An argument I have come up against recently, in this apocalyptic book by James Rickards, is that free trade, as classically defended by David Ricardo with his famous Law of Comparative Advantage, only works in theory because the freedom to move capital and factors of production around means the “playing field” of the market is never “fair”, hence tariffs/other controls are just to re-set the game. Straight off, this sounds bunk to me, not least because free movement of capital is part of what capitalism (clue is in the word) is all about. Capital, both in its physical and human form, goes to places where it can earn the highest rate of return. This is how, to summarise massively, we got from the caves to the skyscraper. If a businessman cannot use his capital where it works most effectively, it would render much investment pointless.
And if it is wrong for capital to move around because it somehow undermines some sort of “fair” trade, then this applies not just to between nations, but inside them, too. Ah, but I hear the Trumpistas cry, what about those evil currency manipulators gaming the system in their favour? The answer is that if the Chinese or others want to send us cheap stuff, made even more dastardly cheaper by currency manipulation, it means consumers don’t have to earn so much to buy imports. True, in the short-term it means that some jobs will be lost because of the cheap imports, but then again the pay packages of millions of consumers stretch a bit further. The pain of the affected industries is easy to see and makes for great TV and campaign spots for a Donald Trump or Bernie Sanders (whose views on trade are identical); the costs to consumers from protectionism is not easy to visualise. Also, if China, for example, sells or “dumps” cheap steel on the world market, manufacturers in the West who use steel will see their costs fall. It is worth nothing that when in the early Noughties George W. Bush slapped tariffs on steel, it “saved” some US steelmaker jobs, but cost many jobs in sectors where steel is a factor of production.
Finally, here are more thoughts on the idea that free capital movement somehow dents the case for trade trade, via Gene Callahan over a decade ago:
An honest advocate of free trade must admit that there will often be people who are made worse off, at least in the short run, by the freedom to trade internationally. But the same is true of trade within the borders of a country: If you open a restaurant near to and better than mine, my business will suffer.
It might be pleasant to live in a world of unlimited resources, where everyone who wanted to run a restaurant could do so without having to compete for customers’ scarce dollars. But since we don’t, the fact that my situation might worsen because of your business activities is an unavoidable consequence of the freedom to buy from and sell to whomever one wishes. If we try to prevent all such unpleasant outcomes, we will eliminate the market economy and regress to a hand-to-mouth existence.
“Economies are dynamic, complex systems. They are most strong and productive over time when they are free to adapt to new realities, circumstances and changing patterns of supply and demand. Was UK mining truly protected by overt government decisions to buy domestic coal in the late 1970s or early 1980s? Or was that protection merely insulating the industry from the competition of cheap natural gas, meaning that when the protection was withdrawn, the industry collapsed?”
– Ryan Bourne.
Rich Lowry, no great fan of Trump, writes what I think is a very astute column on the antics of parts of the media concerning recent “stories” about the man:
For all that Trump complains about negative press coverage, he wants to be locked in a relationship of mutual antagonism with the media. It behooves those journalists who aren’t partisans and reflexive Trump haters to avoid getting caught up in this dynamic. If they genuinely want to be public-spirited checks on Trump, they shouldn’t be more bitterly adversarial, but more responsible and fair.
This means taking a deep breath and not treating every Trump tweet as a major news story. It means covering Trump more as a “normal” president rather than as a constant clear and present danger to the republic. It means going out of the way to focus on substance rather than the controversy of the hour. It means a dose of modesty about how the media has lost the public’s trust, in part because of its bias and self-importance. None of this is a particularly tall order. Yet it’s unlikely to happen, even if it was encouraging that so many reporters opposed BuzzFeed’s decision. The press and Trump will continue to be at war, although only one party to the hostilities truly knows what he is doing, and it shows.
Sense can break out from unlikely quarters. This article by Piers Morgan, focusing on the absurd treatment of Trump, is right on target. Parts of the media, at any rate, does understand the self-inflicted mistakes the media is making, and that this must stop.
It is nearly over. Obama has a few more days in the Oval Office, and then he is off, for what we cannot yet tell.
I left the following comment on a friend’s FB page, with some subsequent edits:
“A poor president on multiple levels. Trying to be generous, I am pleased he did not interfere with the expanding world of private space flight and certain other technologies that may affect lives for the better, but I am struggling to think of a very big positive development on his watch. He cannot even really claim credit for the economic recovery, since that has been largely a function of central bank money printing, the effects of which are uncertain; labour force participation has shrunk, which is one reason why the recovery hasn’t felt like one. The bailouts and stimulus package were, in my view, either a waste of money or a net drag on the economy. Debt levels remain scarily high. The fracking industrial movement took place despite, rather than because, of any policies he set out. He is hostile to entrepreneurs and the business ethic (“you did not build that”).
Race relations deteriorated on his watch, although not all of that can be laid at his door. The Solyndra fiasco highlighted the bubble around climate change fearmongering. The weaponisation of the IRS was an abuse of power, and Eric Holder’s tenure as Attorney General was littered with scandals, such as the Fast & Furious gun-running episode.
Mr Obama’s handling of foreign affairs has been inept, if not malevolent. He managed to alienate allies such as the UK, Poland and Israel, and was naive about enemies, especially Iran. The deal with Iran over nuclear issues is a joke. His intervention into the UK vote on Brexit, for example, saying that the UK would be put at the back of a queue in trade talks, was typical bullying, but also counterproductive. The decision to leave Iraq, come what may, was a mistake, although arguably, there was never a good time to do so. The horrendous procurement saga of the F-35 fighter suggests that some defence spending is as bloated as ever. The heavy use of drone strikes also did not square with a Nobel Peace Price image.
He even managed to shock continental Europeans by not sending a high-placed official to the official mourning for the Paris massacre of 2015, raising questions over how seriously he takes Islamist terrorism, and his attempt to criticise anyone for suggesting that Islam has a problem shows an alarming naivete, at best.
His use of executive orders, and clear unwillingness to negotiate unless on his terms, sets a bad precedent, and opened the opportunity for Trump.
It should be acknowledged that Mr Obama has done a great deal to raise the profile of golf. There is a saying that we should be grateful that we don’t get all the government we pay for. So perhaps it is good that this man spent as much time he did hitting small white balls. He is, however, unlikely to make the US Ryder Cup team in the near future.”
Labour leftists have never understood this basic fact: ordinary people don’t hate rich people. In fact they admire many of them. They don’t wince when they see a footballer and his WAG posing by the pool in Hello! — they think, ‘That looks like a nice life. Good on them.’ Corbyn bemoaned footballers’ pay as part of his proposal to enact a law preventing people from earning above a certain amount of money. Yes, a maximum wage. ‘I would like there to be some kind of high earnings cap,’ he said. It’s the worst idea a British political leader has had in years, and it reveals pretty much everything that is wrong with the left today.
First there’s the sheer authoritarianism of it. It will never come to pass, of course, because Corbyn’s footballer-bashing and bodged populism and general inability to connect with anyone outside of Momentum and the left Twittersphere means Labour won’t be darkening the door of Downing St for yonks. But that Corbyn is even flirting with the notion of putting a legal lid on what people can earn is pretty extraordinary. It would basically be a stricture against getting rich, a restriction on ambition, a state-enforced standard of living: you could be comfortable and middle-class, but not loaded. There’s a stinging moralism, too. Labourites complain about those on the right who look down on the ‘undeserving poor’, but what we have here is not all that different: a sneering at the undeserving rich, a prissy concern with the bank balances and lifestyles of those who’ve made a bomb.
– Brendan O’Neill.
In the UK, the expression “made a bomb” means “make a lot of money”. Of course, Corbyn, who is thick, might think that it means making an explosive device. Given his associations, the idea of people “making a bomb” might appeal to this man, if not for the same reasons.
“Disturb us, Lord, when we are too well pleased with ourselves,
When our dreams have come true because we have dreamed too little,
When we arrive safely because we sailed too close to the shore.”
“Disturb us, Lord, to dare more boldly, to venture on wider seas, where storms
Will show your mastery, where losing sight of land, we shall find the stars.”
Excerpts from Drake’s prayer, 1577, written in Portsmouth as he began his circumnavigation of the globe. The quotation is given by John C. Hulsman, in “Brexit: Directions for Britain Outside the EU,” Institute of Economic Affairs, page 146. (The monograph was published shortly before the 23 June Referendum.) Here, by the way, is an item about Sir Francis Drake.
“The perceived ills of Anglo-American shareholder capitalism shown up in the bursting of the 1990 stock market bubble are not therefore a sign of some decrease in corporate morality – though there have been some clearly illegal practices which are rightly being dealt with by the courts – but due to the perverse incentives created for managerial `rent seeking’ by the regulations limiting hostile takeovers, and the unintended effects of fiscal policy through the double taxation of dividends. With the double taxation of dividends due to end, if all the regulations preventing hostile takeovers can also be repealed, the unregulated market for corporate governance would again provide checks on predatory managements. Executive compensation will begin to fall, accountants will have less pressure to cook the books, and the Anglo-American corporation would pursue the innovation, efficiency, and profitability that has till now been its hallmark.”
– Deepak Lal, from Reviving the Invisible Hand, page 202. (The book was first published in 2006.)
The essay by Mr Palmer is entitled “A New, Old Challenge: Global Anti-Libertarianism”.
The article examines three broad threats, which are serious, to classical liberalism: radical Islamism, the post-Gramsci Far Left, and what is called the “Alt Right”:
Unfortunately, the best argument that the defenders of civil society typically offer in response to those challenges is that the complex of personal liberty, the rule of law, and free markets creates more prosperity and a more commodious life than the alternatives. That’s true, but it’s not enough to deflect the damaging blows of the illiberal triumvirate of identity politics, authoritarian populism, and radical Islamism. The moral goodness of liberty needs to be upheld, not only in head-to-head encounters with adversaries, but as a means of stiffening the resistance of classical liberals, lest they continue retreating. Freedom is not an illusion, but a great and noble goal. A life of freedom is better in every respect than a life of submission to others. Violence and antagonism are not the foundation of culture, but their negation. Now is the time to defend the liberty that makes possible a global civilization that enables friendship, family, cooperation, trade, mutual benefit, science, wisdom — in a word, life — and to challenge the modern anti-libertarian triumvirate and reveal the emptiness at its heart.
Incidentally, for once Trump himself was spot on when it came to the question of Taiwan. Anyone finding it horrifying that he talked to the Taiwanese leadership in supposed breach of protocol needs to pull themselves together. The Chinese government has had it its own way for far too long, whether it is in terms of Western leaders humiliating their countries by kow-towing or with Chinese companies stealing intellectual property and technology and exploiting open markets in the West that it will not open properly at home to Western firms. Terrible Trump is onto them, which is a rare shaft of light in the darkness.
– Iain Martin. The article is actually mostly about Boris Johnson, another politician who commits lots of “gaffes” (MSM-speak for stating uncomfortable truths or comments deemed offensive for some reason, either valid or not.)
The story of the demise of slavery I take to have great significance for our evaluation of capitalism. The system is not to be judged purely by its material consequences. Relative or temporary happiness brought about by productive efficiency or growth cannot be the last word. Absent liberty and self-government, the situation would be inexcusable. We now can see that capitalism has as its essence individual freedom-rights. Without respect for these rights the system is in danger of turning into a monstrosity, as it would have in an unchecked antebellum South. It did so in Wilhelmine Germany and could do so still in crypto-communist China. Again, as in the case of the developing regions of today, liberty-rights are of the essence of capitalism as an improving force for humanity. If we do not see this we run the danger of suffering from the same tunnel vision of colonel Nicholson at the River Kwai.
– Pedro Schwartz
Throughout our time in the EEC/EU Ministers have regularly used prerogative powers to bind us into EU decisions, regulations and judgements which Parliament has been unable to vote on or prevent. Many of these have adversely affected our right to be a sovereign and free people. It was curious that the High Court of England thought that was acceptable yet using the same prerogative powers to bring the right to self-government back was not. I hope the Judges understand three basic points. The first is the referendum was the decision. Government made that clear in Parliament and in a leaflet to all voting households. The second is Parliament can debate Brexit any time it likes, and has done so extensively already. The third is Parliament needs to make up its own mind on what it wants to vote on, and is free to do so. There can be plenty of votes on the Repeal Bill.
– John Redwood
This is quite old – the previous presidential election – but I cannot help thinking, given the huge gap between the supposed cleverness of soon-to-be-gone President Obama and his actual performance on the job, that the actor Clint Eastwood summed up the current occupant of the White House perfectly with this speech.
On a totally separate point, I really enjoyed the Eastwood-directed film, Sully, starring Tom Hanks. What I liked about this film, like another Hanks film (Apollo 13) is its celebration of grace under pressure, of competence, and of a sort of grown-up maturity and adult willingness to accept responsibility. Given the state of the culture, these are good things to put out there on the Silver Screen.