The dignity of free trade

Trib Live ^ | April 12, 2016 | Donald J. Boudreaux

[expat_panama]

Economists since Adam Smith have insisted that the ultimate goal of economic activity is consumption, not production. Production is a means to consumption. Consumption is the goal.

Identifying something as a means rather than as an ultimate goal is not to diminish the importance of that something.

The ultimate goal of the mother of starving children is to feed her family. Her hunting for food is the means of fulfilling that goal. But this fact does not imply that her efforts to secure food are unimportant. Yet when we ask “Why did this woman hunt for food?” the answer is not “because hunting for food gives her great pleasure.” Instead, the correct answer is “to feed her children.”

We do not, however, mistake her food-hunting efforts as being her ultimate goal. We understand that if her children are well-fed, she would choose to spend her time doing something else.

Suppose, however, that we accept an opinion held by many advocates of tariffs and other import restrictions — that opinion being that economic policy should be judged not by how well it enables people to consume but, instead, by how well it keeps current producers doing what they do.

“People take pride in their work,” these protectionists observe. “If trade causes them to lose their jobs, they'll lose their dignity. And preventing honest, hardworking people from losing their dignity is reason enough to restrict trade.”

No one doubts that excelling at a job is a source of self-respect and dignity for workers. But what's the root source of this self-respect and dignity? It's not just the worker's knowledge that she is providing well for herself and her family. If providing well for oneself and one's family were sufficient to create self-respect and dignity, then the successful armed robber and arsonist-for-hire would have self-respect and dignity.

Essential to a producer's self-respect and dignity is the belief that he earns his living honestly. The producer takes justified pride in his work not merely because that work pays him well but because that work is socially useful.

Protectionism, however, destroys this source of pride — or, it would destroy this source of pride if protected producers understood the nature of protectionism. Protectionism allows a handful of producers to earn incomes not by serving consumers but, instead, by being served by consumers. Protectionism is a policy, enforced with threats of violence, that prevents consumers from spending their incomes in ways that promote their own best interests; protectionism is a policy of forcing consumers to spend their incomes in ways that promote the interests of current producers.

Protectionism treats production as the ultimate goal of economic activity — a goal that consumption must be made to serve.

Unlike workers and producers who succeed when trade is free, workers and producers who remain in their current jobs only because of trade barriers do not serve their fellow human beings as well as they possibly can. They do not truly earn their incomes. And there is no dignity in that.

Donald J. Boudreaux is a professor of economics and Getchell Chair at George Mason University in Fairfax, Va. His column appears twice monthly.

[Arthur Wildfire! March]

‘Economists since Adam Smith have insisted that the ultimate goal of economic activity is consumption, not production.’

Now for this ...

Pat Buchanan:

[quote]

Indeed, what great nation did free trade ever build?

As father of a united Germany, Chancellor Bismarck said, when he decided to build Germany on the American and not the British model, ‘I see that those countries which possess protection are prospering, and that those countries which possess free trade are decaying.’

[unquote]

And talk about unfair trade?

VATs

[I use screw exports as an example]

US screws’ prices are inflated by the same V.alue A.dded T.ax that every other screw has.

But Company X says, “We didn’t make the screws there in the US. We made them here.” Company X gets a VAT credit [same as a tax return]. US screw makers don’t.

What do we get?

Our screw factories get screwed until they abandon the US and move to a nation which has a VAT.

Our trade agreements often limit foreign tariffs, but VATs aren’t mentioned. A loophole in our treaties.

[Arthur Wildfire! March]

Patrick J. Buchanan: Trump Is Right on Trade

http://buchanan.org/blog/trump-is-right-on-trade-124822

http://www.freerepublic.com/focus/news/3399142/posts

By Patrick J. Buchanan

[He starts off with modern stats. Terrifying trade gap. Then ...]

Between the Civil War and World War I, under Republicans, the U.S. became the world’s greatest industrial power and a wholly self-sufficient nation. How? We taxed foreign goods entering the United States, but did not tax the profits of U.S. companies or the incomes of U.S. workers.

The difference between economic patriots and globalists who inhabit corporate-funded think tanks and public policy institutes is that the latter think of what is best for their corporate benefactors and the global economy. The former put America and Americans first.

Academics revere Adam Smith, David Ricardo and Richard Cobden.

But none of them ever built a great nation. Patriots look to Alexander Hamilton and those post-Civil War Republicans who built the greatest national industrial powerhouse the world had ever seen.

Indeed, what great nation did free trade ever build?

[unquote]

[fortheDeclaration]

We are all for free trade, but the governments want managed trade!

[VitacoreVision]

How the Free Trade Agenda Is Knocking Down America
-- The New American (PDF) Special Report
http://www.thenewamerican.com/files/TNA2917.pdf

The Special Report includes the following articles:

- The "Free Trade" Agenda Threatens Our Rights
- Global Merger: Piece by Piece
- The EU: Regionalization Trumps Sovereignty
- Trade Promises... and Trade Reality
- North American Union: From NAFTA to the NAU
- Fast-track: Enabler of the "Free Trade" Agenda
- Regional Scheme for the Pacific Rim
- EU/U.S. -- Transatlantic Convergence

[fortheDeclaration]

Free Trade did fuel the great British industrial boom of the 19th century.

[fortheDeclaration]

Regarding U.S. tariffs, we have to remember that before 1913 there was no personal income tax and tariff’s were used to fund the government.

[Arthur Wildfire! March]

And US Hamiltonian trade took over 50% of the world's GDP by the end of the 1800s. We kicked their tails big-time, and that is why Bismarck was more impressed by Hamilton than by England.

[Arthur Wildfire! March]

Good point about no income tax. And Trump wants to cut corporate taxes to 15%. That’s 10% less than China. So it would be the Perfect Storm for the US economy all over again.

I will say that Cruz has great ideas for taxes though. Inventories and expenses should not be taxed, only NET profits.

[Will88]

So, when will this econ professor design a program to eliminate the jobs of overpaid professors in US colleges and have professors in much lower pay nations teach courses over the internet to US college students?

Savings of 75% could be realized. Make it about the consumers (students), professor, not about the producers (teachers) like you.

[DannyTN]

Dignity of free trade = unemployment + government reliance + government debt + austerity + loss of sovernty.

[deadrock]

We have never seen actual ‘free trade’ in action.

[PTBAA]

This is a tough one for me. The argument the professor lays out is compelling, but I believe it also is predicated on the idea of a level playing field where all are competing equally.

My concern is the unfair competition of other countries by currency manipulation, subsidies, import tariffs on our goods, and a willingness to forgo any industrial pollution controls to lower their production costs vs. ours.

Excluding their imposition of tariffs on our goods, these market manipulations actually benefits our consumers in the short run, but have pernicious long-term effects, since it causes our industries to shut down and/or move, and the consumer who has lost his/her job no longer has income to take advantage of the lower costs.

I am for free trade in principle, provided that it is “reasonably fair” trade. When it comes to opening our markets to foreign goods, we can rightly claim that it is our decision to determine what is reasonably fair.

[kjam22]

We have over 1,200 tariffs already in place on goods coming into this country. I think most of the King Trumpy Worshipers who say “amen” when he talks about currency manipulation and making the playing field level are maybe not completely aware of the current condition....

[kjam22]

Many here would argue that unions who guarantee jobs, pay increases, benefits etc for their members hurt productivity and the entire business process because these guarantees lead to sloopy work, bad work habits, and turning out poor quality that is priced high.

Tariffs placed on goods coming in to this country in order to insure producers here of jobs, salaries, benefits etc for their employees could have a similar effect as unions.

[expat_panama]

...the idea of a level playing field,,,

--is something for crybabies screaming "no fair no fair!!". 

Grownups see what's going on and what's available and then they choose.  Canadian law allows them to, produce shale oil and harvest lumber and sell it to us cheaper than our eco-insane court system allows.  That's not Canadian cheating, it's our stupidity.   Mexico kicks out illegals who sneak across their borders and then they play our Dem/rino congress like a violin by claiming victimhood.  That's also U.S. stupidity.

There will never be a playing field level enough for our left-wing morons.  It high time that the American people realized that life cannot be a game forever.

[Buckeye McFrog]

He’ll hold that line of reasoning until the day George Mason starts allowing economics professors from India to teach the courses online and be paid in rupees.

[Mase]

Regarding U.S. tariffs, we have to remember that before 1913 there was no personal income tax and tariff’s were used to fund the government.

And thanks to republican protectionists, who traded their support for the 16th Amendment in exchange for democrat support of yet another tariff (Payne-Aldrich), we have a federal income tax today.

The anti-free trade people have done a lot of damage in our history and the amount of enthusiasm for allowing them to do even more damage is alarming.

[Mase]

He holds that line of reasoning because it is supported by economic reality. The only way Indian professors would take his job is if they created enough value in a free market to attract free people freely deciding how they spend their money - exactly the opposite of the anti-free trade folks who want to empower government to tell us what we have to buy, from whom we have to buy it from, and what price we have to pay.

[PTBAA]

What you call “being a crybaby” I call a reasoned argument. To each his own..

You are correct to say that our insane level of oversight and regulation has made it difficult, if not impossible to compete.

On the other hand, China effectively imposes no environmental restrictions at all on their industries, so while they are killing their own citizens (literally) they are killing us economically.

We do need some serious tax and regulatory reform to make us more cost-competitive, but that does not mean there is no need for oversight and restriction to our markets.

Let’s discuss the intersection of oil as a market and national security. I hope you would agree a steady supply, with healthy domestic production, is a vital national security interest. American frackers have a higher cost of production than the Saudi’s do for their oil sands. Should we allow the Saudi’s to flood our market with $20/barrel oil if it means the destruction of our domestic projection capacity? This would weaken our economy and make us much more vulnerable to supply interruptions. This is a good example of why, we cannot, in all cases, allow the market to be “free”.