Cafe Hayek - Latest Comments in Free Trade is Common

Re: Free Trade is Common

ACassel — Tue, 22 Sep 2009 14:56:49 -0000

You really know how to hurt a guy, Don, bringing up your ability to trade freely with wine producers in Oregon & California. Surely you know that privilege is denied to us in Pennsylvania, who remain prisoners of the state Liquor Control Board and its rules against consuming any alcoholic beverage not routed through and taxed by its monopoly system?

Re: Free Trade is Common

brotio — Sat, 28 Mar 2009 19:25:57 -0000

"So ADM (Archer Daniels Midlane) lobbies our government to get farms subsidies so it can flood third world countries markets with their cheap subsidized products..." - VI Mierduck

Mierduck is on record on this blog of supporting farm subsidies for ADM, because ADM makes ethanol, and His Holiness: The Divine Prophet Algore I has decreed, "Ethanol is safer for Mother Gaia than gasoline, because ethanol comes from Mother Gaia, and gasoline comes from... well, gasoline comes from ... Goddammit! It doesn't matter where gasoline comes from! Just give your tax money to ADM and shut up!"

Mierduck is a hypocrite. Mierduck supports corporate welfare while claiming that he does not.

Re: Free Trade is Common

SheetWise — Sat, 28 Mar 2009 16:21:44 -0000

And we haven't even considered the law. Since International trades require an International transfer of funds -- the Government (U.S. primarily) has set up a lot of barriers.

Trade within the U.S. works smoothly because there is general agreement on the laws, how they will be enforced, and what remedies can legally be pursued. International trade is not easy if you don't have an agent at both ends of the trade. In the U.S., that's not necessary.

When foreign jurisdictions attempt to offer financial services that will facilitate trade, the U.S. (actually the entire OECD) refers to it as unfair competition. That's a huge transaction cost, and limits trade.

Re: Free Trade is Common

LowcountryJoe — Sat, 28 Mar 2009 14:53:36 -0000

I don't feel like I'm trading with a Chinese person when I buy something from Walmart. ~ muirgeo

You don't. You're like three or more transactions removed from the foreign exporter. Tell me that you understand this?

Nations nor people trade.... multinational corporations do and they set the rules.

There are trades that occur that do not involve multinational corporations. And multination corporations are managed by people; they do not run robotically on auto-pilot.

Re: Free Trade is Common

Henry Harrison — Sat, 28 Mar 2009 14:40:11 -0000

Yes, people trade and only people trade. But when one refers to "free trade," one is generally - no, almost always - referring to trade across international borders. Sometimes we'll refer to a licensing requirement or something as "protectionist," but generally even that term is reserved for discussions about international trade.

Weisenthal's point, as far as I can tell, is that we don't need completely free trade to have prosperity, because we are prosperous and we don't have free trade - wait, let me clarify that: I mean free trade across international borders). He points that out to prove a different point, which is that economists and other free trade (across international boundaries) advocates often become hysterical at the prospect of even a small tariff, even though the existence of such tariffs doesn't prevent material prosperity.

Of course, maybe we'd be even more prosperous if trade were even freer (I'm referring to trade across international borders). I think we would be. But it's - waht's the word? - disingenuous to argue that without completely free trade - sorry, free trade across international borders - we'd all be incredibly poor. That's obviously not true, and I think that's all Weisenthal was getting at.

Re: Free Trade is Common

Sam Grove — Sat, 28 Mar 2009 13:36:16 -0000

National sympathies may have been destructive over time, but they have also been a great source of pride and collective action.

And the former often springs from the latter.

RE: "Politics divides people, trade harmonizes people."

Why is it that I can drive across the country and visit anybody I want without interference, but if I want to visit, say somebody in Cuba, it becomes MUCH more difficult?

Politics.

Why are "liberals" and conservatives at odds?

Politics

Why are Jews and Arabs often at each others throats?

Politics

What divides the peoples of different countries?

Political boundaries.

I'm not saying that's the only division that occurs among peoples, but it's the only realm where divisions are codified in law.

Re: Free Trade is Common

Healthy Markup — Sat, 28 Mar 2009 13:27:34 -0000

"I think in most cases we look at the Chinese differently than we look at other Americans, not because we have a negative view of the Chinese (although some obviously do), but because we have a very positive view of other Americans, with whom we feel we have more in common. I don't have many Virginia wines because they are produced better than California wines - I have them because I will pay a premium to know that I'm purchasing from wineries where I know and have met the wine maker or the staff."

Protecting US producers of goods is a sign that one hates other Americans. Americans who would choose cheaper imports than they would otherwise get from the US are made poorer by these restraints of trade. It doesn't help US steel users if a tariff is placed on foreign steel (thank you freetrader-Bush); it doesn't help US car shoppers if high tariffs on foreign goods push them toward UAW-built dreck; it doesn't help broke-ass Wal-Mart shoppers if populists raise prices for those stores because of Mom-And-Pop stories.

http://www.econtalk.org/arc...

Regarding wine chauvinism: limousine liberal calculations aren't relevant to lowest quintile families.

Finally, who cares if US wages fall if everything Americans buy instead become cheaper through free trade without dangerous, expensive govt intervention. Oh yeah, govt types and statists.

Re: Free Trade is Common

Don Boudreaux — Sat, 28 Mar 2009 12:10:43 -0000

People trade. ONLY people trade.

If trade is understood to be only that which takes place across political borders, then pointing out that (1) nearly all such trade is burdened with artificial restraints imposed by governments, and (2) that people in many places in the world, such as the U.S., nevertheless continue to enjoy a great deal of prosperity, then it is too easy to conclude that restricting opportunities to trade isn't terribly harmful.

That conclusion would be mistaken. Because so much trade is free, this freedom (especially in large countries such as the US) generates prosperity in precisely the same ways and for exactly the same reasons that trade between citizens of different countries generates prosperity. The location and nationalities of traders is utterly irrelevant as far as there being gains from trade to be exploited goes.

It's unfortunate that there are any restrictions on trade, intranational and international.

And I continue to understand that allowing the existence of political borders to play the major role that, alas, it plays today in framing the discussion of trade is detrimental to the cause of freeing trade internationally.

Re: Free Trade is Common

Henry Harrison — Sat, 28 Mar 2009 11:48:45 -0000

Weisenthal's claim was that "free trade doesn't exist." Don claims that it does, and uses inter-state trade in the U.S. as examples.

I guess when all else fails, go after the semantics. Weisenthal's point was clearly, explicitly, exclusively focused on international trade, in the same context as almost everyone uses "free trade."

Imagine if I said, "Americans really love football." Don might reply, "No they don't! Look at these television viewing statistics for the 2004 World Cup," referring, of course, to the international soccer tournament. But that wouldn't be an effective reply.

Many words and phrases have multiple meanings. But when the meaning is clear within an argument, it isn't a very good retort to attack the argument as if it meant something else entirely. In fact, to do so is almost, dare I say, disingenuous.

Re: Free Trade is Common

Daniel Kuehn — Sat, 28 Mar 2009 11:38:29 -0000

Don -

RE: "And because words matter, it's helpful to insist that "trade" that occurs between an American and an Armenian is no different than is trade that occurs between an Arkansasian and an Arizonan."

In many ways it is no different. And in terms of our analysis of the benefits of trade, I think we'll find that. But as long as I and others look at an Armenian differently from an Arkansasian (and I likely always will) - you don't harm my understanding of trade to speak of the two types of trade differently. There is no "devil" to slay - my different reaction to the two is not a fault, in my mind.

There are also people out there who may see a role for domestic subsidy of industry. I usually don't see this as appropriate, but who knows - if a new technology were to emerge I could stomach a federal subsidy or two for it. Your desire to "slay the devil" presupposes that even this type of export subsidy - which is based in national preferences and priorities rather than a misunderstanding of the benefits of trade in general - is always going to be inappropriate.

We all see devils in different places. National sympathies may have been destructive over time, but they have also been a great source of pride and collective action. And at the very least they are an expression of an entirely natural sense of devotion to kith and kin. While it may make sense to demonize protectionism, I don't think those national sympathies have to be the "devils" that you suppose they are.

Re: Free Trade is Common

Daan — Sat, 28 Mar 2009 11:31:38 -0000

I agree that total welfare increases under free trade.

But the problem lies at the incentives of PEOPLE. People live on average 80 years and only work up till their sixties or seventies.

We know that a transition fase from restricted trade to free tade is painful for some individuals.

Some people will loose their job and will not live long a enough to reap the benefits.

So unfortunately, for some people it can be completely rational to fight free trade, and it can thus be completely rational for people to start interest groups to try to influence trade policy.

So yes, fighting free trade can be economically relevent for individuals no matter wheter there are political borders at play.

So you do not have to proof that political borders are economically relevent to be against free trade.

But i do agree Don that it would be beneficial on avarage if politicians hold your view instead of the view of the local steal worker. But in a democracy every vote is equal.

Daan

Re: Free Trade is Common

Daniel Kuehn — Sat, 28 Mar 2009 11:28:44 -0000

don and Sam -

RE: "Politics divides people, trade harmonizes people."

and

RE: "This difference in reaction is precisely the devil to be slain."

I disagree with Sam's attribution and Don's solution. The world is far bigger than economics and politics. I think in most cases we look at the Chinese differently than we look at other Americans, not because we have a negative view of the Chinese (although some obviously do), but because we have a very positive view of other Americans, with whom we feel we have more in common. I don't have many Virginia wines because they are produced better than California wines - I have them because I will pay a premium to know that I'm purchasing from wineries where I know and have met the wine maker or the staff. I try to buy American (that's REALLY tough if you've ever tried it) not because I have anything against Chinese workers, but because I like to buy from American workers and factories.

You don't need to have animosities to distinguish between nations, and you don't have to derive those distinctions from politics either.

Re: Free Trade is Common

Acad Ronin — Sat, 28 Mar 2009 10:47:56 -0000

If I recall my college US history correctly, we tried interstate tariffs among the US states during the period of the Articles of Confederation. The reason we have the interstate commerce clause of the US Constitution was precisely because the drafters of the Constitution saw, on the basis of immediate experience, that that was a poor policy. They did give the US Congress the authority to levy tariffs rather than requiring free trade with the world. This was something of a mistake as tariff arguments contributed greatly to the coming of the Civil War, but was probably a compromise given the lack of alternative sources of Federal income at the time.

Re: Free Trade is Common

Don Boudreaux — Sat, 28 Mar 2009 10:27:15 -0000

Daniel,

I do not deny that, as you say, "we react to neighboring countries differently than we react to neighboring states." This difference in reaction is precisely the devil to be slain.

And because words matter, it's helpful to insist that "trade" that occurs between an American and an Armenian is no different than is trade that occurs between an Arkansasian and an Arizonan.

Re: Free Trade is Common

Sam Grove — Sat, 28 Mar 2009 10:21:57 -0000

To repeat, don't take me to be advocating protectionism.

I did not think you were. I have read your statements and remember.

I was just trying to clarify the distinction that other posts seemed to be arguing over.

You can even take my distinction in support of your statement.

We think of it differently, not because of political boundaries, but because of politics.

Politics divides people, trade harmonizes people.

Re: Free Trade is Common

Crusader — Sat, 28 Mar 2009 10:21:20 -0000

What is the point in arguing with muirduck? He just sticks words in your mouth over and over again. Somebody that rude doesn't deserve a response. When will we get registration and ban muirduck forever? At least Daniel, Joe and Martin don't engage in ad hominems and straw man tactics.

Re: Free Trade is Common

Daniel Kuehn — Sat, 28 Mar 2009 10:15:53 -0000

Sam and Dave -

To repeat, don't take me to be advocating protectionism. I'm just saying that even knowing the benefits of trade, it's quite reasonable to think about international trade and sub-national trade separately, precisely because we react to neighboring countries differently than we react to neighboring states.

I wasn't coming anywhere close to making an argument that the benefits of trade are different - just that it's reasonable to talk about the two types of trade separately.

Re: Free Trade is Common

True_Liberal — Sat, 28 Mar 2009 09:52:01 -0000

"And yet free trade is ubiquitous. Freedom to trade generally reigns within political borders. For example, the 50 U.S. states are united on one very large and very successful free-trade zone."

Well, yes and no. If my trade is not doing well in one state, I am free to move to another state without a passport, applying for immigration, etc. just to pursue a standard of living. That makes freedom of choice successful.

Same is not true when crossing national borders!

Re: Free Trade is Common

Martin Brock — Sat, 28 Mar 2009 09:47:26 -0000

... "free trade" refers to trade unhampered by government merely because of the geographic location or nationality ...

I concede that the term has this specialized usage, but Carney himself calls concern for this free trade "admirable". His only point seems to be that politicians, corporate officers and lobbyists only mouth "free trade" anyway.

I'm probably as radical a free trader as you, but I also advocate unilateral nuclear disarmament, even if an adversarial state has nuclear weapons, even if it drops a nuke on my territory. I also thought we should have done nothing after 9/11, besides a limited effort to apprehend individuals directly responsible for the attack.

But most people thought otherwise. He doesn't say so, but Carney possibly believes that a trade war is always ongoing and that unilateral disarmament in a trade war is not the best policy, even conceding that the weapons can only be destructive.

Re: Free Trade is Common

Sam Grove — Sat, 28 Mar 2009 09:45:39 -0000

Political boundaries are irrelevant to the benefits of trade.

This does not say that political boundaries are irrelevant to trade, because politics affects trade.

What Don is saying is that the benefits of trade are not altered when it occurs across political boundaries.

Re: Free Trade is Common

Dave_S — Sat, 28 Mar 2009 09:41:09 -0000

re: Daniel

There is a big difference between personal distinction and political or government distinction. Your preference for Virginia wines is no limitation on trade so long as you don't persuade the government to provide restrictions to my preference for malbecs from, say, Argentina. And, in your preference for VA wines, you're not exhibiting a "national identity" but rather an even more localized preference.

Re: Free Trade is Common

Dave_S — Sat, 28 Mar 2009 09:38:16 -0000

re: Joe

It isn't that political borders don't have economic repercussions -- as you mention, political policies enacted by various sovereign governments can have large impacts on unemployment, business climate, etc.

But that isn't the question at hand. Any restriction on trade enacted by a government is ultimately a restriction on an individual's choice to engage in commerce with whomever he pleases. In that sense, there is no economic relevance to political borders. That is, if I prefer wine from California or wine from Argentina, the political borders are not economically relevant. The only justification for restricting my wine choices is California wine producers influencing the government to restrict my choices in order to force me to choose their product over what I might prefer.

Re: Free Trade is Common

Daniel Kuehn — Sat, 28 Mar 2009 09:29:34 -0000

Don -

RE: "The very point is that speaking of, and thinking about, trade as something uniquely international is mistaken. People -- individuals -- trade. Nations don't trade."

Don't mistake me to be disagreeing with you. I'm only saying that thinking of trade as international is NOT mistaken, only insofar as the word "trade" brings images to people minds of trade across national boundaries (of course nations don't trade - but individuals trade across national boundaries).

As long as national boundaries are important to people, distinguishing "international trade" from other types of trade should be important. And within-nation trade sometimes takes this character as well. Probably 95% of my wine cellar is composed of Virginia wines because of a certain chauvanism I have about Virginia wines.

I don't mean to argue with anything you're saying about trade - simply pointing out that precisely because national identity is important to people, speaking of "trade" as international remains legitimate.

Re: Free Trade is Common

Ike Pigott — Sat, 28 Mar 2009 09:28:48 -0000

muirgeo --

Multi-national corporations DON'T trade. They exist outside of those boundaries.

They exist because they emerge to fill a need. There is an abundance of product here, and and abundance of demand for it there. The multi-national corporation does not dictate WHERE those imbalances occur. The multi-national emerges to ease that imbalance, making both places richer in the bargain.

You have in this instance put the cart before the horse.

Re: Free Trade is Common

Don Boudreaux — Sat, 28 Mar 2009 09:13:07 -0000

Martin,

I appreciate and learn from your contrarianness. But the term "free trade" refers to trade unhampered by government merely because of the geographic location or nationality of producers and consumers.

Of course I don't claim that trade in the US isn't regulated. It is, quite a lot. And much, likely most, of this regulation is harmful.

But there are no special taxes or other burdens placed by government on me if I choose to buy my beans or biscuits from an Ohioan rather than from a fellow Virginian.