Saturday, August 23, 2014
Down with free trade
The theory is that inequality within nations should decrease, as workers are able eventually to exploit their comparative advantage with foreign nationals to raise their own living standards. That's not quite what is happening.
Globally, the workers in poorer countries' are wealthier as wages fall to a global mean, but the gains are unevenly distributed.
A good deal of international trade and monetary economics are over my head so this is an area, like intellectual property, that I have to be cautious about (as opposed to all the topics I am reckless about).
Vox is being provocative, as a good writer should, but I think he's more nuanced than people think. The idea that the current low or zero tariff regimes constitute "free" trade does not bear a lot of scrutiny. For one thing, world central banks have to do backflips to keep labor and capital flowing to the US despite the fact that we are living on credit. Much of the US military is overseas, protecting the Arab royal families while they pump out oil with abandon, and preventing Europe from its periodic exercise in bloody internecine warfare every generation or so.
In other words, free trade ain't exactly "free." US taxpayers, and downstream holders of US dollars, are paying a lot of the freight, and they're not the ones whose incomes are rising.
I've been convinced for some time that cheap labor is not actually "cheap."
As for intellectual property, the libertarian economists (to whom I'm giving a grudging nod) have long argued that much of it is just artificial scarcity. Government declares non-tangible things property and provides a whole nuclear-backed court system (again, funded by taxpayers) to enforce the declaration. In other words, maybe intellectual property ain't really "property" and Silicon Valley is doing a lot more free-riding than they'll ever admit.
Socialists will automatically suggest that the solution is more State ownership and control of everything. I submit it's more a matter of government staying in the bounds of enforcing negative rights, including the freedom to fail.
How much and what kind of immigration would there be if immigrants and their patrons had to pay all the easements without public roads and free schooling and clinics for their kids? What would wages be if McDonald's cashiers didn't get Section 8 and EBT? How much would oil cost without Central Command in Qatar? Would the stock market seem like that great an investment if the government weren't sluicing money toward it with all the tax sheltered accounts?
Government and central banks have such a huge footprint in everything now that nobody really knows what "market value" is or how things would be, across a variety of sectors.