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Thursday, September 08, 2016

The Libertarian Case for Free Trade

Tom Woods graciously granted me permission to publish the complete transcript of his recent show with Gene Epstein, with whom he discussed the libertarian case for free trade, and in doing so, criticized my case against free trade. If you prefer to listen to Episode 728 of the Tom Woods show, you can do so by clicking on the title. Read the whole thing. I will respond to Mr. Epstein in detail in a future post.

Episode 728: Can Libertarians Make a Decent Case for Free Trade?

Guest: Gene Epstein

WOODS: All right, let's get down to business. I want to talk about free trade. You've got a great column on the subject that's linked to at TomWoods.com. So let me start it off this way, because I want to frame the issue the way critics of free trade have been framing it for the past 10 or 20 years in particulars. They'll say — now, the mercantilists were different, because they didn't have free traders around whom they could accuse of being academic pointy-heads out of touch with the real world, but anti-free traders today do have that.

And what they say is, what am I supposed to believe: your theories or my own eyes? The fact is in the wake of free trade I see all these towns that have been decimated because the plant left, and everything's boarded up, and the white workers all on Oxycontin or whatever, and their families are devastated, and they've got social pathologies. This has gone all over middle class America; it's devastated America, because we can't possibly compete with people who live in countries with no regulation and where they earn 10 cents an hour. And you pointy-heads keep telling me that some day this is all going to work out, but look, I can see the devastation everywhere. And that matters to me more than your academic theory in a textbook.

How do you — not that you have to give every single argument right now, but how do you attack that kind of angle on the question?


EPSTEIN: Well, I think you pose it very well, pose the challenge very well, and I do first want to lead, so to speak, with my chin as a libertarian and say that libertarian principles dictate that we should have the freedom to trade, whether it be with a foreigner or with somebody domestic. Nobody has a right to interfere in our right to trade with whomever we please when we perceive mutual benefit.

Now, with that said, since we are Austrians we recognize that people have all kinds of values and attitudes when it comes to freedom to trade. It is a fascinating fact that the first 20 years after World War II Jewish people did not buy German cars. I happen to know that firsthand. My father refused to buy a German car, and in fact, by the 1980s he would only buy American-made cars. So if you are concerned, if you are convinced that your right to trade freely is harming other people or is helping people you think are evil, then go ahead and buy American. Exercise your freedom.

But apart from that, it's very clear then that we are potentially interested in the consequences of our exercise of freedom, and my article attempted to address that.

The problem does indeed get back to Bastiat's statement about the evidence of things unseen. You see some concentrated pain. Some people did lose their jobs, who have to find other jobs, and who, by the way, by and large when people lose their jobs, the next job they get does not pay as well as the job they lost. All of that is quite true.

However, when you look at our deficits, when you look at it from any standpoint, you begin with the fact that the trade deficit of the US in total is 3% of gross domestic product. Then when you've examined all of the estimates about jobs lost to foreign trade — and what I did is I took the highest possible estimate. I then raised it. I then found that it accounts for about 3% of all jobs lost in the domestic economy. So my point then was that if you're going to be against jobs lost, then you ought to also be against the other 97%. One thing you ought to do, for example, is quit buying on the Internet, because you know what that has done? That has destroyed possibly, probably, millions of jobs in the retail sector, or at least hundreds of thousands of jobs. So if you care about not destroying jobs, then be consistent in your behavior.

And then, what's the evidence of things unseen? The people who go to Walmart —mainly, by the way, the lower half of income receivers of the population — are getting bargains because Walmart is basically selling them cheap imported goods. And so if you actually look at the benefits, then the benefits are enormous. However, I'd hasten to say that we Austrians are not utilitarians. There is no way to balance out benefits and costs. I only say approximately we're talking about the pain to the relative handful of people who lose their jobs, 3% of the population, 3% of job losers; we're not talking about the other 97%.

But ultimately at the end of the day it's a matter of ethics. Do people have a right to think for themselves about how they're going to spend their money? Do I have a right to buy from Walmart, even though Walmart is selling me products made by Chinese people? I happen to think that's a good thing to do, because that's giving very, very poor people better job opportunities than they otherwise would have gotten.


WOODS: All right, so there's the problem. I mean, you just stated it. There would be people who would come along and say, I don't feel like my job in this world is to make Chinese people richer. What matters to me are the people who are closest to me, whom I have the most fraternal affection for. And those people would be people in my family, my neighborhood, and in a series of concentric circles. And the biggest of those circles is the US of A. There is no circle outside of that. I couldn't care less what happens in Canada, Mexico, anywhere else in the world, China — I don't care. So I care about the income of American middle class people, and you, Eugene, are saying that we're going to get cheap goods for them. But if they have no job or if they have a crummy burger-flipping job, the cheap goods are just a wash at best.


EPSTEIN: Well, the first answer, as a libertarian and as an Austrian, which you and I, Tom, owe these people, is to say that, just like my father would only buy an American car, then I would tell Vox Day, by the way, who debated this issue with Bob Murphy, establish a website, a competitor with Amazon. Call it the Vox Day Buy American Website. And that will steer people into goods that they might want to buy, which would only be made in the USA.

And I guess it would mean, for example, that you don't drink coffee anymore, since it's grown abroad, but perhaps then somebody's going to respond and grow coffee at many times the cost that it would normally cost, and grow it in a greenhouse. If you want a movement in that direction, do it. It is your perfect right to do so under the principles of libertarianism and under the basic notion of the Austrians, which is that people do not just spend their money in accordance with what is cheap. They have all kinds of other considerations in so doing.

However, do not interfere with my right to disagree with you and to buy from Chinese people abroad who are desperately poor. Then in terms of consequences, please understand that by probably through your actions, you are costing many, many more jobs lost across the economy. Then also recognize that by opposing companies like Walmart, you are denying people of limited means the opportunity to buy cheap goods.

But at the end of the day, utilitarianism cannot resolve this matter. The only thing that can resolve this matter is your right to exercise your free choice. I can only lay out the options for you and tell you that that is not the way I exercise my right to free choice because of the reasons that I outlined; however, if you think you can persuade people to have values in this regard — certainly Donald Trump seems to have caught an impulse among people to be super patriotic. Certainly Vox Day made it very clear that he is a nationalist. That's his value? Fine. I would only tell him he's not a libertarian. And he has the right, however, to push his nationalism as far as he can possibly persuade people to go along with it.


WOODS: I have some questions that aren't just devil's advocate questions, that are more "let's elaborate on the argument," but there's one more I want to throw at you, and here it is: I've heard the argument that the replacement jobs that people get when they get displaced from their current employment because of free trade — and you point out that the number there is actually quite small. But let's say, all right, they get displace from their jobs. The jobs that they get after that are all low income; they're burger flipping-type jobs, or the jobs are so high tech that a high school graduate can't do them. And so this led Gary North to say, when he was asked what are low skilled people going to do in the future, this robotic future, what are they going to do in this future of free trade, and his answer was, "Less." Do you have a less grim outlook than that, Gene?


EPSTEIN: Well, I think I do. I again first want to emphasize something that surprises people, but it actually should be fairly evident in people who read the economic news and track unemployment insurance claims. In the 1950s, a million people a month filed for new unemployment claims. That was in the 1950s before international trade was very large. In fact, the US had an even balance of trade in merchandise trade in the 1950s, and yet a million people filed for new unemployment insurance claims every month. In the recent period, the Bureau of Labor Statistics has been tracking it even more carefully, tracing jobs destroyed to firms that downsize, tracing it to bankruptcies. And they find that it's been running, again, about a million a month on a yearly basis. By the way, in the short run it's even bigger, but it's about a million people a month.

Now, I took the largest possible estimates — I spurned the estimates that were more careful from peer-reviewed research about jobs lost to foreign trade over the last 15 years, and I took the left-wing Economic Policy Institute's estimates, and then I raised them by a certain amount. And I found that on an annual basis, the number of people who lost their jobs to foreign trade was the approximate equivalent, a little bit larger, than one week's worth of new unemployment insurance claims. However, if it's concentrated I guess people are more aware of it. If it's concentrated in a particular community.

So my point then was what about the other 97%. What kind of hypocrisy is it on the part of people who will ship their income expenditures, who abandon the deli on the corner because they don't like the sandwiches or who will buy from Amazon and not go to the local bricks and mortar store and destroy jobs, and yet they think they're so concerned about those people who lose jobs to foreigners.

Now in particular, to get to your question about what people do when they lose their jobs, there is a great deal — the research, by the way, is very, very misty about this. People just talk in broad brush strokes about where people go who actually want to seek opportunities to do something else. But if we're talking about a million people a month who lose their jobs — by the way, in the late 1990s it was actually 1.3, 1.4 million against a smaller base, and yet jobs creation was enormous. We find that when the economy is even more dynamic, more people lose their jobs and more people go on to other jobs.

In terms of the research about what happens to people who lose their jobs, the one thing that we can indeed be sure of is the same thing that happened to me when I lost my job from the New York Stock Exchange, is that I started at Barron's at a lower salary. And indeed, anybody who loses — by and large, people who lose their jobs start at lower salaries. But the burger-flipping image that is invoked probably does not capture the reality about someone who really does search for a job. If you search for a job, you can apply for Uber, you can do that 50 hours a week. There is in fact — there are plenty of jobs out there, plenty available. Again, the image of a sort of bipolar economy in which there are no decent jobs — no decent jobs in construction, no decent jobs in driving cars, in driving trucks — all of that is way exaggerated.

And so indeed, people suffer, but again, if you're concerned about people suffering, why don't you stop consuming from Amazon, because you should be concerned about the 97% of the job losers who lose their jobs for reasons other than foreign trade. You should bear in mind again that the trade deficit is 3% of GDP, and indeed on top of that you should bear in mind that foreign trade creates jobs through all kinds of channels. The US, by the way, because of globalization, has an enormous surplus in services trade. Now of course, that tends to be high-end, but actually a huge part of services trade is tourism. People do come to the US, and tourism by and large is employment of people of limited means. There's low-level employment. There are jobs available.

Now of course when you mentioned robots, Tom, that opens up a whole new question about what's going to happen. The main thing I would have to tell people who are so concerned about robotics is that for all practical purposes, wants are infinite. You know, 110, 130 years ago if I were to tell you that the 60 to 70 to 80% of the people who are on the farm is going to shrink to 1% 120 years from now, I guess those who are concerned about that robotic replacement of labor would also be predicting mass unemployment. The fact of the matter that if wants are for all practical purposes infinite, then if we allow the market to operate there will be plenty of jobs for all, although there may indeed be, instead of a two-day weekend, a three-day weekend.

Maybe that will happen as well, which is of course also part of the evolution of work over the last 100, 120 years. People worked 50 to 60 hours a week, and now they work 40, 41 hours a week. So that happens too. There's a labor-leisure tradeoff. But the idea that robotics are something new strikes me as a historical. Robots have been replacing labor to one degree or another for many, many years.

Let me throw in the Milton Friedman anecdote about his observation of an Egyptian project in which the workers were using hand shovels, and he said why are they using hand shovels rather than steam shovels, and the bureaucrat in charge said, well, this is not just a program for greater infrastructure; it's a job-producing program. And of course Friedman's quip was, well, then they shouldn't be using shovels; they should be using spoons if you want to produce more jobs from this project. The economy is not in the business of producing jobs. There should be in a decently functioning economy plenty of jobs for all, and there should indeed be in a decently functioning entrepreneurial economy plenty of opportunity for people who lose their jobs to do a midcourse correction and start another kind of employment.

But at the end of the day, if it's all about people in distress who have to be helped, then that's another discussion for libertarians to have. There will indeed be in any economy people who through no fault of their own have had bad luck and have had difficulty, and I of course believe that there's plenty of private money available to help those people. But that too is a different discussion.


WOODS: All right, I've got a few more things I want to ask you, but first let's thank our sponsor. Okay, there are a few things I still want to get to here.


EPSTEIN: Okay.


WOODS: One of them is the point you make in the article about the way cheap imports actually contribute to other jobs.


EPSTEIN: Yeah.


WOODS: So if my industry needs inexpensive steel to survive, and you're telling me that the way to increase jobs is to put a tariff on steel, you're actually going to decrease jobs in my industry. So talk about that.


EPSTEIN: That's right, absolutely, and that's one of the channels through which free trade actually helps jobs. You know, why not talk to — if you are so self-righteous about causing people to lose their jobs, then demanding tariffs, like you speak, again, to those people who don't realize that they are suffering from tariffs, as in the case you cited. Business by and large — by the way, free trade from China and from abroad is not consumer goods; it's by and large intermediate inputs that business buys. And those cheap inputs of course make it cheaper for the business to operate and make it possible for that business to employ more people.

The other part about globalization and the rise of mass communication is indeed the huge surplus in services, the fact that tourism is booming. The other third channel through which free trade creates jobs is that foreigners who get dollars from having sold us goods have a surplus of dollars, and they make huge investments in businesses in the US. There's an enormous belt of auto companies in the South that are run by foreigners: Japan, others, they operate in the US.

And by and large, by the way, manufacturing in the domestic market makes good business sense. It's a very old story. You want the finished product to be in the domestic market, because you want your manufacturing center to be very sensitive to the domestic market for the cars you want to sell.

So in fact, manufacturing output in the US is nearly almost at its record high, which was reached in 2007. Again, that's manufacturing output is nearly at the record high of 2007, much of it owned by foreigners, who are using dollars that they get to invest in the US. So in fact, the 3% estimate that I did for the jobs lost was strictly on the debit side. Nobody has bothered to do any decent audit of jobs created. This indeed is difficult research to do, but we know that 3% is probably exaggerated.

But again, at the end of the day it comes back to ethics, because I can't — I'll tell you an interesting analogy in my view. Those who push for the minimum wage, raising the minimum wage, many of them admit that you'll destroy some jobs. Then they say, well, you know, you'll destroy — maybe 2% or 3% of low-wage workers will get dumped on the ash heap, but what about that other 97% that will see raises? And it's very odd that that's okay with them. That 3% who's going to be dumped on the ash heap, by the way, are usually the most marginal and unskilled people. But their utilitarian calculus says, well, if it's going to raise it by several bucks for the other 97%, then why not?

And so that's what they say in that case, but when we say from the other case, in terms of utilitarianism, look at all the millions of people who are benefitting as consumers, who go to Walmart, who buy cheap goods, the workers who benefit as workers when cheap goods are bought. Look at all those people, and they are far more numerous than the relative handful of people who lose their jobs. Those people say, oh, no, no, that's unfair. Suddenly they're defending the minority in that case, rather than — and we're defending the majority when we make a utilitarian argument in terms of free trade. And our roles are reversed when we talk about minimum wage.

But at the end of the day, the only way to resolve this argument is that, in terms of the minimum wage, that's the free transaction between business and labor. That's what you're interfering in. Similarly in terms of free trade, that's my freedom, your freedom, to spend our money for perceived gain with anybody else as we see fit. That includes business, and it includes individuals.

And that's where, by the way — if I may segue for the moment into what Vox Day was saying — he made it very clear when he said, for example — and I jotted down some of the things he said when he was debating Bob Murphy about free trade. He says, I don't trust government, but I trust corporations even less. He said, I'm a nationalist, not a globalist. He said — now, what does that mean in terms of not trusting government but trusting corporations even less?

Well, he seemed to be overlooking the reality that these corporations, unless they engage in crony capitalism, are essentially businesses that are trying to sell us goods. And I don't have to buy their goods. I can just say no, and I can buy domestic if I want to. Or if I don't buy domestic, I can simply refuse to buy from them. I should tell Vox Day, you try to refuse to buy from the government, refuse to pay your taxes. You're going to be thrown in jail. And so he was making a very clear choice. He was choosing government over the free market by trusting corporations even less.

And then when he said he's a nationalist not a globalist, what does "globalism" mean? Globalism simple means in terms of the free market, my right to buy from companies that import from China. That's all. Or from any other country. I don't have to exercise that right. I can refuse to do so. But a nationalist is somebody who declares the right of a nation state, of politicians to dictate to us about what we want to buy. And so again, he was making a very clear ethical choice. His utilitarian arguments I believe were often shoddy in any case, and Bob I think had him dead to rights on certain points, but essentially he was saying I am not a libertarian; I'm a nationalist. I believe that politicians should be in charge, because even though I don't trust them, I trust corporations even less. That was his point.

And then when he even further said that some people are smart but other people are not so smart, that's why we have government, for all its faults, I mean, the way to make people dumb of course is for dumb politicians to dictate to them what their choices should be. And this of course was where Adam Smith came in sounding like Bastiat, when Adam Smith wrote, and I quote, from my column quoting Adam Smith, that the power to interfere with free international trade would "nowhere be so dangerous as in the hands of a man with folly and presumption enough to fancy himself fit to exercise it."

I believe that Vox, again, is investing in these politicians the believe that their folly, their idea that they are smart and so many people are dumb, and therefore they have the right to decide what these people will buy with their money, I think that's presumption. The idea that they know what they want to buy is a question, but the idea that they have the right to interfere with other people's right to buy because in Vox's view they aren't so smart, he's clearly drawing a line in the sand.

He is clearly saying for all its faults we've got to trust the politicians, because again, ignoring, I mean, Bastiat, who said a long time ago that if people are basically incompetent, how does it follow that when you turn them into regulators and political bureaucrats they suddenly become smart and have a right to rule over the rest of us. Isn't it possible that these politicians are going to become corrupt? But in any case, in any case, our fundamental belief is in the right of anybody, whether he passes an IQ test with Vox Day or not, to be able to exercise his or her right to engage in trade in however he sees fit.


WOODS: All right, before I let you go — I mean, this has been great; it's great information. I feel guilty asking you another question, but I am going to ask you one more. What about people who say — I don't want to mention any names — the people who say it's important for us to make things in this country? We don't make anything anymore, and you can't have an economy based entirely on services. We need to make things. We need manufacturing.

And my thought has always been, well, you're telling me a doctor doesn't do anything worthwhile? I mean, a lot of people who don't produce tangible things do add an awful lot of value to this. But what's your answer to that, that we need to make stuff?


EPSTEIN: Well, I mean, of course that's a great question. You hear that all the time. It's sort of a faith-based statement. But of course first empirically — and it's really, as I mentioned, not surprising for reasons I stated — that manufacturing is slightly below its all-time peak hit in 2007. So manufacturing hasn't grown as fast as other things, but just for starters let's get to reality and recognize that manufacturing does operate, and by and large it's because manufacturers know that at least for the high end of finishing goods, finishing cars, they want their manufacturing outlet to be close to the domestic market. So we do make things.

But second, "making things"? Does a chef not make food? We have restaurants. They're in effect taking raw materials and turning it into finished products. That's restaurants, and that's very ubiquitous. They make many things as well. And then in fact "making things," is not agriculture making something as well? Well, that's growing stuff, taking it out of the ground, preparing it, later on milling it into bread. All of those things are making things also.

But of course when we insist on the fact that empirically they're a little bit off when they say we don't make things because farming, manufacturing, preparing food, all of that is very, very ubiquitous in this economy and consists of making things, you know, if you want to make things as you're indicating, Tom, then I guess we just don't need physicians to operate on us. We don't need teachers. We don't need Tom Woods either, I guess, and we don't need me, because we don't make things.

But indeed, at the end of the day, since we provide services that people want to buy, like haircuts — that doesn't make things, although it sort of makes a better head — it's all rather theological in any case. At the end of the day, what we want to do is respond to the market economy, allow people to exercise their right to buy what they need to buy. And it might turn out they want to buy services from people that are relatively intangible. They may want to get a massage; they may want to get a pedicure. All of those things they choose to buy because they value those services.

So at the end of the day, again, it gets down to a libertarian ethic, which is that if nobody wanted to buy any of these services, that would be fine with me, because I don't run other people's lives. But since people do want to buy these services and they want to buy some goods —

And indeed what's the other broad point that's taken place in the world? What's taken place in the world is that we have these economies like China, like in India, that are suffering because of the enormous, horrible legacy of different forms of socialism that kept these people poor. And so we now have open trade with rich countries in the world and very, very poor people, whose alternatives for employment are very, very sketchy, very, very low paid. And so they can make goods, and they can better themselves by selling and exporting these goods to the rest of us. We have advancements in container shipping that make it possible to ship these goods. It's basically a positive development for the world that these poor people in China are getting better employment, are lifting themselves out of $1 and $2 a day poverty to sell us these goods and to make things for the rest of us.

And then we in the rich countries, this rich, enormous country, can find plenty of job opportunities for those people who no longer make the same things that the cheap labor Chinese people make. And then again, if we remember that we still have a turbulent entrepreneurial economy in which jobs are destroyed every month to the tune of a million a month, then we recognize that we cannot do without our dynamic economy. We should make the most of it. And that's marching in a very different direction from what the anti-free trade people, where they want us to march.


WOODS: All right, well, we'll leave the conversation there. I'm going to link to your excellent column, again, at TomWoods.com. I've got to keep a closer eye on your columns, because every one of them seems to have an episode in it. I don't know if I can — you know we'll have to pick the bes ones so I don't drive you crazy, but I'm glad we were able to do this.


EPSTEIN: Tom, it's always a pleasure, and let's do it again soon.

Labels: ,

99 Comments:

Blogger Shimshon September 08, 2016 5:10 AM  

Epstein should move to China. He certainly expresses a great deal of sympathy for their plight, and none at all for Americans.

Blogger VD September 08, 2016 5:39 AM  

He is deeply concerned about the Chinese while being indifferent to Americans. Perhaps he is merely following the lead of the Learned Elders of Wye.

Blogger VD September 08, 2016 6:01 AM  

You're off-topic, Phillip George. Stay out of it.

Blogger joe b September 08, 2016 6:04 AM  

He isn't wrong much, he just isn't considering the movement of people or the current regulatory and currency disasters. Most of the problems with the world he is proposing could be mitigated with real currency and strong arbitration law. Of course it's kind of a libertarian or anarchist fantasy, but it's a fun academic/thought exercise.

Anonymous Anonymous September 08, 2016 6:08 AM  

Job outsourcing is actually a good thing in the sense that it's a form of eugenics for our people. We shouldn't artificially protect dumb menial labor jobs. If the market does not require so many of them, or they can be done for cheaper, let our dumb laborers accept lower wages or fail.

If dumb non whites can do a job, let them do it, keep the standards high for OUR people. It's dysgenic to keep the menial labor people reproducing. It's unfortunate the world has to change so fast, but we just don't need that many of them anymore.

The bubble has to pop at some point. We can cull the unthinking menial labor masses, and become a whole society of intellectual thinking workers. (and yes, I include retarded IT jobs in the category of low skill menial jobs)

Blogger Micchel Higgson September 08, 2016 6:09 AM  

Job outsourcing is actually a good thing in the sense that it's a form of eugenics for our people. We shouldn't artificially protect dumb menial labor jobs. If the market does not require so many of them, or they can be done for cheaper, let our dumb laborers accept lower wages or fail.

If dumb non whites can do a job, let them do it, keep the standards high for OUR people. It's dysgenic to keep the menial labor people reproducing. It's unfortunate the world has to change so fast, but we just don't need that many of them anymore.

The bubble has to pop at some point. We can cull the unthinking menial labor masses, and become a whole society of intellectual thinking workers. (and yes, I include retarded IT jobs in the category of low skill menial jobs)

Anonymous DJF September 08, 2016 6:18 AM  

One big problem I have with “free trade” is how it is defined

Free trade has been reduced to just meaning that there are no tariffs or quotas imposed by government on trade

My definitions is that free trade is trade between free people.

So that would leave out large parts of the China trade where the largest steel make, largest shipbuilder, largest construction company are part of the Chinese communist party. And large parts of the rest of the economy are “privatized” with them being run by members of the communist party

Under the present definition of free trade the Chinese government selling body parts from executed political prisoners to the Cuban government owned medical system is free trade as long as they impose no quotas or tariffs

Here is one list of Chinese government owned companies

https://en.wikipedia.org/wiki/List_of_government-owned_companies_of_China

Blogger Shimshon September 08, 2016 6:19 AM  

I don't know if Tom is just playing Devil's Advocate or is seriously reconsidering his stance, but it is nice to see him presenting your case as the anti-free trade argument.

Meanwhile, Robert Wenzel has jumped the shark on immigration.

"If a businessman wants to hire someone from another country and someone else is willing to rent such a person an apartment, how is this any of your business unless you are a totalitarian?"

That's right. We are all totalitarians now.

Blogger VD September 08, 2016 6:25 AM  

My definitions is that free trade is trade between free people.

That has never, ever, been the definition of free trade. At the time Ricardo used Portugal as his famous example of comparative advantage, it had recently escaped its Napoleonic occupation and and the Portuguese people were the subjects of the Portuguese Prince Regent ruling them from Rio de Janeiro

Blogger FSL September 08, 2016 6:27 AM  

If you really cared about the Chinese, you'd stop propping up their authoritarian government. When the bread stops flowing, draws nigh the Revolution.

Blogger Melampus the Seer September 08, 2016 6:29 AM  

Every single country that has industrialized - that is created the most efficient division of labor known to man - has done so under very high protectionist tariffs. In the developing countries where the IMF has forced free trade policies, none have industrialized. None.

There's no way to theorize one's way out of these facts.

Blogger Roger Hill September 08, 2016 6:44 AM  

I have to admit I have a healthy respect for Woods.

"If you really cared about the Chinese, you'd stop propping up their authoritarian government. When the bread stops flowing, draws nigh the Revolution."

While I agree our economic policies do serve the interest of the Chinese government, I don't necessarily think economic depravity alone spurs revolutionary change.... or, at least in China it doesn't seem to be the case. The Chinese saw the virtual starvation of tens of millions of people under Mao's Great Leap Forward, and the 'Party' went right on ruling. Changes did occur later, but not in a revolution.

Blogger FSL September 08, 2016 6:45 AM  

If you really cared about the Chinese, you'd stop propping up their authoritarian government. When the bread stops flowing, draws nigh the Revolution.

Anonymous DJF September 08, 2016 6:50 AM  

VD writes “That has never, ever, been the definition of free trade.”

I agree, as I said, that is my definition of free trade.

The “free traders” like to imply that it is their definition since they often talk about their individual right to trade with some individual China but in reality it is not. It is not an individual to individual trade, it is a corporate trade and often a government owned corporate trade

They would happily trade in political prisoner body parts if they could get them cheap.

Anonymous Braz MK September 08, 2016 6:52 AM  

Epstein was weak when explaining why he thinks it is not important to make things in USA. There is a reason for the emergence of productive clusters. By manipulating the exchange rate, some countries can get whole clusters that otherwise would be located in a different country.

Blogger Rantor September 08, 2016 7:11 AM  

They seem oblivious to the fact that unemployment is not 5% but 23% with 10s of millions unemployed or underemployed. And as for cheap goods at Walmart, 30 years ago they boasted that most of their cheap goods were made in the USA. That changed with Bush and opening China to MFN trading status. Many US jobs for making cheap stuff were destroyed.

Destroyed because not only was labor cheaper in China, but they do not have environmental and labor laws like the US. They also have the Chinese government subsidizing their export industry. It is not free trade, in an absolute sense, but government managed trade, and it is managed to the detriment of the US worker.

NAFTA, and all of these other multi-thousand page agreements are not free trade, but government managed trade, with government picking winners and losers. A true free trade agreement would need no more than two or three legal pages, double-spaced. Even then, if regulatory conditions are so different, as between the US and China, the trade is not fair and ultimately hurts the more advanced nation.

Blogger dfc September 08, 2016 7:30 AM  

1. Services are being outsourced. Services will not be a source of new jobs in America in the future.

2. VD:
"That has never, ever, been the definition of free trade."

True. Free trade, theoretically at least, has been regarded as absolute free trade, and this is the flaw in the theory.

My observation is that trade isn't free unless both sides (meaning countries, not individuals) are equally free. "Equally free" in this context comprises degree of government regulation, degree of government subsidy, robustness legal system especially with regard to contracts and intellectual property, etc.

"Equally free" is approximately true for Canada, but not Mexico or China.

Blogger Phillip George September 08, 2016 7:32 AM  

Every single country that has industrialized - that is created the most efficient division of labor known to man - has done so under very high protectionist tariffs. In the developing countries where the IMF has forced free trade policies, none have industrialized. None.

There's no way to theorize one's way out of these facts.


.......both sides in a prices war.

cui bono?

So why is there a debate?

Blogger Stilicho September 08, 2016 7:37 AM  

The free traders assume comparative advantage without proof. How do they explain the fact that everything isn't made in China? After all they are capable of making iphones and advanced military equipment... there is no comparative advantage for the west in technology for the vast majority of goods.

Blogger Christopher September 08, 2016 7:39 AM  

"[Vox] seemedto be overlooking the reality that these corporations, unless they engage in crony capitalism,are essentially businesses that are trying to sell us goods."

BOOM. There it is. Who is the sovereign? Who is in charge? Where is the accountability? Where are the incentives? The checks and balances?

Blogger dc.sunsets September 08, 2016 8:02 AM  

I admit tl;dr.

I didn't see, skimming, a single acknowledgement of the fact that the fully fiat monetary system is so profoundly corrupting that it renders moot any downstream discussion of trade.

Epstein mentions Bastiat without noticing the biggest "unseen" of them all.

Blogger dc.sunsets September 08, 2016 8:06 AM  

His argument reads suspiciously like those defending the mass issuance of public debt on the basis that "we owe it to ourselves," never noticing that "ourselves" includes a small cadre of winners and a large mass of losers.

I loathe those who use this line of reasoning.

Blogger Arthur Isaac September 08, 2016 8:09 AM  

When dad and I would talk about this, he was a welder and inspector in a heavy industry. He would point out the Chinese and their amazement at both our ingenuity AND our willingness to let them come in and photograph everything. They would buy a machine, come to the plant and go over the manufacturing process from stock to sale and walk away with a prototype.....for mere money. We're supposed to "compete" with that?

Dad's point was when they put our machinists and welders and other skilled craftsmen out of business and in the ground who is going to build the next wars armaments. The baker or the barista?

We'll be open to Banana Republic mode and the (((Epstein's))) of this world will profit.

Has anyone bothered telling this twit that the Chinese are using trade as a weapon in their first volley? Free trade is not their end game.

What is (((Epstein's))) argument going to be when he discovers that the Chinese are nationalist enough to call his "For a Few Dollars More" schtick? Is his sense of fair play going to be hurt? And will he be at the front of the voices calling for a free trade of bullets amongst the goy? (Lets you and him fight style).

They did this same shit to Germany....

Blogger dc.sunsets September 08, 2016 8:09 AM  

Exporting US manufacturing was 1/2 of the disguise necessary to hide the vast monetary inflation of the last 50 years. Suggesting it was due to comparative advantage is truly ignorant of the underlying monetary crime.

Blogger dc.sunsets September 08, 2016 8:13 AM  

Chinese culture can't innovate. They copy, they may even sometimes fine-tune, but their people are culturally unable to confront (and overturn) their authorities, an essential part of the inventive process.

They are parasites on Western aptitudes.

Blogger Arthur Isaac September 08, 2016 8:14 AM  

We can cull the unthinking menial labor masses, and become a whole society of intellectual thinking workers.

How come I get the impression that you wouldn't know or appreciate a skilled trade if it bit you in the ass? Maybe we should all go to college and learn how to be "intellectual" middle managers and play HR games?

Blogger James Dixon September 08, 2016 8:15 AM  

Seriously? Is this the best case they have to offer?

Just one example: However, when you look at our deficits, when you look at it from any standpoint, you begin with the fact that the trade deficit of the US in total is 3% of gross domestic product.

First, it's 3% every year. Year after year after year. The effect is cumulative. Secondly, once a factory moves, it doesn't come back. Those jobs are gone forever. The jobs that supposedly replace it won't be in the same area. But I guess everyone is just supposed to abandon their homes and families and move wherever the the jobs are, and move again five years later when things change again, right?

Second: ...and say that libertarian principles dictate that we should have the freedom to trade, whether it be with a foreigner or with somebody domestic. Nobody has a right to interfere in our right to trade with whomever we please when we perceive mutual benefit.

Tariffs don't stop trade. They merely make you pay more for foreign trade. Just as local and state taxes make things cost more in a given area. It's a matter of how we choose to fund government that works to our best advantage. If we choose to do so via tariffs rather than other taxes, well, that's our decision to make.

Blogger Arthur Isaac September 08, 2016 8:25 AM  

And move to a Chinese industrial area and sleep in a culvert with a sheet draped over the end.

Blogger Tim September 08, 2016 8:26 AM  

To address only one statement. The problem with losing 3% of jobs to free trade is that represents ONE YEAR. Next year, we have another 3% trade deficit, and there go .03x.97 jobs, and pretty soon the labor participation rate is in the .50s. Hmm, where is labor participation in the US? Oh yeah. If it was really free trade, that 3% would be dropping, and would have reversed by now. But when Mexico and China for example keep their wages and currency artificially low and weak respectively, then the bleeding never stops. In Mexico, the rich get very rich indeed, and the Mexican worker gets marginally better off.....and the American worker is hosed. The same for China, where to you think all those Chinese oligarchs got all those billions? Free trade can work...but only if it is really free trade...and it is still just a leveling between the partners. The United States was so rich we should have pulled Mexico right up to where we were...but in Mexico, the rich saw the benefits, and kept the poor poor, and after 20 years there has been no change....except the working class in the US has suffered.

Blogger James Dixon September 08, 2016 8:27 AM  

> If dumb non whites can do a job, let them do it, keep the standards high for OUR people. It's dysgenic to keep the menial labor people reproducing. It's unfortunate the world has to change so fast, but we just don't need that many of them anymore.

We don't need people who pontificate on how much we don't need other people either. Why don't you lead by example and cull the herd of someone we don't need.

Blogger dc.sunsets September 08, 2016 8:44 AM  

Ok, now I mostly read it.

Concentrated benefit, diffuse cost is a problem everywhere, but note how "free trade" embeds it down to the level of the individual choosing where to buy toilet paper.

For 50 years (35 years on overdrive) people in the USA have borrowed in order to enter the marketplace.

The result?
1. GDP ramped higher because borrowing isn't backed out of its bottom line. Discussions of GDP today are rendered worthless, like discussion of the plot of a fictional universe novel.
2. The relative utility of being productive fell, because Say's Law (in order to consume, you must first produce) was placed in stasis...or bludgeoned into a coma, thus instead of production, people increasingly engaged in parlor tricks (the FIRE economy) as a means to great wealth.
3. Monetary wealth (US$) in the form of owning bonds began to FLOOD into the world, seemingly from nowhere. Perception of riches (by sitting on piles of IOU's) skyrocketed, encouraging a spending spree in one market after another.
4. Trade deficits exploded as Americans traded IOU-dollars to export-mercantilist foreigners for inexpensive (price-suppressed) trinkets from clothing to iPhones.
5. A sense of unlimited resources pervaded the entire West. Congress had no limit on spending because every bond issued by the US Treasury was deemed WEALTH so every time Congress pissed away another dollar on some boondoggle, the "economy" was richer by #1 the amount spent and #2 the amount of the bond that was issued to spend it.

Yes, this hammer is my only tool so every problem in today's world looks to me like a nail...BUT...every problem in today's world arises, if you peel the onion enough, from this putrid swamp of monetary con-artistry.

Free trade? Where, when "money" is so detached from production? Consumer sovereignty, when the cumulative "concentrated benefits/diffuse costs" end up being a vast NET CATASTROPHE for people in the USA due to stupid political edicts driven by a complete and total misunderstanding of what is really happening?

For nearly my whole life we've lived under a system of monetary dishonesty so profound and pervasive that it has befuddled the minds of nearly everyone, high and low. Karl Denninger's metaphor of the pond where lily pads double in sq.ft. is quite apt; Now, after 20 years of wage and price stagnation despite a quadrillion dollars in "new wealth" "created" by borrowing, the cracks are appearing in the columns holding up this vast house of cards.

Trade policies of the last 50 years helped HIDE the dishonesty by keeping prices of goods artificially suppressed. Immigration policies of the last 50 years helped HIDE the dishonest by keeping wages artificially suppressed.

And the ASSholes who benefited from this system to the tune of million-dollar yachts and beachfront condo penthouses want to keep the game going.

No. Shit.

Blogger Conan the Cimmerian September 08, 2016 8:46 AM  

This comment has been removed by the author.

Blogger tz September 08, 2016 8:51 AM  

@20 I pointed that out in several comments at Woods site.
Something goes in the other direction as the goods. If it is gold and silver, there will be inflation and deflation and it won't be competitive after a while. In our case it is dollars and debt, not gold, so Tom's daughters are paying for free trade or will.

Anonymous Elijah Rhodes September 08, 2016 8:53 AM  

Even if free trade confers a global economic benefit in the aggregate, that alone is not a sufficient reason to support it. Tom is right; our job is not to make Chinese people richer while our own industries and capability as a nation languish and our culture dies. We're poorer, but hey, we get nifty iPhones!

This response by Epstein is very telling, as it shows his lack of in-group loyalty and inability to look at issues from a cultural vantage. Makes me wonder whether Libertarianism is an expression of r/ selection.

"However, do not interfere with my right to disagree with you and to buy from Chinese people abroad who are desperately poor. Then in terms of consequences, please understand that by probably through your actions, you are costing many, many more jobs lost across the economy. Then also recognize that by opposing companies like Walmart, you are denying people of limited means the opportunity to buy cheap goods."

Blogger dc.sunsets September 08, 2016 9:00 AM  

So my old buddies in libertarian-land have finally adopted Lenin's Who-Whom?"

If the USA is (on average) rich and Nowhereistan is poor, somehow it's only right if policies are instituted to equilibrate that?

No wonder Trump's call to run US policy for the benefit of US citizens makes some people crazy.

I run my family policy based on what is best for my family, no some goatherd in Nowhereistan.

If the UN population estimates are remotely correct, in coming decades sub-Saharan Africa's population will rapidly surpass that of China and India...COMBINED.

Do those who think the world should be "equilibrated" expect to invite a billion Africans to join us here in North America?

What do you call North America with a billion Africans?

Africa with snow.

No wonder discussions like this make my blood boil. I see the Mad Max world these clowns intend to create for my grandchildren. I see it plain as day.

When the paradigm shift arrives, SWIM (someone who isn't me) is going to join a lot of other Someones who aren't me and they're going to do what feels natural for those whose families face ruin from virtue-signalers.

Blogger dc.sunsets September 08, 2016 9:14 AM  

Libertarians are Utopian. (Been there, done that, have the t-shirt, blah blah.)

No one policy fits forever, in all places and times. "Free trade" is such a policy; consumer sovereignty sounds great on paper, fails for the same reason as do all Tragedies of the Commons.

The opposite of Left is RIGHT. Right is in the direction of hierarchy, and hierarchy taken far enough is aristocracy of some sort. Given that under so-called democracy we still have hierarchy (rule of an unseen elite, usually moneyed interests), the only true alternative is hereditary aristocracy.

The way forward is to decrease the Hobbesian War of All against All that is democracy in favor of some kind of political rule where most citizens have no way of grasping the ruling Power, and thus treat those wielding it with suspicion.

The future will probably recap the past. We'll have our Charles Martel, and we'll have his grandson, Charlemagne. Popular democracy will pass away with most of the rabble.

As for "Free trade" all the rationalizations for it will disappear once this long spasm of insane trust dissipates. Global trade will falter, coinciding with economic collapse, but those who blame the Great Depression in part on Smoot-Hawley get their causality reversed. Booms arise from optimism & trust, which sometimes spin out of control to produce bubbles (and stupid, self-destructively open trade policies, among other things.) Busts are just the natural denouement of booms, and depressions are the natural denouement of bubbles.

We've lived in the largest, longest bubble in recorded history. Anyone with a brain knows what has to follow, sooner or later.

Blogger Conan the Cimmerian September 08, 2016 9:20 AM  

Edit of @31:


Fantasy and Reality, which will you choose? The life and preservation of the West and its cultures or universalism/internationism without self determination, which will you choose?


(warning: language)


This is all complete mental masturbation as there is no such thing as free trade except in the fantasy sense.


This simple truth kills the whole argument. Until there is a completely level playing field, there is no free trade.


As most countries view themselves as nation-states with national interests, it will ALWAYS be this way unless there is a One World Governmental body.


It seems that only the West is not allowed to seek its own best interests.


One side is playing the trade war and the West is lying down and spreading its collective legs.


When someone speaks the magic spell of free trade, they should be slapped accordingly. They are mentally masturbating to their own theoretical musings of a utopian/fantasy world and nothing more.


Free trade is internationalism/universalism. All cultures will have to be subsumed for it to exist (the benefit of the free movement of labour). Amazing to discover that (((they))) are in favour of this.


Free trade is utopian mind bullshit. Free trade is anti-West. As a former AnCap, I can't believe how long it took me to see what an autiste I was in this. Now I look at those who still believe this bullshit and wonder how can the intelligent be so damn stupid. They are either too involved with the theory and not the real world, or this is the other side of the communist/marxist coin as a Hegelian mambo death dance for the West.

Blogger Gaiseric September 08, 2016 9:25 AM  

Most statistics cited on the internet are clearly made up on the spot. 3% of America are the losers in free trade, while the other 97% benefit?! He can seriously claim that when more than 94 million Americans are out of work?

Blogger Undocumented Pharmacist September 08, 2016 9:33 AM  

@ dc.sunsets said

The opposite of Left is RIGHT. Right is in the direction of hierarchy, and hierarchy taken far enough is aristocracy of some sort. Given that under so-called democracy we still have hierarchy (rule of an unseen elite, usually moneyed interests), the only true alternative is hereditary aristocracy.

How does this improve the situation for the common man?

Blogger CarpeOro September 08, 2016 9:38 AM  

Micchel Higgson wrote:Job outsourcing is actually a good thing in the sense that it's a form of eugenics for our people. We shouldn't artificially protect dumb menial labor jobs. If the market does not require so many of them, or they can be done for cheaper, let our dumb laborers accept lower wages or fail.

If dumb non whites can do a job, let them do it, keep the standards high for OUR people. It's dysgenic to keep the menial labor people reproducing. It's unfortunate the world has to change so fast, but we just don't need that many of them anymore.

The bubble has to pop at some point. We can cull the unthinking menial labor masses, and become a whole society of intellectual thinking workers. (and yes, I include retarded IT jobs in the category of low skill menial jobs)


Clearly you do not work in IT. Or maybe even any other professional area. Sure, when this all started that was the way it was sold. That was never the end game. Tech, medical, accounting, hell, I have no idea if there is an end point other than the upper 10%. While you may argue that many of the jobs are "still done in the USA" the issue is that just like in the days when waves of immigrants would be brought in to do factory labor and took jobs from Americans that is now happening in the middle to upper middle class. The claimed need to bring in skilled people because they can't find people to do the work here is b.s. They can find people here, they just don't want to pay the wages. So they import cheaper workers. This in turn discourages more Americans from getting the training or starting down that path. These aren't minor manual labor jobs. These aren't even skilled trade jobs. These are positions that are generally occupied by Americans that have been working in the field for 5-10 years. By the way, many of these replacement workers have certificates or only a little training - those jobs are done more poorly at least until they get 5-10 years in on them also.

With all due respect to Vox's partner in the free trade debate, he needs to take a step back from academia and take a good look. The issue is there also if he cares to look. It is indeed cheaper to hire professors from India, Taiwan, and Eastern Europe and in technical and engineering disciplines there are fewer American students and professors every year. The process stops when Peoria resembles Calcutta - Peoria poorer and Calcutta a little wealthier. Both will have the ultra-wealty and at best a large lower middle class. Perhaps a free trader's vision of Utopia, but not mine.

Blogger maniacprovost September 08, 2016 9:41 AM  

OP makes a good case that free trade is better than no trade, but that's not the question.

He also essentially never addresses tariffs.

And then there's the fact that he leans on our freedom / right to trade as we think best, while ignoring incomplete information and limited rationality.

That's why I favor a low tariff, just enough to eliminate sub-marginal imports. Somewhere between 1% and 7%.

But the tariff should be on the export of dollars, not the import of goods.

Blogger LK September 08, 2016 9:51 AM  

If I am not mistaken (maybe I am), Vox Day has said in the past that Ricardo’s original case for complete free trade by comparative advantage was OK, nut that is wrong.

In the real world, industries have constant, increasing or diminishing returns to scale. The path to wealth and First World development for most countries lies in manufacturing, not in dead-end diminishing returns to scale sectors like agriculture.

Ricardo’s abstract argument utterly fails in the real world. Portugal would be justified in developing a manufacturing cloth industry and other industrial sectors (even if it required imposing tariffs) and ignoring free trade. In the long run, this is what will make it rich. Wine and diminishing-returns-to-scale sectors are a path to poverty.

See here:

http://socialdemocracy21stcentury.blogspot.com/2016/08/robert-murphys-debate-on-free-trade.html

Blogger dc.sunsets September 08, 2016 9:51 AM  

@38 How does this improve the situation for the common man?

There is no alternative to being ruled. Humans are social animals, and social structures are thus inescapable.

The issue is, how are the rulers, and how is the structure, chosen? Today's Hobbesian factionalism is a predictable result of "everyone can be President." It creates a universal system of jockeying to gain control over dispensing the loot, which (paradoxically) ends up wasting astronomical resources on political competition, a condition leftists (who are by definition blind) prefer to blame on competition in the marketplace.

Democracy cannot escape decline into an ever-growing Tragedy of the Commons as political management of society metastasizes to engulf every aspect of human action (i.e., today's political involvement in sex, the most private of all human activities in a civilized world.)

Today we live in the apotheosis of "concentrated benefit/diffuse costs" as exemplified by our completely dishonest monetary system, enabling rent-seeking on a scale never before seen.

Surely, you see that the "common man" is always and everywhere the bearer of the burden of every "diffuse cost."

I'm going from Hoppe on this; if we're stuck with a ruler (chosen somehow) then best if
1) The ruler behaves as an owner, not a renter.
2) The "people" view the ruler's actions with suspicion, rather than letting today's ruler arrogate ever more power on the belief that tomorrow "the people" will get "their guy" into power and thus get to distribute the (now larger) swag.

Ignoring the second point above is why "government" has grown like a hydra to consume everything we do. Nothing is private now. Our money, our sex lives, our very ability to treat things as they are (e.g., treat men as men, not men as women and vice versa) has been lost to the POLITICAL PROCESS, which is synonymous with force.

The common man would be far better off if he was never tempted to invest time and effort to obtain the ability to rule his neighbors, and if those who do rule realize that there are hard limits to the popular consent of a suspicious citizenry.

Blogger LK September 08, 2016 9:52 AM  

correction: "but that is wrong."

Blogger Student in Blue September 08, 2016 9:53 AM  

Something that struck me while reading the first section of it, was the assumption that "well if we don't have free trade, we must automatically have banned every import". Thus the proposition that without free trade, we can't drink coffee anymore unless someone in America grows them in greenhouses at great expense.

That's not the only alternative to free trade and they should feel ashamed for presenting it as if it were.

Humans didn't magically only start importing items when free trade became a thing.

Anonymous BGKB September 08, 2016 9:53 AM  

Most of the problems with the world he is proposing could be mitigated with real currency and strong arbitration law.

The current investor-state dispute settlement system (ISDS) is pretty bad and will only get worse with the TPP. By having a choice of 2 jewish arbitrators people can get away with embezzling hundreds of millions and use ISDS to force Interpol to remove red alerts and extradition requests.
http://www.thedailysheeple.com/secret-global-court-why-corporate-criminals-and-corrupt-politicians-desperately-want-the-tpp_092016

Job outsourcing is actually a good thing in the sense that it's a form of eugenics for our people. We shouldn't artificially protect dumb menial

Affirmative action means we get stuck with black token pilots who are only trusted to sit at desks.

Blogger al September 08, 2016 9:55 AM  

Roger Stone
Have you heard of the J-curve theory of revolution? It appears reasonable to me. People here would probably be interested.
From popularsocialscience website:
"Revolutions are most likely to occur when periods of prolonged improvements concerning economic and social development are supplanted by a period of sharp reversal... After a reversal of fortunes, people will subjectively fear that what they have earned will be lost, and thus their mood becomes revolutionary. Davies claims that political stability and instability are dependent on the mood of the society. In other words, poor people who are satisfied will not revolt, and rich people who are dissatisfied may revolt. What is important is their state of mind rather than how much goods they possess. Revolutions do not usually occur in impoverished societies. The reason is that when people are preoccupied with their physical survival, the community-sense and consensus on joint political actions goes down and thus also the likelihood for revolutions to occur. Even though physical deprivation is to some extent present at the onset of revolutions, it is seldom the primary cause."
Not too familiar with conditions in China, but it seems they fit the j-curve mold.


Blogger al September 08, 2016 10:04 AM  

The j-curve part of the theory refers to the appearance of a curve of Needs vs Time (I hate soft science terms like this) when expected progress fails to manifest. So dashed hopes cause revolutions. That's why Trump giving hope to the white working class is viewed as extremely dangerous in the corridors of power. It also suggests that Obama is a fool for lying about economic data and not trying to manage expectations for our inevitable collapse of wealth if things aren't changed. Jimmy Carter was mocked for his "Crisis of Confidence" speech, but if he expected decline to continue he did the right thing by the country. If not for the unprecedented production of private debt that has wrecked our nation, Carter's speech would have been spot on.

Blogger dc.sunsets September 08, 2016 10:07 AM  

The claimed need to bring in skilled people because they can't find people to do the work here is b.s. They can find people here, they just don't want to pay the wages.

High wage or low, flooding supply into the USA was and remains a key component of maintaining wage stagnation, which is itself a key component of the claim that you can create ~$1,000,000,000,000,000 in "new dollar wealth" (AKA the Bond Ocean) and surprise! there's NO INFLATION!

This is for the deluded morons who think inflation is characterized by a rising CPI. If I have a rigid airship with two gas bladders, one marked "assets" and the other marked "consumer goods," and I pump a quadrillion cubic feet of volatile credit---er---hydrogen gas into the airship but all of it goes into the one marked "assets," am I not inflating anything?

Obviously, my airship rises, and rise and rises and rises. Everyone looks out of the gondola and marvels at the view. They congratulate the architects of this stupendous ride. It never occurs to anyone that a spark (a rise in interest rates) could occur at any moment, and once it does, the sympathetic detonation of each cubic foot of BOND VALUE promises a full Hindenburg experience for everything that depends upon the buoyancy of Bond Value inflation.

Blogger Student in Blue September 08, 2016 10:08 AM  

@al

It's completely off topic, and in my opinion better theories covering the same thing have already been discussed. It's also full of "no shit sherlock".

"Davies claims that political stability and instability are dependent on the mood of the society."

NO KIDDING? People riot when they're unhappy, thus they don't riot when they're not unhappy! Brilliant!

Blogger al September 08, 2016 10:12 AM  

Student in Blue
The main part of the theory isn't about the unhappiness, but rather when expected progress fails to manifest. I also think you are a smart ass for no discernible reason, and I never understood why the internet is so full of such people.

Anonymous bgkb September 08, 2016 10:25 AM  

He would point out the Chinese and their amazement at both our ingenuity AND our willingness to let them come in and photograph everything.

The equality cult ignores that throughout history its been white people making innovations. The Chinese had a good run until their imperial times killed off those who questioned things.

No wonder Trump's call to run US policy for the benefit of US citizens makes some people crazy.

They are too stupid to make money without cronyism

The future will probably recap the past. We'll have our Charles Martel, and we'll have his grandson, Charlemagne.

I am rooting for Vlad Tepes and Pinochet's helicopter.

Blogger Student in Blue September 08, 2016 10:32 AM  

@al
The main part of the theory isn't about the unhappiness, but rather when expected progress fails to manifest.

"What is important is their state of mind rather than how much goods they possess. Revolutions do not usually occur in impoverished societies."

Unhappy people riot, and happy people is still a succinct summary.
The only "distinction" that they're trying to make is some sort of revolutionary new idea that happiness is a state of mind, and not necessarily just having material goods.

This thing is full of points that have been known about for millennia that are being touted as new wisdom.

I also think you are a smart ass for no discernible reason, and I never understood why the internet is so full of such people.

I'm being a smartass because I think it's a really, really dumb theory that treads no new ground.

Blogger Student in Blue September 08, 2016 10:33 AM  

*and happy people don't, is still a succinct - and true - summary.

Blogger pyrrhus September 08, 2016 10:39 AM  

We live in a Potemkin society in which fraudulent government statistics on GDP, inflation, borrowing and unemployment lead to inane discussions like this one. How is it possible that a service economy with close to 100 million people unemployed can provide a first world living for its people? Currently the answer is by printing fiat money and shipping it overseas. How long do these guys think that can last?
And it is an incontestable fact that the middle class has been hammered in the last 50 years, (possibly excluding those whose unions wangled large government pensions in some blue states). In the '60s, people routinely put their kids through college without borrowing, for example....Of course, the industrial working class has been nearly wiped out, including many trades....But it's all worth it so we can get cheap plastic junk from the far east.

Anonymous BGKB September 08, 2016 10:50 AM  

IRS says don't store gold at home for retirement because it would be problematic for them to steal it. http://www.zerohedge.com/news/2016-09-07/irs-warns-against-keeping-ira-funds-gold-home

Blogger Fatherless September 08, 2016 10:55 AM  

How do you get around that passive aggressive Libertarian thing... well, you should just totally BUY AMERICAN that will work...?

Blogger Solaire Of Astora September 08, 2016 11:11 AM  

Has he ever seen regular people go shopping? They aren't making conscious decisions to buy Chinese products. In my experience, proximity and convenience are all that matter in most cases. His entire argument about him helping a poor Chinese peasant is simply a rationalization after the fact, and a disgusting one at that. He's making a purely cost based decision and then dressing it up as an act of moral goodness.

Blogger JaimeInTexas September 08, 2016 11:17 AM  

https://en.wikipedia.org/wiki/Austrian_School

Austrian School
The Austrian School is a school of economic thought that is based on the concept of methodological individualism – that social phenomena result from the motivations and actions of individuals.[1][2][3][4]
(snip)
Among the theoretical contributions of the early years of the Austrian School are the subjective theory of value, marginalism in price theory, and the formulation of the economic calculation problem,
(snip)

Methodology
The Austrian School theorizes that the subjective choices of individuals including individual knowledge, time, expectation, and other subjective factors, cause all economic phenomena. Austrians seek to understand the economy by examining the social ramifications of individual choice, an approach called methodological individualism. It differs from other schools of economic thought, which have focused on aggregate variables, equilibrium analysis, and societal groups rather than individuals.[40]


Also, see https://mises.org/about-mises/what-austrian-economics

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

To me, people like Epstein and Wenzel, they forget the "subjective choices of individuals" component. Or, do they deliberately ignore it?

Purchasing and selling decisions are not solely made on economic calculus of an individual. It is human nature.

The individuals within a society must be, to the largest possible extent, homogeneous in their beliefs and mores so that their intercourse, of which economic is but one component, can be performed based on mutually and unchallenged and un-conflicting assumptions.

In other words, their identity as individuals will direct the external generic characteristic, which in its collection is known as people.

Epstein and Wenzel wish for the impossible because they are locked in academic argumentation, unlike Bionic Mosquito, who takes the academic and critiques it based on the reality on the ground.

Woods is a Roman Catholic, pre Vatican 2, and he understands the importance of culture -- after all, he wrote the book "How the Catholic Church Built Western Civilization"

That is why Woods is approachable and not afraid to listen to us, the alt-right.

I hope that Woods will invite Vox to discuss:
identity > culture > politics

Blogger Undocumented Pharmacist September 08, 2016 11:25 AM  

@dc.sunsets said

Ignoring the second point above is why "government" has grown like a hydra to consume everything we do. Nothing is private now. Our money, our sex lives, our very ability to treat things as they are (e.g., treat men as men, not men as women and vice versa) has been lost to the POLITICAL PROCESS, which is synonymous with force.

How was anything private for the peasants under the feudal system you seem to be proposing?

The common man would be far better off if he was never tempted to invest time and effort to obtain the ability to rule his neighbors, and if those who do rule realize that there are hard limits to the popular consent of a suspicious citizenry.


How does the citizenry dispose of rulers who overstep their supposed bounds?

Blogger Aeoli Pera September 08, 2016 11:25 AM  

But ultimately at the end of the day it's a matter of ethics. Do people have a right to think for themselves about how they're going to spend their money?

No. And that's just descriptive the descriptive end of things. Working at a strip club cured my libertarianism, so the prescriptive side is also "no".

Blogger Aeoli Pera September 08, 2016 11:29 AM  

95% of macroeconomics is apologetics.

I will say this for economists...the carbon dioxide they produce is good for the plants.

Blogger kurt9 September 08, 2016 11:49 AM  

It seems to me that technological change, not the alt-right, will bring a lot of manufacturing back to the U.S.

The fracking/shale revolution, combined with advances in 3-D printing and robotics/automation, will reduce the advantages of low-cost labor to manufacturing. This, along with the corruption and cross cultural hassles of China, ought to lead to a manufacturing renaissance in the U.S. regardless of the success or failure of the alt-right. The fracking/share revolution will be supplemented (replaced?) by the development of Gen IV fission power as well as potential breakthroughs on the part of one or more of the fusion power start-ups (Tri-Alpha Energy, General Fusion, etc.).

Given these expectations, I think the issue of "free trade" and of outsourcing in particular will decline as a political issue in the coming years.

Blogger kurt9 September 08, 2016 11:51 AM  

Support for my argument:

http://www.breitbart.com/big-government/2016/06/08/globalization-destroyed-era-robotics-3-d-printing/

Technology, not the alt-right, will regenerate American manufacturing.

Blogger Undocumented Pharmacist September 08, 2016 12:00 PM  

Robotics to bring back manufacturing, but not jobs. Good for profits, but not for society.

Blogger dc.sunsets September 08, 2016 12:03 PM  

@59 Undocumented Pharmacist

First, this ain't my blog. This means that my comments are largely rants; if you gain something from them, fine, if you don't, ignore them. I have no desire or obligation to clarify or (laughing) edify.

Second, if you think 14th century peasants didn't have more privacy (esp. financial privacy) than do you, well, we already discussed Snowden and maybe you should go back and review the Bank Secrecy Act.

As to how does the citizenry dispose of rulers, have you access to a library? Sheesh. Go back, read "Discourses on Voluntary Servitude" and evaluate its thesis in the seat of your mind's abstract thought. If you have one. After all, not everyone makes it to Piaget's Formal Processes.

Blogger Student in Blue September 08, 2016 12:04 PM  

@kurt9

That won't necessarily stop the Chinese however. For the vast majority of them in mainland, they'll steal the technology, claim it was always there, and entice businesses to buy from them instead of Americans by claiming the lowest prices (and never delivering a quality product).

The technology will alter the balance, probably, but you can't discount that people lie and will lie shamelessly.

Blogger dc.sunsets September 08, 2016 12:09 PM  

Robotics to bring back manufacturing, but not jobs. Good for profits, but not for society.

So the mechanization of agriculture wasn't "good for society?"

Yes, mfg is headed for full automation. Yes, few people will be smart enough to fill the demand for engineers and others who conceive, design, prototype and then direct the manufacture of industrial goods.

Did people at the dawn of agriculture's automation know what their great-grandchildren would do "as work" to survive? Then why would you think anyone would have a clue how this is going to go?

Maybe future people will demand hand-made stuff. Maybe lots more people will simply entertain others. As long as the lower costs of automated manufacturing reach the consumer level (something only political intervention can stop), it might not take much productivity to "get by" at a decent standard of living.

The truth is, getting the human-variation out of manufacturing is every bit as useful as getting men out from behind the ass end of a draft horse pulling a plow.

Blogger JaimeInTexas September 08, 2016 12:16 PM  

@64. Undocumented Pharmacist September 08, 2016 12:00 PM

"Robotics to bring back manufacturing, but not jobs. Good for profits, but not for society."

It will bring jobs but they will not be structured like the old manufacturing plants.

3-D printers vary in their sophistication, cost and materials. Depending on the product, assembly will be required. The 3-D manufacturing of the future will be dispersed in thousands of small shop manufacturing. As always, there will be tens of thousands hobbyists that will support a sector of the 3-D printing manufacturing.

Blogger dc.sunsets September 08, 2016 12:17 PM  

PS: A huge component of the high cost of living today is the totally artificial "marketplace" for medical services. It is a vast sinkhole for capital, and everything I've seen informs me that the increment in lifespans (and general health) over the most basic, cheap things like decent water treatment and sewage management is tiny compared to the crushing burden of dead weight cost.

You get the vast labyrinth of political patronage (disguised as all sorts of medical, regulatory and insurance-based services) and a lower-middle-class lifestyle is incredibly cheap today, in terms of what is required to produce (and trade for) it. This is a trend that should continue once the elephantine parasite that is the banking/debt/congressional scam breaks down and accounts (esp. promises of future cash flows like pensions, S.S., Mediscam, etc.) are finally reconciled with reality.

Of course, another possible future is where there are a few men involved in making real stuff and the rest of us are employed to spoon-feed and butt-wipe the SSDI-lifers and aged.

Blogger JaimeInTexas September 08, 2016 12:19 PM  

May I add that much of the 3-D manufacturing will be done closer to the product's end user, dropping the cost of shipping and inventory. The main shipping cost will be in the raw material.

Blogger Student in Blue September 08, 2016 12:30 PM  

@JaimeInTexas

Fair enough.

Anonymous BGKB September 08, 2016 12:51 PM  

I am sure this is relevant. McDonalds offering free employee housing in areas its hard to find workers http://www.bloomberg.com/news/articles/2016-09-05/mcdonald-s-free-housing-lays-bare-eastern-europe-s-labor-crunch

A huge component of the high cost of living today is the totally artificial "marketplace" for medical services

The cost of subsidizing illegals goes into it. A fellow healthcare traveler's wife had to get a yearly MRI to follow up her condition. The cost to get it in CA after insurance payments was so high she could have flown home & paid out of pocket cheaper.

Aeoli Pera. Working at a strip club cured my libertarianism

Is MILO a big tipper?

Anonymous MMX2010 September 08, 2016 12:56 PM  

I didn't read the whole thing because I stopped at the "Don't interfere with my decision to disagree with you by buying Chinese goods!" comment.

First of all, there are many ways we can "interfere" with (((Epstein))), ranging from putting echoes around his name, to pointing out his unlimited affection for the Chinese compared to his fellow Americans.

Secondly, (((Epstein's))) biography, which I only got though a quick Google search, depicts an old man with no wife and no children. So he's an economic specialist with a boatload of time on his hands calling for responsible working parents to devote boatloads of time evaluating their economic decisions. What horseshit. Responsible parents don't have the time to do that, so they expect their politicians to make responsible decisions on their behalf - which politicians won't do.

Blogger The Anti-Gnostic September 08, 2016 1:03 PM  

Great thread.

I am not very good in this area, but as I understand the concept of international trade, the imports must be paid for by exports or by credit, either in the form of debt or equity.

We have very large deficits. How are they being financed? I recall Robert Murphy taking a look at this and saying there's still around 20% out there that can't be accounted for by US exports and overseas investment. Not to mention that export-nations' central banks actually print money to buy US Treasuries to bolster the dollar. This is a long, long way from the old model of Venetians trading their ducats to the Damascenes for their silk. The State and its central bank's footprints are all over international trade. It's no more "free market" than the purchase of an airplane ticket at this point. That charming observation of lower-class people shopping for middle-class toys at Walmart is actually dependent on the biggest monetary bubble in human history.

But for some reason things keep rolling along.

Blogger kurt9 September 08, 2016 1:15 PM  

Sometimes free trade is necessary to break the stranglehold of stagnant corporations and industries. For example, the "Big 3" of Detroit, along with the corrupt UAW, collectively decided in the early 70's to make garbage. It required external competition in the form of the Japanese automakers to force the U.S. automakers to mend their ways and to start making good cars once again.

The problem with any kind of fixed system is the stagnancy and intrenched rent-seeking parasitism that results in inferior productivity. We see this with all of the established players in the medical field who refuse to consider aging itself to be curable medical condition. Hence, reform must come from an external source in the form of Aubrey de Grey's SENS foundation as well as other outside players and DIY bio-engineering people.

Its a similar dynamic (or lack there of) to how the railroad companies failed to develop and become the airline industry.

Creative destruction is necessary to all fields of human endeavor. This is something the alt-eight advocates need to keep in mind.

Anonymous Rhino September 08, 2016 1:17 PM  

My problem with free trade is that the benefits mostly go to the holders of capital while the costs are imposed on domestic labor.

I'm not okay with that.

Blogger The Anti-Gnostic September 08, 2016 1:26 PM  

"Creative destruction is necessary to all fields of human endeavor. This is something the alt-eight advocates need to keep in mind."

Good point. I'm old enough to remember the 70s.

I don't even like to think about where we'd be if 2008 had been allowed to happen.

Blogger kurt9 September 08, 2016 1:30 PM  

Worldviews (ideologies, philosophies, religions) that seek to limit creative destruction or productive accomplishment in general represent rent-seeking parasitism. The advocates of the alt-right must ensure that such rent-seeking parasitism is never able to become entrenched in the alt-right.

Blogger Student in Blue September 08, 2016 1:30 PM  

@kurt9
Sometimes free trade is necessary to break the stranglehold of stagnant corporations and industries. For example, the "Big 3" of Detroit, along with the corrupt UAW, collectively decided in the early 70's to make garbage. It required external competition in the form of the Japanese automakers to force the U.S. automakers to mend their ways and to start making good cars once again.

Free Trade isn't necessary though in that situation, instead just setting tariffs to zero for that industry so they actually have competition would be all that's needed.

Free trade is not just a couple of industries or goods not having tariffs on them, after all, but all goods and industries.

It'd be like saying "Fat people gain health benefits by not eating for a while (losing weight). Thus, everyone should stop eating, forever."

Blogger Student in Blue September 08, 2016 1:33 PM  

Left out some sentences, so that came across as a bit disjointed.

Free trade is not just a couple of industries or goods not having tariffs on them, afterall. Free trade is instead ALL goods and industries have no tariffs on them.

And if you say that every industry and good should have no tariff on them because some cases prosper from it is like saying, "Fat people gain health benefits by not eating for a while (losing weight). Thus, everyone should stop eating, forever."

Blogger Undocumented Pharmacist September 08, 2016 4:07 PM  

@ dc.sunsets ranted .. .
As to how does the citizenry dispose of rulers, have you access to a library? Sheesh. Go back, read "Discourses on Voluntary Servitude" and evaluate its thesis in the seat of your mind's abstract thought. If you have one. After all, not everyone makes it to Piaget's Formal Processes.

Gosh Mr. Sunsets you shore are smart. It's a wonder why you ain't king already. But mebbe you is, secretly.

Blogger JaimeInTexas September 08, 2016 4:07 PM  

@75. kurt9 September 08, 2016 1:15 PM

A lot can also be explained by government regulation, really, strangle hold, on manufacturing.

Blogger Undocumented Pharmacist September 08, 2016 4:07 PM  

@ dc.sunsets ranted .. .
As to how does the citizenry dispose of rulers, have you access to a library? Sheesh. Go back, read "Discourses on Voluntary Servitude" and evaluate its thesis in the seat of your mind's abstract thought. If you have one. After all, not everyone makes it to Piaget's Formal Processes.

Gosh Mr. Sunsets you shore are smart. It's a wonder why you ain't king already. But mebbe you is, secretly.

Blogger JaimeInTexas September 08, 2016 4:23 PM  

What a lousy example, that of importing coffee. Why have a tariff on a good that cannot be produced here?

Anonymous Mark Call September 08, 2016 4:43 PM  

At least some of the comments here have come close:

It is impossible to have "free trade" with fake money.

Blogger kurt9 September 08, 2016 4:56 PM  

JaimeInTexas wrote:@75. kurt9 September 08, 2016 1:15 PM

A lot can also be explained by government regulation, really, strangle hold, on manufacturing.


Of course.

Blogger dc.sunsets September 08, 2016 5:10 PM  

Chinese culture can't innovate. They copy, they may even sometimes fine-tune, but their people are culturally unable to confront (and overturn) their authorities, an essential part of the inventive process.

They are parasites on Western aptitudes.

Blogger Arthur Isaac September 08, 2016 5:34 PM  

So the mechanization of agriculture wasn't "good for society?"

With all of the unintended consequences, from the dust bowl to uncontrolled population explosions due to automation and fertilizer I think there is a solid argument for, "No it isn't good for society".

Anonymous A Paradigm Is More Than Twenty Cents September 08, 2016 7:37 PM  

This response by Epstein is very telling, as it shows his lack of in-group loyalty

Eh? Seems clear to me that (((Epstein))) has plenty of ingroup loyalty, it's just that 97% of Americans aren't in his ingroup.

Blogger Blunt Force September 08, 2016 8:24 PM  

Walmart not only destroyed entire community based shopping districts with cheap foreign imports but created those markets using the very tax dollars of the people whose jobs they were destroying.

http://www.goodjobsfirst.org/search/node/Walmart

Blogger Blunt Force September 08, 2016 8:51 PM  

Walmart not only destroyed entire community based shopping districts with cheap foreign imports but created those markets using the very tax dollars of the people whose jobs they were destroying.

http://www.goodjobsfirst.org/search/node/Walmart

Blogger Thucydides September 09, 2016 12:27 AM  

@52:

"@al
The main part of the theory isn't about the unhappiness, but rather when expected progress fails to manifest.

"What is important is their state of mind rather than how much goods they possess. Revolutions do not usually occur in impoverished societies."

Not true at all. Peasant revolts are quite common, but the end result is a lot of dead peasants and occasionally the lord of the manor has been replaced by a new lord. The French and American Revolutions were perhaps the first modern revolutions since the middle class had grown large and powerful enough to have their own political, social and economic aspirations and to be able to fight for them. Previously, the middle class was a very small part of society, and generally allied with the Aristocracy to protect their property and wealth from the peasants and poor.

When the middle class had reached a critical mass, then they were able to take on the aristocracy for control of the levers of power, as well as defend their property against the depredations of the poor.

In today;s world, the middle class has their property relentlessly drained away through taxation, regulation and fees that transfer their wealth to the crony capitalists and political gatekeepers, while simultaneously these same rent seekers seek to eliminate the ability to protect middle class property (gun control laws, the Ferguson effect to reduce the police presence and force feeding narratives and political correctness to prevent the debate and defending of ideas in the public square.

Few Revolutions truly succeed, perhaps only the "Glorious Revolution" in England and the American Revolution are the only two that come to mind off the top of my head, otherwise we see the revolutions consumed from within and collapsing in bloodshed and chaos, like in France and Russia.

History tells us the conditions for a Revolution are present, but also warn us that the end will be singled by the arrival of "the man on the white horse" who promises to end the chaos and bring peace and security to the masses.

Blogger Student in Blue September 09, 2016 10:29 AM  

@Thucydides

Fair enough. The quote was from the source Al was quoting, so I'm not heavily invested in the idea.

You're right, there's something of an ahistorical assumption that there were plenty of peasants who didn't have much but were completely content with what they had.

This realization is, of course, not the same thing as trying to claim that with enough material stuff everyone becomes happy - and that revolutions aren't driven by feelings of unhappiness.

Related to that, from personal experience there's definitely a large section of people who, if you take care of basic needs, aren't going to start any fight whatsoever no matter how much they gripe.

Blogger Blunt Force September 09, 2016 10:40 AM  

Walmart not only destroyed entire community based shopping districts with cheap foreign imports but created those markets using the very tax dollars of the people whose jobs they were destroying.

http://www.goodjobsfirst.org/search/node/Walmart

Anonymous Frost September 10, 2016 7:53 AM  

The fundamental thing that forever seems to keep me from being wholly alt-right stems from the free trade objections, namely because I feel a lot of them go just ignore the baseline argument, and into a sort of consequentialism that they won't engage in when addressing other things. IE: the fundamental argument that its wrong to steal and use force, and thus the argument basically ends at that point. You cannot argue that someone should not be allowed to voluntarily engage in some sort of trade without being authoritarian and destroying any basis you have to claim you're for freedom and liberty, and this is a zero sum game because that's how principles work: you're either for freedom and liberty, or you're not, and you might as well not respect them at all, because once you've infringed a little, you've violated the very premise of defending them, and thus the entire structure is just trying to make an arbitrary distinction, and is thus logically faulty.

I also always free like when folks bring up labor mobility as a necessity, or inevitability, they forget that the reason there can be labor mobility in the United State is we (well, nominally, no thanks to the government...) speak the same language and share a general culture, AND because there is an infrastructure to allow such mobility.

The answer, as far as I see, is to a. stop taxing people and using their money to fund the welfare state that immigrants disproportionately rely on, and b. stop the subsidies to businesses that engage in the behaviors too. It will self correct after these two things are done, but the irony is as Blunt Force points out, Walmart was able to do what it did because it had state support, and only because it had state support, really. The vast majority of immigrants aren't the terrorists, though many come with them. The vast majority are welfare queens, destructive in an entirely different way. So, the real issue is end the state theft that funds the welfare state, and immigration, and the companies that leech of society in general.

Also, as an aside, I remember seeing an argument that somehow free trade, because it requires open borders (which I don't necessarily agree with, but that is with a definition of what a border is) is against property rights, because it posited a collective ownership of a geographical area of the 'nation' as a collective property right, but this is impossible, because a. that's not how property rights are established and b. any such collective right would mean every US citizen (though, really, more accurately every US citizen of anglo-descent for the most part, with some exceptions) would share equal control over that state, and property rights would mean every one of those people would have to agree with any use of that collective right, not merely a majority or plurality, or anything, but a universal consensus.

Anonymous simone September 12, 2016 6:30 AM  

Maybe if americans wouldn't give about 70 % of their wages to government (on taxes, tariffs, fake money printing) then they could afford a bit more expensive locally manufactured goods.

Blogger Dwain Dibley September 16, 2016 5:03 PM  

@ Frost
I think it's a tad disingenuous to equate, as Mr. Epstein did, your individual ability to freely trade with any other individual on the planet as being the same as corporations engaging in internationalized commerce. Whereas, your individual trade affects yourself and the person you are freely trading with, corporations deal in bulk merchandising that has the potential to affect the lives and livelihoods of tens of thousands of individuals in a single transaction, disrupting or destroying the established division of labor. And, contrary to Mr. Epstein's erroneous assertion, your ability to buy chinese products at WalMart, is not the equivalent of you engaging in a trade with China.

As an aside; International commerce is not 'trade'. International commerce is a direct line from production to store shelves, it is a system where whoever produces the cheapest will always win, and always at the expense of labor. This is absolutely devastating for advanced economies with established sticky down wages and prices, but tremendously profitable for the corporations who reap the spread.

The concept of labor mobility is a bit more complex and comprises more than just latinos flooding across our southern borders for welfare. For example; Ford moved its production facility from Detroit, Mi. to Atlanta, Ga. In the process of Ford relocating the production capital base from Mi. to Ga., it disrupted or destroyed the division of labor in Detroit and surrounding communities, displacing 10's of thousands of workers and business owners. Labor mobility comes into play when the displaced factory workers in Detroit move to Atlanta, seeking their old jobs at reduced pay. The ability of those displaced workers and businesses to move from Detroit to Atlanta is due to Detroit and Atlanta being contained within the same sociopolitical system, which makes their mobility possible.

Now, Ford is moving its small car production (a capital resource base) from the U.S. to Mexico and in the process, it will be displacing or destroying the division of labor for 10's of thousands of people and businesses. These displaced workers and businesses will be left swinging in the breeze, labor mobility denied, because none of those displaced workers will be packing up and moving to the alien sociopolitical environment of a homogeneous Mexico to get their old jobs paid in pesos. And even if they tried, Mexico simply wouldn't allow them into the country, the very last thing they want or need is more poor people.

So you see, labor mobility is more than just latinos flooding across our southern borders for welfare. It's also about capital mobility, the destruction of the established division of labor.

Arguing against the deceptively misnomered "free trade" as a "jobs" issue is simply wrong because it's far more than that. We're talking about no less than the destruction of the division of labor, capital base and our market economy, and along with that, the destruction of the social contract.



Blogger Dwain Dibley September 20, 2016 4:25 PM  

Just to clarify:
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.

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