the resolution, which stated:

Free trade is always economically beneficial in the long term, and the more free trade is practiced by a country, the higher the standard of living of its inhabitants will be.

The Japanese novelist Natsume Soseki once wrote: “The memory of having sat at someone’s feet will later make you want to trample him underfoot.” While I have been seated, metaphorically, at the feet of the great Austrian economists for most of my life, I harbor no desire to trample them. I retain genuine affection and respect for the Austrian School of economics.

However, just as the classical economists eventually gave way to the superior understanding of the Austrians, so Ludwig von Mises and Murray Rothbard will one day be surpassed by the post-Austrian economists of the future. Is that day here yet? I will argue that it is, at least with regards to the doctrine of free trade.

The world has changed in many ways in the 240 years since Adam Smith triumphed over the mercantilists. The most significant changes, with regard to the topic at hand, concern the mobility of capital, a factor which was not accounted for by either Smith or Ricardo, and the mobility of labor, a factor which was never taken into consideration by Mises or Rothbard.

Let me first state that I accept Bob’s general terms with regards to both free trade meaning unlimited transactions between domestic and foreign parties, and national wealth being measured on average. I am presenting five arguments against free trade tonight: they are empirical, mathematical, existential, practical, and logical. Given the time constraints, it is not possible to go very deep into any of them, but each of the five represents a very serious and substantial challenge to the claim that free trade makes a nation wealthier in the long term.

My first argument is empirical. The conventional argument in favor of free trade has changed very little over the centuries, and was repeated this very week in a major essay by Francis Fukuyama in Foreign Affairs. It states:
  1. International trade has become increasingly free over time.
  2. Wealth has increased during the same period.
  3. Therefore, free trade produces wealth.
Or to put it another way, as Bob did in his excellent textbook, Lessons for a Young Economist, “If we imagine an initial situation of worldwide free trade, and then further imagine that an individual country decided to “protect” its domestic industries and “save jobs” by preventing foreign goods from crossing its borders, its residents would become much poorer.”

But this is not true. We have considerable evidence that freer global trade does not necessarily make an individual country wealthier. For example, although the free trade in goods has considerably increased over the last 50 years, real wages are lower in the USA than they were 43 years ago. So is the country wealthier? Proponents of free trade often cite growing GDP per capita, and it is true that since 1964, US GDP per capita has risen from $3.5 thousand to $54.6 thousand, a 15-times increase.

That means the USA is wealthier, right? No, because over the same 50-year period, total US debt per capita has risen 34 times. If your income doubles, but your personal debt goes up by a factor of 4.5, are you wealthier? No, of course not. Your perceived increase in wealth is a mirage.

Freer trade has clearly not produced greater wealth for America or Americans, but rather, greater indebtedness. This is not to say free trade can never benefit a national economy, but we have clear empirical evidence that in the case of the United States, it has not. Therefore, the resolution is false.

My second argument against free trade is mathematical. Free trade theory relies, at its core, upon the Law of Supply and Demand. But in Debunking Economics, Steve Keen cites the work of William Gorman, who in 1953 utilized mathematical logic to prove that the Law of Demand does not apply to a market demand curve. It only applies to single individuals, and it is not possible to derive a market demand curve by simply adding together the quantities demanded by all individuals at each price. In other words, the combination of all rational consumer preferences results in an irrational market where lower prices may or may not increase demand.

This proof has many implications for economics that have not yet been explored, and among the obvious casualties is David Ricardo’s theory of Comparative Advantage. The math literally does not add up. Therefore, the resolution is false.

Listen to the rest of it there. Brainstorm members will receive a full transcript once it is complete. I should note that Steve Keen informed me that there is a more substantial mathematical case to be made against free trade than the one I presented, but as it was his point and not mine - and frankly, I don't fully understand it yet - I did not utilize it in the debate. I will devote a separate post to it later.

Labels: , ,

67 Comments:

Anonymous Icicle June 21, 2016 4:13 AM  

International trade has become increasingly free over time.
Wealth has increased during the same period.
Therefore, free trade produces wealth.


tl;dr

Post hoc ergo propter hoc.

Blogger Shimshon June 21, 2016 4:15 AM  

Proponents of Austrian Economics are like Francis Fukuyama. They have become dogmatic regarding the subject.

Blogger Sherwood family June 21, 2016 4:26 AM  

This sounds very interesting, VD. Thanks for taking on the subject and putting this debate together.

Blogger Gapeseed June 21, 2016 5:48 AM  

Apologies if these points were addressed (I will listen later), but...

1. Assuming labor mobility is necessary in free trade, would a proud racially restrictionist country like Japan have the solution, with extremely limited means of citizenship combined with....

2. Technology. Japan is the world leader in robots, which would obviously help alleviate the need for low-skilled labor. Wouldn't advances in telecommunications technology help reduce the need to settle at points of trade, something not captured in past data?

3. What is the role of centralized banking and fiat currency in the labor mobility? If the United States had incurred the same levels of indebtedness using hard currency, would we be able to afford importing third world labor?

Anonymous Bratwurst June 21, 2016 6:05 AM  

Tom Woods' closing argument falls apart immediately if you consider that not every nation is big enough to be autarc.

Countries like Germany do not have enough natural resources. They have to trade. They have to trade goods they do not have.

Blogger Lovekraft June 21, 2016 6:09 AM  

Unless there is built into the system a moderation of population and cultural forces, eventually the system will be crushed under its own weight.

Blogger Shimshon June 21, 2016 7:37 AM  

Just finished listening. Fantastic!

Blogger residentMoron June 21, 2016 8:02 AM  

Icicle

It could be correctly stated in the negative;

3: ergo, free trade has not decreased wealth

But even then the number of qualifications required to make this valid, would still fill libraries. In the end, the simple historical counter factual knocks it down.

Blogger bob k. mando June 21, 2016 9:00 AM  

"She cannae take much more, Captain."

Blogger Mr.MantraMan June 21, 2016 9:25 AM  

I wouldn't take Rothbard or Mises at face value without asking who they are and what culture produced them.

Brilliant men, but coming from them it sounds like per usual they leave a gap in their ideas, a silence they would be very uncomfortable talking about. Jews and their capital were meant to stay mobile and labor if you count the thinking and managing of financial and business mobile as well.

Off topic, I'll bet The Donald arbitrages that mindset to his advantage.

Blogger Michael Larson June 21, 2016 9:52 AM  

Your argument that free trade does not increase a country's wealth because...
A) Free trade has increased over the last 50 years, and
B) Real wages have decreased in the US over the same time period
...is problematic in that it assumes correlation = causation. There are so many other factors that produce an country's average real wage, besides trade with other countries. In particular, there have been so many economically destructive government initiatives and policies enacted over the last 50 years that it would be impossible for a wealth creator like free trade to counter all that destruction. In addition, an increase in international trade does not necessarily mean an increase in free trade. Regulations, restrictions, bribes, corruption, etc., are the basis of almost all international trade. It could be argued that there is, in fact, very little if any free trade in the current world economy.

Blogger VD June 21, 2016 9:53 AM  

Your argument that free trade does not increase a country's wealth because...
A) Free trade has increased over the last 50 years, and
B) Real wages have decreased in the US over the same time period
...is problematic in that it assumes correlation = causation.


That's a stupid objection, Michael, because it applies to the generic free trade argument as well. You can't dismiss mine without first dismissing theirs.

Blogger Nick S June 21, 2016 9:55 AM  

Just listened. Bob seemed a little taken by surprise and kept trotting out the practiced cookie cutter responses of a lecturer and glossing over the intrinsic dynamics of Vox's specific arguments. That's to be expected, I suppose, but I would clearly give this round to Vox. I'm looking forward to more of this.

Anonymous Joel June 21, 2016 10:08 AM  

It would have been interesting to hear a comparison of cheap goods and of International Aid instead of welfare, as it seems that is a better analogue. Especially so, because Woods' has had guests on to condemn International Aid.

Episode 644 asks, "How Not to Help the World's Poor" and partly answers it by saying, "stop giving them free stuff."

I don't know that it would have benefited the resolution, as their receiving free stuff does raise living standards, as defined by economists.

Blogger Gaiseric June 21, 2016 10:12 AM  

Nick S wrote:Just listened. Bob seemed a little taken by surprise and kept trotting out the practiced cookie cutter responses of a lecturer and glossing over the intrinsic dynamics of Vox's specific arguments. That's to be expected, I suppose, but I would clearly give this round to Vox. I'm looking forward to more of this.
It's an interesting dynamic that's common in the academic community. They simply aren't used to thinking; they just repeat rote arguments prompted by keywords without actually even understanding them, in many cases.

Blogger Cluebat Vanexodar June 21, 2016 10:21 AM  

I like what I am reading here. I will watch the cast at the house.

Although I also have great respect for the Austrians, I also see the limitations as applied to a welfare state, without free bidirectional migration trying to compete with slave states who have vey little regard for our intellectual property rights.

Tot zo.

Blogger Nick S June 21, 2016 10:24 AM  

@15
👍

Anonymous Daedalus Mugged June 21, 2016 10:27 AM  

Vox, appreciate your efforts, and the effectiveness of them. I very much appreciate being able to eavesdrop and learn; I'm transitioning from libertarian free trader...to not. Thank you for making me think and re-think, but while the podcast is helpful to those like me, I think the most effective way to spread your ideas is to have a 'credentialed' economist write a peer reviewed academic paper challenging these largely 'settled' ideas in economics.

Who do you think is the most likely PhD economist to 'flip' to your side? Is it a Tom or Bob, or is there a more likely target? If not by individual, what are the characteristics of the economist that should be targeted (perhaps younger, immdediate post-doc looking for way to make his or her mark on the world?). What focus area of their dissertation would be most fertile for conversion? Thank you for all you do.

Anonymous Ryan June 21, 2016 10:27 AM  

There once was an economist kid,
Who researched the facts that were hid,
He presented the score...
We produce 15 times more,
But owe 34 times what we did.

Blogger Cail Corishev June 21, 2016 10:28 AM  

I thought it was odd, the way they reacted to how many points you raised in your opening ten minutes. They gave you ten minutes, and you used it. What did they expect, that you'd spend five of it opening with a few jokes?

Blogger JNorth June 21, 2016 10:30 AM  

Is it possible to buy the transcript if you are not a brainstorm member?

Blogger Dire Badger June 21, 2016 10:35 AM  

My Biggest problem is That Bob Murphy is a relative of mine, and I hate watching him grasp at insanity.

Blogger Michael Larson June 21, 2016 11:11 AM  

"That's a stupid objection, Michael, because it applies to the generic free trade argument as well. You can't dismiss mine without first dismissing theirs."

That's a stupid objection, VD, because you are assuming that I give any significant credibility to empirical (historical) arguments for free trade, which I don't.

Blogger Gaiseric June 21, 2016 11:16 AM  

Daedalus Mugged wrote: I think the most effective way to spread your ideas is to have a 'credentialed' economist write a peer reviewed academic paper challenging these largely 'settled' ideas in economics.

Who do you think is the most likely PhD economist to 'flip' to your side? Is it a Tom or Bob, or is there a more likely target? If not by individual, what are the characteristics of the economist that should be targeted (perhaps younger, immdediate post-doc looking for way to make his or her mark on the world?). What focus area of their dissertation would be most fertile for conversion? Thank you for all you do.

I should note that Steve Keen informed me that there is a more substantial mathematical case to be made against free trade than the one I presented, but as it was his point and not mine - and frankly, I don't fully understand it yet - I did not utilize it in the debate. I will devote a separate post to it later.

Anonymous patrick kelly June 21, 2016 11:38 AM  

" the higher the standard of living of its inhabitants will be."

Many of the commentators seem to be ignorant, maybe willfully, of the meaning of these words. The go off on how only individuals can be better or worse off, and the effects on the "country" or "nation" are not important.

In the context of this debate as presented, it is very important.

Sure sounds like they didn't agree, they didn't even understand.

But then I'm a Vox fanboy and rather ignorant beyond a very surface level understanding of economics.

Anonymous Daedalus Mugged June 21, 2016 11:47 AM  

@25 Gaiseric, Steve Keen is doing his own thing, related, but not identical. He is shooting in the same direction, but advocating his own case in his own way. Although there is some overlap, Vox's case is a materially broader challenge. There is room for another economist to pick up that mantle.

Blogger VD June 21, 2016 11:57 AM  

Who do you think is the most likely PhD economist to 'flip' to your side? Is it a Tom or Bob, or is there a more likely target? If not by individual, what are the characteristics of the economist that should be targeted (perhaps younger, immdediate post-doc looking for way to make his or her mark on the world?). What focus area of their dissertation would be most fertile for conversion?

I don't think you understand how little I care about credentials, people with credentials, or convincing people with credentials. I certainly don't think about it at all.

That's a stupid objection, VD, because you are assuming that I give any significant credibility to empirical (historical) arguments for free trade, which I don't.

No, it isn't, because I am not assuming anything about you or thinking about you do at all. This has nothing to do with you and everything to do with the free trade argument that most commonly appears in the media.

Blogger Were-Puppy June 21, 2016 11:57 AM  

@19 Ryan
There once was an economist kid,
Who researched the facts that were hid,
He presented the score...
We produce 15 times more,
But owe 34 times what we did.
---

That's good. I'm bemused thinking about that old saying "You have to spend money to make money".

Blogger VD June 21, 2016 11:58 AM  

Is it possible to buy the transcript if you are not a brainstorm member?

I think you can join Tom Woods's podcast and get it for $5.

Blogger Were-Puppy June 21, 2016 12:01 PM  

@25 patrick kelly

Sure sounds like they didn't agree, they didn't even understand.
---

I am a grasshopper here, as well Patrick.

What I observed is not that they are ignorant of the implications against a country or nation, but that they don't care. They might be of a globalist mindset, and those things just don't matter to them.

Blogger VD June 21, 2016 12:03 PM  

A 140-character-friendly version for Twitter.

There once was a studious kid
Who dug up the trade stats they hid.
He laid out the score
We make 15 times more
But owe 34 times what we did.

Anonymous JamesD June 21, 2016 12:06 PM  

Test.

Anonymous JamesD June 21, 2016 12:09 PM  

Ricardo's law of comparative advantage is true. However it has little bearing on the Free Trade Debate. If I run a successful business, yes I will pay more to the guy mowing my grass. So Ricardo is correct. However the guy mowing my grass might be in that position because his factory job got shipped off to Mexico.

Anonymous JamesD June 21, 2016 12:13 PM  

The benefits of Free Trade are real, but contain a fatal flaw. It is best to state the rule thusly: In free trade you will optimize the economy of a given SYSTEM. You must define the system. So if the system is China/US, indeed the system is optimized. China got a lot wealthier, and the US got poorer, but on whole a lot more Chinese benefited than Americans losing out. However I'm not Chinese. You can see this works for the other argument: If protectionism is good, why not let the States have it. That is because we define the system as these USA. Therefore these USA are optimized by free trade within the system.

Anonymous JamesD June 21, 2016 12:17 PM  

Finally factoring in both, we add your observation on labor mobility. In the free trade system of China/US, the Chinese business man could pay more for a lawn mower dude. However that benefits the Chinaman, not the American lawn cutter. Again you have to define the system.

Anonymous Jack Amok June 21, 2016 12:32 PM  

...you are assuming that I give any significant credibility to empirical (historical) arguments for free trade, which I don't.

So if reality disagrees with your theory, then obviously reality is wrong.

A bit of advice for you - don't pursue any career or hobby that involve heavy equipment, hazardous materials, or significant heights.

Blogger James Dixon June 21, 2016 12:38 PM  

> Your argument that... is problematic in that it assumes correlation = causation.

This is a debate. The proposition being debated is: "Free trade is always economically beneficial in the long term, and the more free trade is practiced by a country, the higher the standard of living of its inhabitants will be."

Because it's stated as an absolute, a single counter example is enough to disprove the proposition. Vox provided one. The debate wasn't as to whether free trade is beneficial in some specific cases.

Anonymous Daedalus Mugged June 21, 2016 12:56 PM  

Vox, I think I do understand how little you care about credentials...you care about the idea, not the advocate for it. You don't care about credentials, but you also know a lot of the rest of the world does, thus my question about how to get your important ideas incorporated into mainstream (ie credentialed) economics.

These podcasts are great for you to sharpen your own thoughts (seems to be your objective, with the side benefit of changing my thinking), but the real victory for the idea/truth is when it is incorporated into credentialed economics. I eventually want to see changes in econ 101 texts. I appreciate you may not care.

I think the first step in that long journey is a credentialed, peer reviewed challenge to some of the fundamental tenets of economics, some shared by the Austrians and neo-Keynesians. Figuring out who to send this and subsequent podcasts to who is both credentialed enough to be listened to by those who do care about credentials, and is still open minded enough to listen and learn something and perhaps formalize the challenge within academic economics is what I want. I am asking for help in figuring that out. I understand you have the right to be completely apathetic about my objectives and to decline my request, but please don't think I am suggesting you should care about credentials as it relates the truth (or falsity) of your arguments.

Thank you, again.

Blogger Joshua_D June 21, 2016 12:56 PM  

The debate is available on Tom Woods' YouTube channel @ Debate on Free Trade, with Bob Murphy and Vox Day and via podcast on Tom's website @ Ep. 684 Debate on Free Trade, with Bob Murphy and Vox Day.


Blogger Brian S June 21, 2016 12:56 PM  

Reading the comments on the youtube video is interesting, especially this one...

"Typical Vox trying to divert the conversation to include non economic argument... 'are you in favor of open borders'. Thanks Vox for showing you argument involves non economic concepts."

I think there's a lot of the problem embodied in this statement. Somehow the genetics and culture of the people who make up the economy make no difference to these free traders. If you look thru the comments you can see how uncomfortable it makes them.

Blogger Joshua_D June 21, 2016 1:07 PM  

Brian S wrote:Reading the comments on the youtube video is interesting, especially this one...

"Typical Vox trying to divert the conversation to include non economic argument... 'are you in favor of open borders'. Thanks Vox for showing you argument involves non economic concepts."

I think there's a lot of the problem embodied in this statement. Somehow the genetics and culture of the people who make up the economy make no difference to these free traders. If you look thru the comments you can see how uncomfortable it makes them.


Yep.

Like Vox said in an earlier post, "No, my [Vox's] arguments depend upon the existence of the nation, not the state. If there is no coherent group of self-identified people sharing traditions, characteristics, and values, then there is no need to concern ourselves with their collective fate, as we owe nothing to them, share nothing with them, and can abandon them and ignore their interests without a thought. This, of course, is one reason why the globalist elite wants to destroy cohesive, coherent nations, for much the same reason they want to destroy the family. The individual is easily corrupted or destroyed, the nation, not so readily.

My favorite part of the debate was at the very end when Vox asked Bob why people should trust his argument given that he doesn't believe in the nation state. Bob's response was very interesting.

Vox has also mentioned in his talk with Stefan Molyneux that "economics" used to be referred to as "political economy".

At the end of the day, the question is "Do you believe in the polity, the nation, the concept that, for better or for worse, we have some responsibilities to each other, Americans to Americans, French to French, Italians to Italians? Or do you believe that we are all just humans inhabiting the earth and our love for Americans should be the same as our love for Aboriginals in Australia?

Anonymous Millenium June 21, 2016 1:11 PM  

What about inflation Vox? 3.5 thousand fifty years ago bought a whole lot more than 3.5 thousand today.

 The go off on how only individuals can be better or worse off, and the effects on the "country" or "nation" are not important.

Could you use that against them and point out that in the 1950s a single individual on the average wage could have a stay at home wife, raise a family and buy a house.

Blogger VFM #7191 June 21, 2016 1:23 PM  

Brian S wrote:I think there's a lot of the problem embodied in this statement. Somehow the genetics and culture of the people who make up the economy make no difference to these free traders. If you look thru the comments you can see how uncomfortable it makes them.

It's what's so incredibly frustrating about many libertarians. Their hyper-individualism is directly at odds with biological reality of man. Man cannot be reduced to merely Homo economicus.

Libertarians get the nature of man wrong and their economic theories suffer because of it. Their logic may be internally consistent and sound, but that matters not if the premises it's based on are incorrect.

Unfortunately, reasoning with these people on subject is almost impossible. Libertarianism attracts spergs and other forms of autists like perhaps no other political/economics ideology out there. Trying to part a sperg from his precious "system" is about as difficult as convincing a fat kid to give up junk food.

Anonymous A Paradigm Is More Than Twenty Cents June 21, 2016 1:29 PM  

Somehow the genetics and culture of the people who make up the economy make no difference to these free traders.

Tabula rasa premise plus implied magic dirt. The assumption that an illiterate peasant from Chiapas suddenly becomes a Vermont town meeting participant with a long time horizon the instant he sets foot in New England. So it’s no big deal to replace the English / Scots-Irish / Germanic population with a bunch of mestizos, because tabula rasa + magic dirt = Success!

Economists love them some simplifying assumptions.
Assume that humans are just as fungable as steel bars or liters of oil, and many economic models become simpler.

They also become unreal, but that’s merely a detail.

Blogger praetorian June 21, 2016 1:39 PM  

Thank you very much for this, Vox, Tom and Bob.

This is one of the most important topics in economics and it is wonderful to see it discussed by intelligent men of good will who can disagree without (for the most part) devolving into rhetoric.

Blogger Michael Larson June 21, 2016 2:01 PM  

"So if reality disagrees with your theory, then obviously reality is wrong.

A bit of advice for you - don't pursue any career or hobby that involve heavy equipment, hazardous materials, or significant heights."

Very clever boy, Jack Amok.

Can you tell me what the reality of history is?

If you argued that "it rained yesterday and the price of gold went up by 10 points, therefore the rain caused the price of gold to go up 10 points"... am I denying reality to say that your theory is flawed or am I just exposing your ignorance?

If a person's interpretation of reality (history in this case) conflicts with his theory, then it may be that his theory is wrong. But it could very well also mean that his interpretation of history is wrong.

Blogger Brian S June 21, 2016 2:03 PM  

praetorian wrote:Thank you very much for this, Vox, Tom and Bob.

This is one of the most important topics in economics and it is wonderful to see it discussed by intelligent men of good will who can disagree without (for the most part) devolving into rhetoric.


Agreed, would love to hear more. Getting back on FDR to discuss atheism and free trade could be interesting too, not necessarily in debate form

Blogger Conan the Cimmerian June 21, 2016 2:07 PM  

@40 @41 @42 @43 @44

All varying aspects of my thoughts as well.

The problem is when theories hit the real world and get flattened.

As VD stated, when logic meets/is gainstayed by history/experience let logic be silent.

This really does not penetrate them when it is a shot to the head. The sperg on the theories is strong.

Libertarianism in the ideal would be ideal. The only problem is that there seemingly will never be the ideal. You could even say the same thing about many aspects of communism. But it does not work IRL.

Blogger James Dixon June 21, 2016 2:15 PM  

> What about inflation Vox? 3.5 thousand fifty years ago bought a whole lot more than 3.5 thousand today.

Yes, the real growth in both GDP and debt after inflation is taken into account is quite a bit less then the stated amounts would indicate. But the debt and the income are both affected equally by inflation, so the argument holds anyway.

OpenID aew51183 June 21, 2016 3:08 PM  

@40

"Typical Vox trying to divert the conversation to include non economic argument... 'are you in favor of open borders'. Thanks Vox for showing you argument involves non economic concepts."

It is very standard for dogmatic economic pundits to forget the simple fact that Economics is a "science", a tool to be used to benefit people and society.

They simply assume greater economic efficiency is desirable, when, for instance, the most "efficient" cost of labor is zero (e.g. robots, but not necessarily sex robots).

This is the equivalent of nuclear physicists simply building bigger and bigger a-bombs "because it's possible".

The context of whether it serves the people needs to be examined.

Blogger Jimmy The Freak June 21, 2016 3:15 PM  

Listening to Murphy's argument about gifts (SUV), it made me wonder if he is doing a bait and switch between short-term benefit/long-term gain.

When the SUVs are received, yes there is a short-term improvement in standard of living, but when nobody buys an SUV in the next 5-7 years, the domestic manufacturers scale back, shutter capacity, and layoff workers. Now those workers are looking for new jobs and driving down wages in other industries due to an increased supply of available laborers. Now you add in mass migration and you've got a real mess.

Blogger Snidely Whiplash June 21, 2016 3:23 PM  

For me, the question in economic debates is always, as Lenin put it, "Who, whom"

International Free Trade(tm) benefits some, detriments others. Who, whom? The fact that some financier in New York makes an extra $2B next year, that he spends on a mansion and buying a vacation island, benefits me in exactly what way? The average of his income with my income has zero meaning.

Blogger Conan the Cimmerian June 21, 2016 3:24 PM  

Also, what is up with the AnCaps/libertarians in the comments going on as if debt and inflation is of zero concern. AnCap - Keynesians?

OpenID aew51183 June 21, 2016 4:02 PM  

@53 They're AnCaps. You may as well try to divine reason from feminists.

Anonymous bw June 21, 2016 4:16 PM  

by Francis Fukuyama in Foreign Affairs

Ding Ding Ding ! CFR Globalists Chatham House Intel Banksta Alert.
Excellent.

Blogger Res Ipsa June 21, 2016 4:34 PM  

Vox,

Good stuff. Thanks.

Blogger Russell Fryman June 21, 2016 5:13 PM  

One of the more interesting comments was that the Law of Demand does not apply to the Demand Curve. It only applies to single individuals, and it is not possible to derive a market demand curve by simply adding together the quantities demanded by all individuals at each price.

At first glance, this looks like same argument that Austrians have made against the rest of the economic world wrt micro versus macro economics. In which case a) the economic sciences are descriptive instead of proscriptive, and b) the sum of a very large number of functions (or transactions) is not the same as a function of those aggregate sums. If so, then anyone positing a functional relationship between “free trade” and prosperity would be akin to making a Type 2 error.

Blogger praetorian June 21, 2016 6:15 PM  

They're AnCaps. You may as well try to divine reason from feminists.

Quoted for great truth.

These are folks that would cry "At least we didn't coerce anyone!" as they came up for their last breath while their country was swamped under a tidal wave of third world gibs.

Blogger Dave June 21, 2016 6:27 PM  

I say both Bob and Tom were totally unprepared for your 10 minute open. Looking forward to you expounding upon five arguments in future blog posts or debates.

Blogger VD June 21, 2016 7:41 PM  

Reading the comments on the youtube video is interesting, especially this one...

I found them almost uniformly stupid. The entire debate is quite clearly over most of their heads. They don't understand that the "correlation isn't causation" damns the "free trade causes wealth" argument, which is the underlying point. And they really don't understand that it isn't my argument; I'm not saying free trade causes less wealth there, I'm saying THERE IS LESS FUCKING WEALTH, SO OBVIOUSLY FREE TRADE CAN'T TAKE CREDIT FOR SOMETHING THAT DOESN'T EXIST.

"Typical Vox trying to divert the conversation to include non economic argument... 'are you in favor of open borders'. Thanks Vox for showing you argument involves non economic concepts."

Which is ironic, considering that the secondary argument made in favor of free trade is "freedom" and an appeal to the nonexistent human right to trade freely.

Blogger Bob Loblaw June 21, 2016 9:50 PM  

Free trade definitely has an "evening out" effect. If an auto worker in Mexico is making $8/day and you have completely free trade between the US and Mexico, as an auto company you can't build plants in the US. You'll go out of business. Over time Mexico gets richer and the US gets poorer. That's great, if you're a Mexican...

Blogger Groot June 21, 2016 10:39 PM  

@13 Nick S:
"Bob seemed a little taken by surprise and kept trotting out the practiced cookie cutter responses of a lecturer and glossing over the intrinsic dynamics of Vox's specific arguments."

He was taken aback by Vox's initial sally (as was I), but you misread his reply. Bob is deeply knowledgeable and a wonderful, clear writer. All three gents went out of their way to be generous, non-contentious and friendly, but real points were made. This was a nice debate, but nobody wimped or sperged out.

@37. James Dixon:
"Because it's stated as an absolute, a single counter example is enough to disprove the proposition."

This perception is incorrect, but excusably so for anyone who has not taken endless Economics classes. "Ceteris paribus" is such a basic tool and assumption in any economic discussion, that it is often elided, as it was, unfortunately, in the initial resolution. It means "other things being equal" or "if everything else doesn't change." It has the advantage of allowing us to examine a single facet of a complex adaptive system, but has the disadvantage of never being true. This is why Bob was careful to avoid discussing historical situations as proving or disproving economic principles, since history is nothing but "everything else changes." A basic tenet of Misesian/Austrian economics is that it is an a priori science, with economic principles that apply to human behavior, rather than merely historical scribbling of one thing after another happening.

@43. VFM #7191:
"It's what's so incredibly frustrating about many libertarians. Their hyper-individualism is directly at odds with biological reality of man. Man cannot be reduced to merely Homo economicus."

This is so incorrect, and you guys need to stop sperging on this point you just made up. I'll say again, that while individuals make decisions, they take as input the interests of family, church, community, nation, whatever. Human action is intentful, but those intentions are fully human in the broadest possible sense. It is like Protestantism, in that each human is responsible for their own soul. That doesn't make you selfish. In fact, just the opposite, if you believe that your soul is saved if you give your life for others.

Read this book, by Bob: Choice: Cooperation, Enterprise, and Human Action. Highly recommended.

For myself, I finally heard what I've been waiting to hear, and that is, if not free trade, then what? I think I heard Vox concede that this was in fact the weakness, because the "what else" politically can only come from those who are least trustworthy, our current political class.

Anonymous Eric the Red June 22, 2016 4:31 AM  

All the other points Vox made were relevant. However, citing the work of William Gorman about the demand curve is equivalent to using Deus ex machina to save the play in the third act. It's speculative at best, and further work by economists may find some holes that could lessen its impact on the topic of free trade.

However, all in all, well done.

Blogger James Dixon June 22, 2016 6:42 AM  

> This perception is incorrect, but excusably so for anyone who has not taken endless Economics classes. "Ceteris paribus" is such a basic tool and assumption in any economic discussion, that it is often elided, as it was, unfortunately, in the initial resolution.

In a debate, if it's elided, it doesn't exist for the purposes of the debate. The arguments are made on the terms given.

Blogger Eggmunkee N July 07, 2016 1:52 PM  

I have come from an AnCap position, but more and more I am finding the need to prioritize the negative effects of globalization and destruction of cultures over avoiding all coercion. It's easy to think that most people can behave more rationally when you mainly interact with people trying to reason out issues, i.e. online. I think we are starting to see Western civilization break up and that is bringing to light some of the hidden positive effects that said civilization was providing. Not all cultures value reason, restraint, private property, individual choice, etc. and merging with those cultures will in effect just water down the foundations of all of these beneficial cultural values. I don't like the coercion that a border entails, but I also think that social cohesion is a scarce thing that is worth taking steps to protect. Governments should help create an environment of stability, which is one basis of economic productivity and societal strength. It seems everything typical politicians do these days is aimed at destroying social cohesion, because the conflict shifts more power to them and more profits to their friends. This is why I support Trump, though I don't agree ideologically with all of his positions.

Also, I'm seeing that, more and more, it is multinational corporations, global government advocates, groups like the CFR, and idealist libertarians that are all pushing for unlimited migration and erasing all political, legal, and cultural distinctions. If they are building the global system, it is definitely not a positive development. First, calling it free trade is a misnomer; it will be highly regulated corporate subsidy trade, which will lessen wealth and productivity, except for the global corporations. Somehow idealist libertarians haven't noticed this and go on like it's not a very complicated legal agreement. The free trade organization will be a group that has taken a great deal of sovereignty from the nations taking part and placed it in a corporate NGO of some kind. It will not necessarily make external trade easier for a small company, since there may be a larger regulatory burden from the deal. So, it seems free trade as practiced today is just a form of sovereignty export and multinational corporate subsidy. Both globalist politicians and multi-national corporations will benefit and control this structure. I think this type of free trade will cause a net negative effect for the majority of nations on the planet. And once the structure is in place, it may take a war to untangle from this globalist power structure being set up. For example, if the EU succeeds in removing its member nation armies and taking control of them, that will likely require a war for them to leave. So, that's why my thoughts have changed on this topic.

Blogger Dwain Dibley September 22, 2016 1:08 PM  

First off, internationalized commerce is not "trade".

Definition of Trade
In trade, the ownership of goods or services is transferred from one person to the another in consideration of cash or cash equivalents. Trade can be done between two parties or more than two parties. When the buying and selling take place between two persons, it is called bilateral trade whereas when it is done between more than two persons then it is called multilateral trade.

Earlier the trade was little cumbersome since it followed the barter system where goods were exchanged in return of other goods or commodities. It is hard to evaluate the exact value because of the different commodities type involved in the exchange. With the advent of money, this process became more convenient for both the sellers and buyers.

Trade can be domestic as well as foreign. Domestic trade means within the border of the country and foreign trade means across the borders. Foreign trade is done through investment in securities or funds and can be termed as imports and exports.

Definition of Commerce
Commerce includes all the activities that help in facilitating the exchange of goods and services from the manufacturer or the producer to the ultimate consumers. Majorly the activities are transportation, banking, insurance, advertising, warehousing, etc. that act as an aide in the successful completion of the exchange.

Once the products are manufactured these cannot reach directly to the customer, the same has to pass through a series of activities. The first wholesaler will purchase the product and with the use of transportation, the goods will be made available to the stores and at the same banking and insurance service will be availed by him to have protection against the loss of goods. The retailer will then sell to the ultimate consumer. All these activities come under the commerce head.

In short, it can be said that commerce is the branch of business that helps to overcome all the hindrances that arise in the facilitation of exchange. Its major function is to satisfy human wants both basic and secondary by making the goods available to different parts of the country. No matter where the goods have been manufactured the commerce has made it possible to reach the world – wide.
http://keydifferences.com/difference-between-trade-and-commerce.html

WalMart does not "trade" with China, it engages in commerce with chinese producers to fill its store shelves in the U.S.

--------------

Continued

Blogger Dwain Dibley September 22, 2016 1:09 PM  

Continuation:

Productive capital, the means of production and the creation of wealth, together with the division of labor, forms the basis of our market economy. The division of labor isn't just the assignment of different parts of a manufacturing process or task to different people in order to improve efficiency, it also includes the ancillary businesses, with their own division of labor, that provide necessary support to the primary activities or operation of industry in its production of goods. It also includes the opportunistic businesses, with their own division of labor, that provides the goods and services to the communities that rise around the primary producer of goods. And yes, it also includes the local governments with their own division of labor.

Of course, all of this depends on the profitability of the goods producing industries. So it ships its products out through channels of distribution to independent retailers who sell the products to its customers, then the retailers pays the producing industries for the goods, the producers pay their employees, who go out and buy cars and homes and appliances and furnishings, it pays the ancillary businesses for their support, who pay their employees who go out and buy cars and homes and appliances and furnishings, the opportunistic businesses flourish selling the production from other Productive capital sources paying its employees who also go out and spend, it invests in equipment and plant modernization and it pays dividends to the rentiers of Wall Street.

That, is the gist of an industrial market economy, the division of labor, and the cycle of money through the economy. Prices are relative to wages, wages and prices are relative to the economy within which they are established. and that, constitutes our standards of living. Industries providing the productive capital base fueling it all.

It is established and well documented fact that the unfettered influx of cheap foreign overproduction into our markets destroys domestic production. That's why the former industrial belt of the U.S. is now called the rust belt. That's why textile production has all but disappeared from our shores. That's why we no longer produce the majority of consumer electronics, or even pots and pans and cooking utensils. That's why the U.S. has been running trade deficits for over forty years That's why industrial production went from a high of employing 27% of the population in 1970, to its current 9%, employing less of the population than government. And a large portion of the industries left, produce for government consumption.

When WalMart started, the vast majority of the products it carried were produced in the U.S.A., any foreign produced products they carried were the exception, not the rule. The U.S. industrial market economy prospered.

Today, WalMart is the primary U.S. retailer for China, its former domestic suppliers driven out of business, gone. Compounding this, we have Wall Street corporations ripping the productive capital base out of communities and exporting production offshore. That, is the destruction of the productive capital base. That. is the destruction of the division of labor, as previously identified. That, is the destruction of the production knowledge base and expertise. That, is the offshoring of profits and capital formation. That, is the destruction of the social contract. And that's the primary reason behind 91 million working age adults not in the labor force and 47 million on some form of government assistance.

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