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Unilateral global free trade is probably the only way it is going to happen

Here on Samizdata, we do not have a single ‘editorial line’ and therefore we sometimes disagree with each other. And this is a case in point. Midwesterner has stated that:

There are very few rationalizations for supporting unilateral global free trade…

Actually there are loads of them.

If a foreign state wants to subsidize (say, mp3 players) that I buy at the expense of their hapless taxpayers,well, more fool them. In the long run it is unsustainable and if at some point their wicked government stopped the export of said products, then the glory of capitalism is that domestic producers will simply re-appear or an intermediary market for importing them via a third party will pop up, but in any case it is hardly a tragedy for the overseas people purchasing said products. Is it ‘fair’ to the mp3 player manufacturers elsewhere else? Wrong question because trade is not about fairness in that sense.

If it is ‘unfair’ that a country (say, Taiwan for example) subsidies a product to make the price lower, why is it not ‘unfair’ that a western state makes me pay more for my mp3 player because they have forced domestic mp3 player manufacturing companies to expend vast sums on welfare payments and other labour cost increasing regulations and hence making them uncompetitive? As the USA is generally less regulated than most other countries, by the logic of ‘fair trade’, no one else should allow the US to import ‘their’ unfairly under-regulated products into their over-regulated markets.

If you follow the logic of ‘fair trade’ rather than ‘free trade’, a nation-state should not allow its subject people to trade with anyone not subject to that nation-state’s laws (i.e. there should be no international trade at all), otherwise it is bound to be ‘unfair’ in some way. Labour costs, raw material costs, ease of market entry, etc. etc. are always going to vary.

Moreover, it is a mistake under most circumstances to accept that buying a product from a foreign company is trade between (say) the UK and US. Unless a state of war exists or I am trading with a state owned company, trade occurs between me and a company, not ‘my’ nation and some other nation. Unless the company I trade with is largely an adjunct of a foreign government, it is just trade between private people. To think otherwise suggest accepting that the state has a controlling interest in every economic action you make, even if the other party is not subject to its sovereignty. From both moral and utilitarian perspectives that is a serious mistake.

59 comments to Unilateral global free trade is probably the only way it is going to happen

  • chuck

    A common interest in profit is a great unifier. But, I sure as H*ll don’t want to depend on that when it comes to the basics of survival, like food and fuel. And the first age of globalization ended in WWI. Peace is not a foregone consequence of trade and so I think it reasonable to protect those industries essential to national defense.

    I am a pessimist, human nature is a bitch, and worshipping the Gods of trade is insufficient solace in a dangerous and unpredictable world.

  • I never understood why people felt that trade must be ‘fair’. Life isn’t fair, and it really isn’t the business of our corporations to enrich other nations past what they would accept anyway. If they felt the trade wasn’t ‘fair’, why would they trade at all?


  • ResidentAlien

    Security of supply of food and fuel is a legitimate concern but this is not an argument against free trade. Stockpiling is a sounder response than rigging the market.

    I am not aware of any country actually subsidizing the production of MP3 players to the benefit of foreign consumers but France does subsidize the electricty it sells to the UK.

  • Bruce Hoult

    As I’m sure most are aware, here in New Zealand, back in the mid 80’s, we declared a unilateral zero-page free trade agreement with the whole world at the same time as we removed subsidies on domestic manufacturers and farmers.

    It’s working well. We stopped making things we can buy cheaply, such as cars and TVs, and our farmers quickly switched to producing things that people actually wanted to buy.

    We’re also seeing labour diverting into high value high tech exports. I’m not up on what’s happening in Auckland, but here in Wellington (with a population within commuting range of about 400,000 people) we’re making blockbuster movies and have such a thriving software export industry that people are starting to use the term “Silicon Welly”.

    In the last five years I’ve worked for:

    – a NZ startup (eServGlobal.com) supplying “Intelligent Network” (IN) software to half a dozen major telcos in Europe.

    – a company (metservice.com, a former government department) supplying 3D TV weather graphics software to TV stations around the world (I worked on a project customising it for the BBC).

    – a NZ startup (innaworks,.com) supplying compiler & optimizer technology for mobile phones to nearly every major 3rd party supplier of software for mobiles (mostly but not entirely games)

    Other recent success stories in Wellington include “TradeMe” with a home-grown auction site that beat eBay in the NZ market, ProjectX with online mapping that is better (in Australia and NZ) than google maps, and SilverStripe with a content management system for web sites that has attracted attention on digg recently.

    And a newcomer that I think will make a splash: xero.com with their take on web-based “Accounting 2.0” (you read it here first!)

  • I consider food and fuel security part of the remit of the State. Water too.

    To me the important thing is that people can find out IF something is being subsidised and in what way. Those interested in the issue should shout loud and clear. It should also be the responsibility of those who educate to teach people about the implications of spending money abroad or with companies who expatriate profits, if only as part of the need to understand the globalised economy. With that in place, the issues will make sense. Right now, I doubt if most people in the UK have any idea about the implications of 2m+ “salaried unemployed” in the State or indirect state sector or of the act of buying imports.

  • Nick M

    In the long run it is unsustainable

    I disagree Perry. In the long-run all sorts of things are sustainable. This doesn’t mean they’re right, just that they still happen. The utter fiasco of the EU CAP has been going on for decades and doesn’t look like ending any time soon.

  • I disagree Nick. The CAP is on borrowed time as it is inevitable that the new EU members, with their inefficient agricultural sectors, will demand equal treatment under CAP. That will quickly make CAP such an epic budget buster that either the CAP goes or the EU goes (a win-win if you ask me).

  • Midwesterner

    If a foreign state wants to subsidize (say, mp3 players) that I buy at the expense of their hapless taxpayers,well, more fool them.

    If a nation that seeks the downfall of free nations wants to confiscate its own subject’s labor and assets and trade them for ownership of the assets of those free nations, more fool us to let them. Producers simply reappear? Okay. But what of that hostile government’s ownership of free nations’ assets purchased with the intrigue? Does it simply disappear?

    If it is ‘unfair’ that a country (say, Taiwan for example)

    If Taiwanese manufacturers want to underbid, and use any trade surplus to buy assets in other free nations, that is trade between subjects of two nations allied both ideologically and militarily. It is within the sphere of free nations. Far from wanting to take us down, I think Taiwan would like to see us stay strong. So that they can continue to exist.

    If you follow the logic of ‘fair trade’ rather than ‘free trade’

    I don’t ever support ‘fair trade’. Free trade is for allies. When trading with tacit or overt opponents, trading must be tactical in nature. Expecting individual business owners to assume the brunt of a hostile nation’s attack so that a few can profit at their loss is the height of redistributionism. Let me make this clear. I draw a distinction between losing and gaining market share between free and allied countries and between countries who are ideologically opposed.

    Unless a state of war exists or I am rading with a state owned company,

    Well, yes. That is rather the point. But war does not begin with cannons and torpedoes. The most successful attacks are fought economically. And there is no surer way of losing a fight than not realizing you are in one.

    To think otherwise suggest accepting that the state has a controlling interest in every economic action you make,

    Not at all. Government belongs at the borders, not between free people. If you can demonstrate reasonably that a government and its people are supporters and practitioners of individual freedom, then it is between individuals. But when one government takes upon itself the choice of using power to manipulate trade with hostile intent, then that is a matter of national defense.

  • But when one government takes upon itself the choice of using power to manipulate trade with hostile intent, then that is a matter of national defense.

    Sure, but the vast majority of governments manipulate trade with regulation and subsidy not because they are locked in an ideological war with the USA or anyone else but because they are pandering to internal interest groups within their own country. That is even (largely) true for China.

    I have little problem with treating places like North Korea, Iran and maybe even China and Venezuela differently, but the vast majority of the rest of the world really are not at war with us or even contemplating it at some point in the future, regardless of their political make up or public posturings. I can think of many reasons for making an individual choice to not trade with companies in Zimbabwe but they really are not working for our downfall and I hardly think it falls within the reasonable ‘defence’ remit of the state to take that decision away from me.

  • Midwesterner

    Bruce, check out your trade deficits over the last five years.

    From page 7 of this PDF, (NZ$000) 2002 = -699,230 and 2006 = -8,263,530

    Looking at the numbers, it looks like you have had ‘corrections’ in the past and may be due for another one.

    It was 2000 = – 4,316,736 and fell to 2001 = -941,018

    What happened to cause that last ‘correction’. Remember this?

  • Midwesterner


    That is true. And when corrections occur between nations that have a stake in each others continued success, that is a good thing.

    I do think the recent history of nations matters. I think places like India, Taiwan, South Korea, etc have long years of a western style indvidualist meta context to help them along. But as you discussion with the former soviet Russians in another thread made clear, meta-context matters.

    Our (security) problems come from a failure to anticipate problems with a very few countries. I believe that China, due to its absence of a good meta-context, it has to be dealt with very cautiously. Helping them buy $1,000,000,000,000 share of our economy is not cautious. We can hope that the annexation of Hong Kong infects them with our values, but I don’t think that with stakes this high, we should be betting our entire existence on it.

  • MarkE

    I fear, MW, that you may have fallen into a common trap. Remember that we are working through the governments we have, not the better (and less) government we want.

    We may be able to gain unilateral free trade, including trade with enemies, which would create strategic problems, but not necessarily insurmountable ones. These problems may result in a period of uncomfortable adjustment in future, or they may even lead to more traditional forms of warfare. Alternatively we could get government directed trade, to protect our “strategic industries” or “National champions”. In this case the protectionism will not be directed at those industries which are necessary for our future survival or even for us to prosper; it will protect those industries that are poorly managed and deservedly failing, but which have enough political clout to get political support. This will not protect the citizens of the country imposing protectionism from those threats.

  • Jacob

    “I think it reasonable to protect those industries essential to national defense.”

    Production of armaments is clearly in the domain of national defence, and you wouldn’t want to outsource that to China.
    All esle is to be treated as normal goods – no trade restrictions to be imposed.

  • Midwesterner


    I know you first point all too well. I began my article with

    When you buy your microwave oven from a foreign factory, you are dealing through the many tiered intrigues of two intervening governments,

    I don’t believe we can “gain unilateral free trade”. I believe we are already on the losing end of it.

    And yes to every body who says the problem is domestic political manipulations. Yes. But instead of forcing ourselves to cope with the pain of it, we are trading debt for anesthetic. People who think our production displacement can be explained by “other countries do other things better than us” are 90% wrong. The vast majority of it is caused by regulations. By political interference in the market place!

    Our eagerness to buy cheaply from unregulated countries (even friendly ones) is economic suicide. (we are simultaneously addressing two separate topics, political economics and defensive economics) It’s the lazy guy on the front porch putting his food on a credit card. Only when the market restrictions are equal, is displaced manufactoring truely beneficial. These debts are incurred buy purchasing anesthesia from the consequences of our bad domestic policy. Almost everyone agrees on that. And then says, the best course of action is to buy more.

  • BlacquesJacquesShellacques

    mw: You say: “Okay. But what of that hostile government’s ownership of free nations’ assets purchased with the intrigue? Does it simply disappear?”


    1. As for land. non-resident tax rates, which are a scam we Canadians have been working for a long time. Just ask our American neighbours who own land here when they open their annual non resident real property tax bills.

    2. a. As for movables: If physical, let the hostile state take them away, in which case my state brags about it’s exporting prowess. Or the hostile state can pay me to store them.

    2. b. If the movable is a debt obligation, it is private. Maybe I’ll pay, maybe I’ll go bankrupt. If I pay, what will the dirty furriner do with the money? His absolute only choice is to spend it here, directly or indirectly. He buys land, we tax him. He buys movables, well, round the mulberry bush we go.

    2. c. If the movable is an equity investment such as shares, what is the furriner to do? Vote to destroy the value of the company. Good idea. First the minority will litigate for years, then I’ll buy the corporate assets for pennies and compete with the furriner, who just lost his shirt, and the idiot minority who invested with crazy furriners.

    Maybe the hostile state buys all the shares of Intel to get access to Intel military secrets. Not really possible given multiple levels of shareholder and director reporting and investigation required, not to mention CIA, FBI etc., but it would make a good novel.

    Midwesterner, sorry, but the system is entirely self correcting if left alone and tweaked in the smallest manner possible.

  • chuck

    Perhaps I should have chosen the Roman Empire as the first example of an international free trade zone. In The Fall of Rome and the End of Civilization by Bryan Ward-Perkins, the author makes the point that after the Germanic invasions the economy sank below the level of pre-Roman times because of the loss of local skills, skills that took almost 1000 years to recover.

    Civilization is not just what is taught in schools, it is also what people know how to do. Much of this is passed generation to generation through apprenticeship , as in the building trades. How to construct a building or put up a bridge is something the construction companies know, but it is not something that is taught in schools. When I look around, one of the consequences of free trade that I see is the loss of skills. This is not a bad thing as long as those skills are available elsewhere and access to them is guaranteed. Indeed, specialization can lead to higher quality goods. But, and this is my point, there is nothing that promises the continuation of such a blissful state. Anyone who reads history must retain a healthy dose of skepticism when long lasting peace and prosperity are implicitly assumed in the formulation of policy.

  • Chuck, the Roman Empire was a ‘single market’ but it was not a ‘free trade’ area. Trajan’s attempt to impose Empire wide price control are indicative of the sort of central control that Rome tried to exercise over its economy. This was in large part responsible for the Empire’s later military weakness as it no long had the economic wherewithal to support the standing military it needed to maintain its rule.

  • Midwesterner


    You left out a couple.

    3. The dollar ceases to be the world currency. (We have to start borrowing and buying in another nation’s currency on a world market.)

    4. After defaulting by whatever means we choose, including those you name, nobody does credit with us anymore. (Buys our debt.)

    Resulting in all the problems we would face if we just bit the bullet and tackled the problem now plus a whole lot more problems we don’t have now.

  • Midwesterner

    Anyone who reads history must retain a healthy dose of skepticism when long lasting peace and prosperity are implicitly assumed in the formulation of policy.

    In a nutshell.

  • chuck

    Perry, I believe that is what Van Mises proposed as an explanation so it isn’t strange to find it here. There have been, what, some 84 reason for the fall of the Roman Empire tabulated? Nevertheless, I think Ward-Perkins did a good job of showing how there were specialist centers of production dotted throughout the Empire who relied on exporting their products. The disappearance of trade not only ruined those centers themselves, but also caused those dependent on the products to fall to a far lower level of existence.

    Another recent book by Heather postulates a perfect storm of military challenges, started with the Sassinid Empire and ending with the Huns pushing the Germanic tribes, improved politically and militarily by centuries of contact and conflict with the Romans, into the Western Roman Empire.

    I think it is a mistake to make economic determinism the locomotive of history. There are many other factors, from religious enthusiasms to mad kings. It is a complex business and sometimes I think the Gods are just throwing the dice in yet another game at the Hub.

  • chuck

    More here in this interesting discussion between Ward-Perkins and Peter Heather. I particularly like this bit from Heather because it strikes me as completely relevant to what is going on today.

    Here, there’s maybe a bit of difference between us because I do believe in the importance of structural change outside the Empire. It’s the argument I start to develop in the last chapter of my book, but much more elsewhere, namely that having to co-exist with a large and aggressive Empire pushes neighbouring populations into processes of socio-economic and political change, the end result of which is to generate societies more capable of parrying the Empire that started everything off. There is, in other words, a kind of Newton’s Third Law: to every Empire there is an opposite and equal reaction which undermines the preponderance of power in one locality on which the original Empire was based.

    Here we see the fall of the European Empires, exacerbated by WWI and the rise of the USSR as a supplier of arms and ideology to the third world. Here, too, is the ongoing shift of the world economy and technological progress to the Pacific Rim. I do worry about the long term prospects of the US in this new world. Call me provincial.

  • I am really not suggesting economic ‘determinism’ as given their economic decline, the Empire could have responded in various ways to try and off-set that reality. But a reality it was… but we are getting a tad off-topic 🙂

  • Paul Marks

    It would be good if governments of other countries got rid of import taxes and other restictions on goods and services from country A. (people in these countries and people in country A. would be better off).

    However, the government of country A. will make the population even worse off if it “retalitates” against the import taxes and other restrictions of other governments. For example, the correct response to the great American import tax increase of 1931 should have been to do NOTHING.

    The governments of Britain and other nations made things (both for Americans and for their own populations) worse by putting up import taxes of their own.

    Oddly enough people who are anti immigration are sometimes (although not always) anti free trade as well.

    As Ludwig Von Mises pointed out this is not logical – because if a government denies (or makes difficult) trade with poorer people it is (whether it knows it or not) inviting them to physically come to the country.

    I can see justifications for wishing to keep certain people out. For example, they may be after government services, or they may be violent criminals or they may be actual invaders who wish to make parts of the country part of another country or overthrow its institutions (all three claims have been made, rightly or wrongly, about many hispanic immigrants to the United States). But putting up taxes and other restrictions against their goods and serivces would simply be (whether people know it or not) to invite yet more immigrants to come.

    As for trade with China:

    If people want to “save American manufacturing” they should do such things as get rid of pro union laws (for example if a manager wishes to fire a worker for belonging to a union that should be up to him), and eliminate other regulations and taxes (such as the Death tax and Capital Gains tax). Unions do NOT improve the wages and conditions of workers in the long term – there is a short term benefit, but then (because the unions have helped undermine the industry) wages and conditions are WORSE than they would have otherwise have been (assuming the workers are not just made unemployed).

    There are no “short cuts” (whether through unions or through regulations) to better wage rates or conditions – these things must come (if they are to come at all) via economic progress.

    Hitting goods from China will not achieve anything good in the long term.

    Of course the United States has many problems – from the ever growing burden of the unconstitutional “entitlement programs” to the (also unconstitutional) fiat money credit bubble financial system

    But a trade war with China is not going to help with any of these problems (nor is China copying some of America’s mistakes, which now seems to be happening) – quite the contrary.

  • Midwesterner

    Paul, China holds about $1,000,000,000,000 in reserve.

    Unlike other nations (ie Japan) that hold substantial US$ reserves, China would rather they were the worlds strongest nation and would almost certainly use every option available to depose us whenever it was convenient or inconsequential to do so.

    I agree with free trade among our allies. In that region, I think we can reasonably claim South Korea, Japan, and Taiwan as allies. China sees a different future. We must discriminate between them.

    The fact that things have progressed so far that any act regarding China’s currency valuation practices, and insistence on equally open Chinese markets would trigger a trade war suggests that we already have too many eggs in that basket.

    They are not collecting that much money out of benevolence or because our people need microwaves and televisions more than their’s do. There is a reason they are exporting their material goods for dollars rather than solving countless standard of living problems at home.

  • Ian Deans

    MW, if China does hold that much then it brings to mind the old joke – if you owe the bank $1,000 and can’t pay then its your problem, but if you owe the bank $1,000,000,000,000 then it’s the bank’s problem.

    Would China not have an obvious interest in keeping the US afloat just to protect their currency holdings?

  • RAB

    Great thread you all!
    I have been mulling over what to say for a while now.
    Idealogically I agree with Perry.
    Realistically I agree with Mid.
    Some industries need to be protected in the national Interest.
    All I can say for now, is that, in reply to Ian’s assertion above, that it is the bank’s problem.
    I disagree.
    China, if it so chose, could use economics as a weapon against the USA.
    It could sell all those billions of dollars reserve short on the finance marts and cause the kind of dislocation and devaluation that just one man, George Soros, did by causing a run on the pound and taking Britain out of the ERM.
    Man doth not live by bread alone, and pure economics is pure fiction.
    There is malice and madness in the affairs of man as well as a balance sheet.

  • veryretired

    I’m with RAB, this and the previous post are terrific. I’m not surprised, as Mid is a serious person who tries to think about important issues, and Perry is as articulate a defender of the minimalist position as I have ever run across.

    A few somewhat disconnected points.

    The numbers being kicked around are stupifying if one thinks of a dollar as being worth a dollar. In fact, its only worth about 8 cents compared to the 1973 dollar when Nixon took the US off the gold standard. (And, no, I don’t want to get into a debate about that).

    We must remember that we are now on the cusp, a bridging period between a time when “everyone” agreed that the state was the essential protector and guiding light of economic activity, and a freer system in which many of the more intrusive collectivist theories and assertions have been examined and found truly wanting.

    In China’s case, Deng’s admonition that it doesn’t matter what the cat is called as long as it catches mice is now a primary operating priciple. Is everything hunky-dory? Of course not.

    Tensions and rivalries will always exist, but the increasingly practical, younger Chinese leaders can see what is there in front of them—a half century of antagonism with the west and the US led to disaster, famines, impoverishment, and continual social turmoil resulting in the deaths of millions, while a more open, trade based relationship is building a China of wealth, economic depth, and worldwide influence.

    Politicians have tried to sell the idea that they should be in charge of everything for “the public good”, but as the public gets more and more informed and savvy about how things really work, this assertion is increasingly met with skeptical resistance.

    The complaint against political management of the economy, as well as many other aspects of state action, is not that they are doing the wrong thing, but that they don’t know what they’re doing at all.

    In fact, the economy of the US has moved on to a completely different level of work and productivity, based largely on computerization and other advances in technology, while most political types are clearly at sea just trying to set the clock on their DVD player.

    The reason the US, and the west, has the resilience it does is precisely because it does not protect, but allows the creative destruction of capitalism to operate, discarding enterprises which no longer provide a high return on investment, and exploring new technologies and economic activities.

    How many of Medtronics’ heart regulators will the aging males of China and India demand? And if the pacemakers are made in China under license, what will it matter to a company in the US which has already moved on to brain wave regulators, or genetic cancer reprogrammers?

    I can see, and appreciate, Mids point about potential defense issues, and the threat of an impoverished US being at the mercy of a wealthy China. But I have seen this contention many times in the past, involving Greek shipping tychoons, Arab oil shieks, Japanese industrial powers, all of whom, among others, were said to be preying on a weakened US economy, and “buying” the country out from under us.

    Anyone care to go back and read all the dire predictions in the press and other media about the ruthless Japanese taking over the country in the years right before their economy collapsed into a ten + year long depression?

    Wait till the Chinese banking cows come home—we’ll see whose system is driving the world economy in a few decades.

    My money’s on the US, but, of course, I am not only a ferocious nationalist, but an incurable optimist.

    Ordinary people can see very well what works and what doesn’t, what makes sense and what is all b.s., what goods and services give them a good value, and what is a waste of money.

    It’s the elites who are in over their heads, because they believe all their own hype. No one who lives in the real world does.

  • Midwesterner

    VR & RAB, thank you for the generous compliments. I’ve had trouble communicating this because while each individual facet of trade can be explained away, the big picture cannot.

    Wait till the Chinese banking cows come home—we’ll see whose system is driving the world economy in a few decades.

    This writer has hit what I’ve had in my geometrically (rather than linguistically) ordered mind and been having trouble communicating. I mentioned it on the other thread, I mention it again because I really think it cuts to the essence. This has happened before with some of the same players in different roles. The outcome was predictable then and it is predictable now.

    The big difference is China is more willing to endure pain than we were/are and I don’t think it will take them 10-12 years and a world war to recover. On the other hand, we are next in line for the British experience. And I don’t think China will be as benevolent to us as we were to the British.

  • Alex

    And I don’t think China will be as benevolent to us as we were to the British.

    Oh sure, the USA was very benevolent. Like in the Suez Crisis for example when our benevolent ‘ally’ fucked us over for daring to do something without their approval? The ‘special relationship’ has always been a delusion. At least during the Cold War it could be argued that the USA was the least worst option but in the post-Soviet world we really REALLY need to learn to live without caring all too much what people in the USA think. Trade with them but otherwise just stay the hell away from their wacko foreign policies, stay the hell out of their wars and leave them to their messiah complexes. Apropos the article, I think we should trade with the USA in spite of what the US state is, not because of it.

  • Well, fiat currency does strange things. But remind me exactly why the Chinese would do so much harm to themselves by working like mad in order to accumulate the money and then lose their shirts in dumping it on to the market all at the same time? Also note that much of their money is not held in cash. It is held, rather, in U.S. government bonds. How do you think the U.S. will react if they try to cash 1 trillion dollars in bonds all at the same time? It would be pretty funny, but don’t think they’ll get their money.

    As far as possible results of default by the U.S.:

    If the dollar ceases to be the ‘international currency’, so be it. I don’t care. It’s fiat money anyway. Maybe it would make it easier to return to a gold standard. Either way, so what. Let them trade in whatever makes them happy.

    If nobody will loan our government money, so much the better. Congress will have to either raise taxes to match spending, which might cause an economic collapse, but is an orthogonal issue, or they would have to cut spending. If they cut spending, that means fewer subsidies to manufacturers who cannot manufacture, workers who refuse to work, farmers who do not farm. Which means that the assets owned by such people can be redirected into productive use. Which means economic growth.

    Also, we could cut welfare to all the dictators and Socialists we are currently supporting, which would save us a great deal of money. We could stop paying to protect Japan and Germany. That would be a chunk, too. We could bring every soldier in the world back to U.S. soil, either to protect it, or to leave the military and do something productive. Either one is good.

    And finally, we could stop imprisoning 2% of our population and end the insane war on drugs. That’s an expensive proposition.

    So I say, lets beg and plead with the rest of the world to stop lending our government money. I’m all for it.

  • gaznazisforjesus

    I disagree with quite a few of the views on this blog – BUT I AGREE WITH THIS ONE.

    Free trade is part of the answer to poverty and economic development in the rest of the World.

    I think its the only thing that can rescue France from the Brink of ruin…

  • Brendan Halfweeg

    China is facing real risk of population demographics hampering their economic rise. The one child policy has given China a fertility rate of 1.8-1.9 children per women (compared to the US rate of 2.1). Such a fertility rate may lead to China becoming old before they become rich and having to rely on capital rather human resources to continue their economic growth. Economic growth and urbanization (one child policy only applies to urban areas) will probably lead to this rate either being stable or decreasing.

    Since China doesn’t have millions of people clammering at their border to get in, lower fertility and high labour demand will see the gentrification of China similar to what we are witnessing in Japan and Europe. Older populations are less likely to go to war, younger demographic nations (like Iran) are more likely. Instead of leaving girl childs in the paddy field to die, the Chinese may start leaving the elderly out to rapidly become ancestors.

    In addition, China has a serious bachelor problem (something like 30 million Chinese men that can’t find wives) that could see internal civil strife and mass migration, further weakening the authoritarian regime. China may never be a liberal market democracy, but they may move towards a benign oligarchy, with a ruling class chosen from within the old communist party cabal. As long as their privileged position is not challenged and their prestige is enhanced, China will return to the status it enjoyed prior to Europe’s (and followed by America) ascendency on the world stage, a sort of Neo-Ming Dynasty.

    The Chinese aren’t communist in the way the Russians were, they are not interested in sponsoring revolution outside their geographical sphere of influence. They hanker for what used to be called Great Power status. They want all the bells and whistles associated with super power status, ICBMs, nuclear submarines, ballistic missiles, space programmes. They don’t have territorial ambitions on the West, or even idealogical ambitions. They consider themselves already superior to Westerners, and they don’t want to bring us into the fold of Chinese civilisation, but to exclude us.

    Meanwhile they want to get rich and drive big cars, like the rest of us.

  • Paul from Florida

    Why should fair trade be defined at the nation state level? Why shouldn’t it be at the county or town level? You know, for fairness of your fellow townies?

    Under ‘my plan’ everything would have to be attempted to be built/made/serviced in each town. This would not only protect jobs, but also make them. For example, jet passenger aircraft. These are good jobs at good wages. Each town would be able to have these jobs instead of one national company. Each town would be able to dig, smelter, and make the aluminum. The whole country would be dotted with a half built aircraft, a smoking smelter and mill. It would be glorious!

    Stop the unfair national fair trade now! Fair town trade for the masses! (Also open heart
    Surgery too!)

    One last improvement to structural deficiencies in Fair Town Trade Theory( FTTT ). Many towns are made up of villages. It might be necessary to have a Fair Village Trade, in which for example, each village would have it’s own mining, smelter, mill, aircraft plant and open hart surgery center. I don’t want to be ideologically rigid.

    Chairman Paul.

  • Midwesterner

    Rich Paul, you’re an isolationist. Funny, but not impossible position for a free trader to hold.

    So I say, lets beg and plead with the rest of the world to stop lending our government money. I’m all for it.

    Oh, don’t worry. They will.

    There is hope for you though. At least you seem to agree that trade dept is a very bad thing. Some people have denied it even exists.

  • Midwesterner

    err, trade debt.

  • Midwesterner


    True. But it is possible to see a very different outcome.

    The Chinese aren’t communist in the way the Russians were.

    True. I suspect they will (after their big crash which will happen along with all of the rest of us) turn out to be the national socialist flavor of collectivism. I don’t see them worrying about the finer points of spreading a doctrine.

  • I don’t believe we can “gain unilateral free trade”. I believe we are already on the losing end of it.

    Who is ‘we’? I am not losing anything. I benefit from cheaper products and if domestic producers cannot compete, they should start both demanding less costly regulations be imposed by their own governments and investing in making better products… either way, I end up with cheaper and/or better products.

  • Midwesterner


    I have difficulty understanding your beliefs and values from that statement. I see four possible interpretations, if there are more, please tell me.


    1. You believe individuals should (and are able to) alter their own habits to maintain international trade balances.

    2. You believe international debt in any measure, large or small, trending or fluctuating, between friends or foes to be harmless and without negative consequences.

    3. You believe debt does have consequences and you look forward to them. (At least one person so far appears to have taken that position.)

    or 4. occurs to me. You believe all governments everywhere in actual fact do answer and serve the individual interests of their citizens.

    I’m sure there are more. Is one of these correct or what am I missing? I don’t know how to answer.

  • I do not think trade deficits matter all that much and to the extent they do, it is a matter to be solved by reducing state interference in domestic economic affairs.

    I do not think it is the role of government to tell people who they can or cannot trade with unless there is a de facto state of war going on (and I do not mean just ‘rivalries’, i.e. the state of relations with China. On the other hand I do happen to think we are already at war with Iran, it is just they are killing our soldiers and we are not shooting back, so interfering with people trading with Iran is just fine by me).

    If foreign states want to ‘dump’ products on me, I am happy to buy them at the (Chinese) taxpayers expense. If they stop doing that at some point an cut off supplies in the future in order to prove what big dicks their mighty government has, either the products will continue to flow via third parties or domestic or other foreign producers will step in to fill the void. Either way, the state has bugger all role in the process.

    You believe all governments everywhere in actual fact do answer and serve the individual interests of their citizens

    Government should exist to stand behind individual liberties by providing defences against collective threats that individuals cannot defend against (army, some police (though much can be private), some CDC, courts). Some international politics are therefore inevitable. However probably 20% of what is currently controlled by the state regarding international matters is probably all that is required.

    I care not one iota about the USA remaining the world’s pre-eminent military and economic power however as that is not a legitimate reason to mess with social relations (i.e. markets) in all but the most particular circumstances.

  • Midwesterner

    I believe that one of the very very few legitimate roles of government is to protect us from foreign governments. With this statement:

    If foreign states want to ‘dump’ products on me, I am happy to buy them at the (Chinese) taxpayers expense.

    you appear to be stating that it is not. If I am an efficient business operator who can compete with any other free market company out there, granting a non-free market government the power to come into my free market and destroy my business is a defense issue. It is one of those very few legitimate roles of government.

    And regarding domestic regulation, small business owners and the people who depend on them should be free market’s strongest advocates. Having been a small business person most of my life, I can tell you that we can compete with anybody. We are more efficient. We are more motivated. We are more flexible. (I think) we are more intelligent. We adapt much better. We can compete with anybody. Except foreign governments. If we, as free market individualists, want the support of the small business community and their dependents, we have to quit throwing them into the mine fields to clear a path for us. And it isn’t even working. The same tactic that Iran used with peoples lives against Saddam, we are using with no small portion of business people’s lifetimes and savings. Insanity is when we keep doing the same thing over and over again and expect different results the next time.

    Government should exist to stand behind individual liberties by providing defences against collective threats that individuals cannot defend against (army, some police (though much can be private), some CDC, courts). Some international politics are therefore inevitable. However probably 20% of what is currently controlled by the state regarding international matters is probably all that is required.

    We agree completely on that. 100% total agreement. China is deliberately using the power of (a gigantic) state as a tool of conquest. I find small reassurance that they are not cruising subs up and down our coasts and shooting at fishing boats.

    A ‘devil may care’ attitude towards US hegemony in our present world is very much the passengers on the deck of a sinking ship gloating that the captain is going to drown. We are the (badly miss-managed) aircraft carrier that provides cover for the rest of the fleet. While we agree totally on what got us to this point, we apparently diverge greatly on what will believe will happen if US/UK etc hegemony collapses.

    I would like to believe that the collapse of the US would be inconsequential and that another freedom loving world power would step into the void. Barring that, I would like to believe the absence of a historic and cultural love of individual freedom in the world hegemonic power was harmless. Neither of these beliefs are plausible.

    The US took Britain’s place while sharing the same cultural and legal history. It was an almost painless transition from the standpoint of global freedom. China shares none of our culture or our legal history. Even less than they might have, all of the freedom thinking people who could, escaped to Taiwan. Chinese hegemony is a bad thing. Please convince me I’m wrong, I will sleep better.

  • If I am an efficient business operator who can compete with any other free market company out there, granting a non-free market government the power to come into my free market and destroy my business is a defense issue. It is one of those very few legitimate roles of government.

    No, that is not defence at all. China is not the Soviet Union and has quite different motivations. The Soviets were a clear and present ideological threat and a military threat, the Chinese are just a potential military threat to it’s neighbours (more than just potential if you happen to be Vietnam or Tibet or Taiwan of course) but they are no ideological threat whatsoever to anyone. We are not at war with China and should not act as though one is inevitable either, because it is not. Militant Islam is a far bigger manifest threat than China, which is just another unpleasant country.

    If is not the legitimate role of state to protect its subjects (i.e. its the consumers) from a foreign government determined to give them cheap products (unless said government is shooting said products out of a gun). China and India rising to rival the USA economically is (almost) inevitable and it is simply not within the power of the USA to prevent that from happening. At best it can ally itself with India to limit Chinese hegemonic urges but the era of US quasi-hegemony is not going to last much longer so why allow the US state to distort US markets just because China wants to do so? The competitive advantages of the West come from having less restrictions, not from sheltering them from ‘unfair’ competition.

    If you truly believe, as I do, that that evidence shows capitalist systems are vastly better at adapting to distortions and the vagaries of international differences than a planned economy, then why do you think the US state is somehow going to be able to ‘manage’ fairness into the system via political intervention?

    It is important to take a fairly strict definition of ‘defence’ or ‘defence’ becomes the key to endless statism (and indeed many preposterous US restrictions are hung on that hook). I viewed the attack on Afghanistan as clearly defence. I viewed the attack on Iraq as on the cusp. I view Iran and (possibly) Syria as hostile by their sponsorships of third party attacks. North Korea is hostile because they keep threatening literal attack when criticised. But I regard China as just another unpleasant nation and their cheap products also make us richer, not just them. I do not recall any direct military threats from them (except against Taiwan). Of course if you think a potentially nuclear war between the US and China over Taiwan is a real prospect, then you points make more sense (I disagree that is likely however).

    I think your ‘defence’ argument is false because you take the definition much too far. Anyone might be a threat in the future and if you go down that route, you end up with something that looks a lot like the state of international trade circa 1955. I personally find it reprehensible that some companies like Skype, Yahoo and Google and Cisco aid and abet repression in China but I do not see that as being the business of the US government.

  • Midwesterner

    With two threads going, I lose track of what I have said on each.

    Japan is the closest comparison to China as far as global economics is concerned. I do not at all perceive the same consequence (say nothing of likelyhood) from a Japanese global hegemony as I do from a Chinese one. Much as I would be disgusted by an incompetent and self destructing US huddled under Japan’s skirts, I think there would be a good chance the march of individual freedom would continue in some form.

    Like it or not, the free nations of the world are huddled under US skirts (with a very strong UK/Aus/Can element). When these nations, post collapse, are obsessively rearranging their navel lint, who will come to the aid of the Falklands? Of Kuwait? Of Taiwan? Of Bosnia? Of Korea? Of Israel? Of an entire constellation of states of varying degrees of freedom? When Hugo invades his neighbors, who will notice, much less care?

    The next world power doesn’t have to be a conquering one (Although as soon as they discover the power, they will be. Even the US fell into that trap.) to have a sweeping and extremely consequential effect on world affairs. They merely have to permit their allies to do things without stopping them. And one day, their foreign policy will get lazy and they will hit with a hammer instead of coaxing with candy.

    You have not even touched on the justification for a nationstate reaching into a free market and attacking selected sectors of its businesses. I really don’t see how you can blow this off as not a criminal act. The mere fact that it uses stolen property of its own citizens to perpetrate the crime does not invalidate it. The fact that certain consumers are benefitting is in no way different than certain consumers benefitting from domestic agricultural subsidies. And yet, I have no doubt that you would make a strong effort to interupt that redistribution loop. Why should you grant immunity to foreign governments hawking stolen property off the back of a truck?

    And as a separate matter, I am fast coming to detest the word ‘fair’. Curiously, I found “fair” eight times in your article, and not even once in mine. Further I have not used it even once in any comments on my thread, and only once in utter rejection on your thread. Yet it has been used fourteen times by people attacking what I am saying. Used in a derisivly pejorative way. I think you know debating well enough to recognize a strawman for what it is. Please stop the “fair” bs. If your case cannot stand on its own, please do not remake my case into forms that you do find possible to argue against.

  • Midwesterner

    My apologies for the tone of my last paragraph. I could and should have phrased it better.

    Preview doesn’t always catch everything.

  • ‘Fair’ is implicit in your argument. You are willing to allow trade with people from other nations who play by (more or less) the same rules (i.e. they play ‘fair’, or at least fair enough).

    Even though you do not use the word ‘fair’, your arguments are much the same as those on the right who make the ‘fair trade’ proposition (the left version of the ‘fair trade’ proposition is a bit different).

  • Midwesterner

    No, Perry. Not at all. I don’t even know how one can define “fair”.

    If being opposed to dealing in stolen property is fair, well, what’s your complaint?

    I believe trade between nations with incompatible goals to be a matter for defense policy. Fair comes into that not a whit.

    I believe that stealing and reselling property (and profiting from that activity) is wrong without qualification. That fact that the property is being stolen from citizens of another nations is being used to excuse it is incomprehensible to me. You will need to elaborate on why that particular type of stolen property is exempt from moral considerations. You’ve stated so outright, but I don’t get it. Why?

    And since you are the one using the word fair, can you please give us a definition so that I can know what exactly you are saying. The word is clearly being used as a pejorative, see Paul from Florida at 1:59.

  • Midwesterner

    I’ll add to that. If we are subsidizing something (and we certainly are) then I hope that our allies would put in place trade restrictions to clobber that intentions of that subsidy.

  • ResidentAlien

    Once you start retaliating against subsidies or restrictions imposed by a trading partner you just make a bad situation worse.

    The US subsidizes the domestic sugar and corn industry through a mix of import restrictions and tariffs. How can a trading partner “retaliate” against that? The country affected cannot impose comparable restrictions on the import of US sugar and corn since they grow their own and the subsidized sugar and corn is inefficiently produced and not widely exported. If a country “retaliates” against the import of other US goods such as computers they are only shooting themselves in the foot and encouraging the US to “retaliate.”

    Free trade is a basic human freedom. Mess with it as little as possible!

  • veryretired

    As much as I hesitate to get in the middle of this sparring match, I am compelled to point out a few aspects of the situation which have been passed over.

    The complex system of friendships or antagonisms that exist in the world are the leftovers of decades of ideologically driven competition, esp. military one-upmanship between the marxist and non-marxist blocs.

    This rivalry has warped otherwise non-belligerent relationships, such as existed between China and the US, for example, and its afteraffects are still playing out.

    Just as Einstein described the effects of mass on space-time, so must we recognize the tremendous damage that the warping of over half a century of relentless military expenditure has caused in all our national and international structures and systems.

    If ideology is removed from the equation, as it slowly is being removed by the relentless march of time bringing the deaths of so many of the older maoist cronies, the newer technocratic leaders will soon be forced to deal with economic realities without the need to bow to an overarching ideological prism, already abandoned in all but name anyway.

    Further, and even more important, is the development of that most dangerous element within Chinese society—a commercial middle class.

    It is odd for those of us in the west, who have been immersed in the ridicule and contempt that our intellectual and artistic “betters” have for that group, to imagine the middle class as a revolutionary structure, but in history, that is exactly what it has been, and will be again as the former totalitarian societies allow private commercial activity to develop.

    Why did the collectivist ideologies, from fascism to marxism to maoism, hate a bunch of farmers and shopkeepers so ferociously?

    Because they knew, better than our own culture, their supposed defenders, that the man or woman trying to run a farm, operate a small business, raise a family, and provide for their loved ones didn’t judge everything through the “correct” political spectacles—they made decisions based on what worked best to solve their problems, and politics be damned.

    From the aristocratic disdain for “trade” and the muddy peasants who toiled in the fields, to the leftists contempt for the “trivial personal concerns” in the mundane life of the ordinary grocer or widget maker, a powerful message has been drilled into the minds and beliefs of our society—there is something ignoble, even comical, about the fussy man over there, worrying about the number of flaws in the toilet seats his company makes, or sitting up nights counting pennies to see if he can afford another truckload of flour for his bakery.

    As Rand points out, for years uncounted, those little people who started making some product or providing a service and, with a committment to the “mundane” bordering on the obsessive, succeeded in building up a profitable entity, were subjected to a relentless campaign of villification and moral condemnation, even as they were providing the structure that enriched all around them, and funded all the “public goods” that states were credited with providing.

    China, and many other parts of the world, are just now emerging from a nightmare period of dementia, in which poison was praised as elixier, political connections trumped all, and reality was ignored in the pursuit of the “ideologically pure”. They are replaying the process that the US went through in the 19th and early 20th centuries, building the social and economic structures that will transform their society from an impoverished 3rd world nation to a wealthy, developed country.

    They can see what has happened to the Japanese, the South Koreans, the other Asian tigers, the Irish—every time a society develops an atmosphere friendly and nurturing to the growth of individual initiative and commercial activity, prosperity spreads and deepens.

    I don’t think it is an overstatement to say that they have certainly experienced first hand the painful effects of delusional ideology and anti-commercial repression. Why would they wish to ever go back?

    This is a long and complex process, developing over decades, with misteps and problems at every stage.

    But, regardless of any difficulties, the development of a sound social class of small/large business people, and sturdy yeoman landowners, to paraphrase Jefferson, cannot help but benefit, not only Chinese society, but all the world’s people who desparately desire and need these very same developments for themselves.

    There are world travelers here on this site. We are often treated to the photos and commentary of Samizdatas from exotic locales and foreign lands.

    Here is a little request from an old man who can’t jaunt off to Mozambique or Sri Lanka or some other wonderful or mysterious place—stop in any local coffee shop or market or restaurant and ask aix people at random what they want for themselves and their family.

    Here’s my prediction—a decent house or flat, a good medical facility nearby, a good job, education for themselves and their children, some modern conveniences, relief from the constant threat of social chaos and upheavel.

    These are the “mundane” and “trivial” concerns of any middle class man or woman. They are the hopes and dreams of humanity.

    Get back to me on what you find out. It’s a description of the future.

  • The tit-for-tat argument is exactly what ‘fair trade’ advocates want. It is called rather misleadingly a ‘trade war’ and involves a series of retaliatory tariffs invariably against different products, to make people act ‘fair’. It has happened between the EU and USA many times and that is the consequence of not pursuing unilateral free trade. The end result of allowing the state to manage trade is ever more state control.

    All subsidy is theft, but as it is so widespread, allowing the state to prevent trade in products subsidized by other governments means a huge reduction in all international trade. Is that really what you want? The world is not so easily divided into good guys and bad guys.

  • Nick M

    All subsidy is theft

    Nice slogan Perry.

    I like the way it echoes the old “All property is theft”.

    Nice post, as ever.

  • Midwesterner

    import restrictions and tariffs

    Word use alert. Import restrictions and tariffs are not subsidies, their only valid use is for defense against subsidies.

    If our subsidies of a product, and I mean taking tax dollars and using them to discount the retail cost of a product, are met with blocking moves, that makes it easier for us to defeat those subsidies. Your approach of profiting from it as a consumer in another allied country only reinforces its continued existence. You are benefitting from stolen property.

    Free trade is basic. And stealing money to influence is wrong. Not sometimes like you seem to be saying, but always. The only exception to this is for international defense. We are clearly not discussing that case.

    In the past briefly, I was a farmer. I could not farm without accepting a subsidy. I did at that time, accept it and hate it. When I heard of trade blocks placed by allies against our subsidized corn, I entirely sympathized with and supported the blocking nations.

    For those of you who don’t know how subsidies work, producers are paid to produce a product. Producers who do not accept the payment are driven out of business by the subsidized product. Then the strings are attached to the subsidy. The gov starts to tell you what to plant, where to plant it, and how much to plant. If you don’t, they cut of and/or repossess your payment(s). But you cannot remain in business without the subsidy because everbody else is taking it. It’s like penguins, nobody can make a solo move without getting killed.

    Anything that defeats this system is a step in the right direction.

    Likewise, when we, the US, put up trade restrictions or subsidies to ‘protect’ domestic producers from non-subsidized imports, I want our allies to retaliate. Very often fear of retaliation is a reason bad things are not done.

    What seems to elude everyone on this site is simple if, then, else logic. (Cobol was one of my first computer languages.)

    When a nation subsidizes a product and exports it, producers in the importing country demand protection. Any of you (all of you?) who are imagining this does not happen are living in an altered reality. If it is your intention to change human nature or change our entire systems in one fell swoop, then we have no further rational discussion possible.

    If you acknowledge that these political realities will happen and think even a little you will realize that trade wars are the preferred method. There are only two ways this subsidy can be countered. One is at the border and one is domestically. While the border method is usually a penalty of some sort and almost never a subsidy, the domestic method is of necessity a subsidy.

    When a subsidy is sought, the forces are arrayed with election sponsering interest groups backing candidates who will give them subsidies, against the amorphous body of taxpayers facing countless such attacks. Taxpayers always loose and subsidies never go away.

    When a trade war is begun, the forces are arrayed with one government placing the block against the other nations recipients of the subsidy. The government being challanged has to defend both the subsidy receivers and those who do not receive subsidies but are still harmed by the trade war.

    Those non-subsidized people who are harmed by the trade war are also paying for the privileged group’s subsidy. They have a very high probability of coming out against the subsidy as the preferred method of ending the trade war. It is most definitely in their own self interest for two reasons. One is the increased cost goods to them during the trade war, and two, the taxes they are paying to effect the subsidized group’s benefit.

    The trade war I am most acquanted with is the US/Canada soft lumber trade war that has been going on knock-down drag-out for 20+ years.

    What started it is some Canadian provinces subsidizing timber producers by giving away standing Crown timber to certain (presumably politically powerful) timber companies. Those companies then used that freebie to undercut market priced timber and assure jobs for voters in certain constituencies. The US has to a remarkable extent stayed out of Canada’s domestic politics and only demanded that the price of timber entering the US be priced at its free market value, not its subsidized value. This has been a very long and very rough war with virtually all of the available internet information coming from Canadian sources who for the most part suppress that little part of why it all started.

    The latest agreement reached is discussed in this article which is also from a Canadian source and is dated yesterday. It has some telltale statements such as this one on page two, “The Atlantic provinces, with their market-based timber pricing system, can export without restrictions.” which give away the game of what those evil American trade warriors are up to. Wonderfully enough, part of the agreement also included the clobbering of a hideously redistributionary Senator Byrd (hawk, spit) amendment described accurately in another Canadian source this way “the so-called Byrd Amendment — which diverts punitive import duties from foreign importers to allegedly suffering American industries”.

    Do you get this? The fall out from this latest resolution of the trade war which is easily one of the worst case ones out there, is no new subsidies and two nations are now reducing their redistribution programs and revenues.

    You guys can continue to live in your world where it is perfection first, or you can live in the world where we are and make tactical efforts to bring about change. Your idealistic belief in how you wish things were warrants the formation of a Green Free Trade party where you can all see solutions that only you can see.

    I’m not seeing them.

  • The web of costly regulations, tariffs, taxes and licences that are wrapped around so many products, i.e. the things which increase costs or have the effect of limiting market entry or which indirectly bar foreign competition, is vast.

    All these things are a form of theft because it is the use of politics (i.e. the violence of law) to manipulate markets in favour of someone… so the idea that only easy to see top level tariffs or subsidies are the only (or even the main) issue is simply not true. These factors have a huge effect of shaping how competitive any given industry is when viewed globally and the idea that government (of all people) should be trusted to use tariffs to balance out unfair practices for the good of the global trading system is a pretty strange one in my view and suggests an alarming degree of trust in the benevolence of the state.

    To me it seems like government intervention for freer trade is rather like drinking for sobriety.

  • not the Alex above

    Very intresting thread – i’m with free trade even with china.

    Whens there’s a large enough middle class power structures will start to change.

    In the mean time if we’re worried about trade imblances lets go down the 19th centuary route and sell them all the opium from afganistan killing 2 birds with one stone!

  • ResidentAlien

    Import restrictions and tariffs are a subsidy. They transfer money from the consumer of the product subjected to the restriction or tariff and give it to the more costly domestic producer.

  • Midwesterner

    These are all things that would have continued or escalated without reactionary trade pressure.

    Bananas, this:

    The final list of targeted European goods will be published in a few days, US officials said. They will be selected from the original list, which ranged from Scottish cashmere sweaters and Italian cheese to French handbags and German coffee makers.

    The US wants the European Union to open up its market in bananas, claiming unfair advantages are being given to former European colonies at the expense of American-backed concerns.

    caused this:

    The World Trade Organisation (WTO), cast in the role of referee, ruled out European moves yesterday to increase import tariffs on Latin American producers ” a move primarily intended by the EU to protect growers in former colonies in Africa and the Caribbean. It also calls into question Brussels’ efforts to protect the same banana exporters by giving them preferential access to supermarkets in the EU.



    President Bush was on the brink of triggering a full-scale transatlantic trade war last night with the announcement of tariffs of up to 30% on steel imports.

    White House sources said the president would lay out details of the plan to protect America’s ailing steel industry in a statement late yesterday.

    The move is likely to bring retaliatory action from the European Union, which has warned it cannot allow its industry to be swamped by imports shut out of the American market.

    caused this:

    PRESIDENT George Bush last night avoided a major trade war as he bowed to international pressure and lifted the controversial tariffs on steel imports to the United States.

    The climbdown was welcomed by the European Union, which was on the verge of imposing retaliatory tariffs on a range of US exports.


    In turn, they want assurances the Americans will keep a promise to accept B.C. government timber pricing reforms aimed at removing the main U.S. complaint that logs from Crown lands are subsidized.

    The Atlantic provinces, with their market-based timber pricing system, can export without restrictions.


    Under the deal Canadian exporters also got back about 80 per cent(Link) of the $5 billion US in duties they paid in.

    That’s right. 80% of the money collected went back to the Canadians. The fact that they gave it to the already subsidized lumber companies instead of refunding the taxpayers is beyond our (US) control or business. But the money (regardless of pejorative word games being used on this thread) was escrowed and 80% returned. We tried to get them to stop the subsidy entirely, but all we could get was for them to keep the money in Canada.

    Sure, every so often, the U.S. and the EU experience “trade rows” – as our British friends call them – but trade disputes are inevitable given the scope of our economic ties. In any event, the real action today in international trade is not in the WTO dispute settlement process, but in the new Doha Round of negotiations. There we have put on the table unprecedented proposals for the reduction of barriers in both agricultural and industrial products. We propose to eliminate agricultural export subsidies and greatly reduce agricultural support payments, as well as to eliminate all tariffs on industrial products by 2015.


    Last year, Canada won a complaint filed with the World Trade Organisation (WTO), which ruled that it could take commercial reprisals for $233 million over six years against Brazil, which was found guilty of subsidising the exports of the Brazilian Aeronautics Company (Embraer).

    Canada also openly offered a $300 million subsidy last month to help Bombardier win a contract for the sale of 150 airplanes to a US company, thus stepping up the fight with Brazil in the WTO.

    Needless to say, it’s pretty certain that Brazil will retaliate and two more nations will have major redistribution schemes destroyed.

    And the pattern will (hopefully) continue:

    These trade disputes will not disappear, and we will most likely see the emergence of new disputes. Both the US and the EU will continue to attempt to implement protectionist policies as they go through adjustment periods in which their manufacturing jobs disappear due to global-ization. They will attempt to use protectionist measures to cushion the impact of economic transformation. However, both the US and the EU will use the WTO in order to prevent these protectionist measures to get out of hand and to preserve the liberal trading system. Thus, the WTO dispute resolution mechanism will act as a check on the temptation to implement protec-tionist policies.

    Meanwhile, in a desperate attempt to make a case out of a theory, ISIL(Link) has resorted to talking about Japanese rice! Any government does not take action to make sure it can feed basic staples to its own population without counting on imports, is history illiterate and foolishly naive. All nations should do what it takes to make sure they can always feed the most basic of staples to its population. That preposterous case was apparently the only actual case they could find. The rest of their article was just like this thread. Dogma and doctrine.

    They also seek to use all the right trigger words with the following statement:

    Protectionist laws not only force you to pay more taxes on imported goods, but also raise your general taxes as well.

    Well I just named several cases where the prices and tax load went down because of reactionary trade policy. Even their hypothetical cases were of unilateral actions. They didn’t even dare hypothesize about reactionary trade policy.

    Their entire document is such a crap heap of hyperbole and vague unanalyzed and unsubstantiated assertians couched in a document worthy of any socialist utopians that I haven’t the stomach to quote any more.

  • Midwesterner

    Addressing most of the commenters here, I’ve taken the time to reread this thread. With a few minor exceptions, what I find here is a disappointing affirmation of the deliberately preposterous strawman arguments I wrote for my initial article. You have offered no evidence or cases where your unilateral trade policy has broken down market subsidies and protections. I have offered many to show that if government handouts are to be defeated, reactionary trade policy is one of the most effective and proven methods to do it.

    Instead, this topic has produced an echo of supurb resonance. The number of ‘me-too’s piling on is remarkable. Comments that would be treated with justified derision by even the intended beneficiaries in any other debate are here added to the quorum of truth by democratic consensus.

    That was not a random comparison to the Greens tha I made. These very people here who mock Green pronouncements of knowledge without any explanation beyond ‘we know it is so’ or ‘so and so says so’, are here presenting the same kind of ‘knowledge’. That vast majority of claims don’t attempt to find any basis at all. They are merely someones claims. Very many of you place words in the mouths of your opposition and attack invented claims that nobody has ever even made. The difference between a posse and a lynch mob is the posse delivers the suspect for discovery and judgement. The lynch mob’s sole qualification is prior knowledge of the verdict.

    Almost none of you looked at my concerns, reasons, or questions before you filled in the blanks. What need do you have for reason? The answers have been revealed to you. Occasionally your dearly held assumptions are supported by unsubstantiated pseudo-facts and platitudes. But mostly claim falls on top of claim. Analysis is rare and evidence? Nil.

    Is Samizdata just another inbred community of idealogues hunkered in a circle stroke? Is there some core ideology that prohibits the rational entertainment of certain heresies? Do only the stanzas change but the refrain must remain the same?

    I made ten deliberatly preposterous statements at the beginning of my article. I have gone back and read the two threads. I counted at least five of my top ten actually being used by one or more commenters. And very many that I didn’t think of. And one claim that was too preposterous even for my caricatures was presented. Somebody thinks there is no trade deficit!

    I am finished with this thread. It is my goal to achieve free markets, not score cheap shoes at the expense of somebody who’s sole crime is living outside my legal jurisdiction. You have all had every opportunity and invitation to bring reason and evidence to accompany all of your opinions to this debate. You have assiduously avoided any recourse to facts, reason, examples or evidence. Any reasoning that you may desperately resort to at this point in the conversation is clearly secondary to your preordained conclusions. If you get that urge, don’t bother, the time for that has been for the last 50+ comments.

  • mike

    I hope Midwesterner will continue to post his anti-echo-chamber articles on Samizdata – these are the articles, and ensuing discussions, I look out for the most.

    On the one hand, Midwesterner is absolutely spot-on to challenge Perry and the echobunnies; it does sometimes seem to me that there is something of a dark utopian shadow behind the various blue & white shades of social individualist opinion here on samizdata (or is that just the result of decent graphics design?!).

    In answer to MW’s debt-as-national-defence-concern, it seems all the folk at samizdata have to say is that the US gov should cut welfare spending – …. well sure! Yet the only realistic way I can see that happening any time soon is if – as MW points out – China makes a call on the American debt.

    How else, realistically, is US government spending going to fall?

  • mike

    I would add to that by noting that China seems to have considerable influence on how tax dollars are spent in Taiwan. As I guess everyone knows, mainland China is the top destination for exports coming out of Keelung and Kaohsiung harbours in Taiwan. The b/s independence-talking government in Taipei, after taxing those exporting companies spends all its’ money on skoolzandospitals and meanwhile cannot afford to pay for US surface-to-air Pac 3 missile batteries ordered five or six years ago! Kaohsiung alone (population 1.5m) has 7 government funded universities and more hospitals than you can shake a syringe at!

    My theory is that the members of the Taiwan legislature are all stooges smuggled in from the mainland or otherwise bribed / castrated into channelling government spending into areas of irrelevance and impotency.

    I would not suggest that the same could be true in the US, though I do think campaign financing is interesting.

  • Paul Marks

    An historical note. It was not the United States that backstabbed Britain at the time of Suez (although such people as Herbert Hoover Junior at the State Department were rather anti British), America did not help in the fight (it was an election year and there were other political problems – such as the Russian invasion of Hungary) but America was not hostile to Britain, indeed J. F. D. (Secretary of State at the time – although ill and out of action) asked Eden (years later) “why did you not go on?” It was “Super Mac” – Harold Macmillan who backstabbed Britain.

    As finance minister Macmillan was a strong supporter of the judgement to go into Suez (the canal having been grabbed by a socialist dictator by the name of Nasser), but then (when the operation was well under way) Macmillan suddenly came out against it – saying the sky was falling on the economy.

    Certainly there was a “run on the Pound” – but this was because it was overvalued against the Dollar (not because of a wicked American plot). Even before Suez many British politicians (such as Rab Butler) had understood that the government should stop trying to rig the exchange rate.

    There was no great economic collapse in 1956, and if Prime Minister Eden had not been ill and distracted by military operations he might have understodd what Macmillan was doing.

    Harold Macmillan wanted to be Prime Minister and if that meant supporting a war and then pulling the rug out at a key moment – well so be it. Eden had to be destroyed (for Macmillan to become Prime Minister) and so Britain had to lose.

    Of course the pull out from Suez undermined the British (indeed Western) position in the Middle East (for example the revolution in Iraq of 1958 was stimulated by the “British defeat”), but Harold “winds of change” Macmillan did not care – he wanted to be Prime Minister and if this had to be at the expense of his country, that was just too bad.

    Harold Macmillan was a disgusting man, he shows that it is quite possible for a man to be a soldier (Macmillan had faught in the First World War), but still have no real loyality to his country at all. Macmillan’s henchman Edward Heath (who faught in the Second World War) is another example of an ex soldier politican with no loyality to his country.


    “Protection” for industries will not solve their REAL problems (unions, taxes, regulations) it will just make them worse.

    The only good thing to be said about “protection” is that it is sometimes amusing (in a sick sort of way). For example, the tax on the import of steel that President Bush introduced – a tax that helped undermine the American car industry (amongst others).

    As for the Chinese.

    It is not low wages or poor conditions that are the reason for Chinese exports to the United States.

    In fact the gap between American and Chinese wages and conditions, whilst still very great, has NEVER BEEN SMALLER.

    Under Mao hundreds of millions of Chinese were on starvation wages (indeed tens of millions starved to death), but there were no great Chinese exports to the United States.

    The United States did not get high wages and good conditions by act of God (still less via unions or government) it got them by free (or freeish) economic development – and if it wants to keep them it will have to return to that.

    If it does not manufacturing industry is doomed – and all the “protection” for “vital for national security” industries will not help (indeed, as I pointed out above, it will hurt). “But we used to have high import taxes in the 19th century” – how does that explain high American EXPORTS of manufactured goods. The taxes on imports were not “vital for the development of American industry” they were (in a lot of cases) just a corrupt political stunt that allowed some American companies to charge more at home than overseas.

    The import taxes were about ripping off Americans at home (both consumers and small business enterprises), not “building the American economy”. Business enterprises that really could not compete with (for example) British imports went bankrupt anyway (in spite of the import taxes) – see the schems of A. Hamilton and many other flops.

    “But we can not fight the Democrats on the unions, or or regulations, or on taxing the rich, or on ……”

    O.K. – but do not blame the Chinese for your own failure to win the domestic political battle. Sure they give lots of money to Bill Clinton (which goes into the joint account with Mrs Clinton), but the Chinese are not the reason that pro business people in the United States are losing the fight.