Friday, April 15, 2016

Notes on the free trade debate by Vox Day

First, Dr. Miller has graciously provided the audio of our debate at Future Strategist, which, among other things, once more demonstrates the astuteness of my decision to avoid pursuing a career in radio or anything that involves speaking in public. It's as if the more clearly I am able to think through these complicated issues, the harder I find verbally articulating the path through them. At this point, I have to expect that if I ever come to correctly grok the fullness of all the myriad pros and cons of free trade, my verbal explanations will be reduced to seemingly nonsensical word bursts.

move... you know... war... people... um, mask of credit!

Second, since I didn't have any reason to fully cite a few of the more interesting quotes I'd found, (for, as Spacebunny observes, a very particular definition of interesting) I thought some of you might find reading them to be illuminating. Since Dr. Miller didn't put much effort into distinguishing between free trade in goods and free trade in labor, there wasn't any point in doing more than mentioning these statements in passing. But many free traders do attempt to make the distinction, which is why I believe they are worth noting.

Milton Friedman, "What is America" lecture at Stanford:

There is no doubt that free and open immigration is the right policy in a libertarian state, but in a welfare state it is a different story: the supply of immigrants will become infinite. Your proposal that someone only be able to come for employment is a good one but it would not solve the problem completely. The real hitch is in denying social benefits to the immigrants who are here. Look, for example, at the obvious, immediate, practical example of illegal Mexican immigration. Now, that Mexican immigration, over the border, is a good thing. It’s a good thing for the illegal immigrants. It’s a good thing for the United States. It’s a good thing for the citizens of the country. But, it’s only good so long as it’s illegal.

Ludwig von Mises, Liberalism, Chapter 8. Freedom of Movement 

The natural conditions of production and, concomitantly, the productivity of labor are more favorable, and, as a consequence, wage rates are higher, in the United States than in vast areas of Europe. In the absence of immigration barriers, European workers would emigrate to the United States in great numbers to look for jobs. The American immigration laws make this exceptionally difficult. Thus, the wages of labor in the United States are kept above the height that they would reach if there were full freedom of migration, whereas in Europe they are depressed below this height. On the one hand, the American worker gains; on the other hand, the European worker loses.

However, it would be a mistake to consider the consequences of immigration barriers exclusively from the point of view of their immediate effect on wages. They go further. As a result of the relative oversupply of labor in areas with comparatively unfavorable conditions of production, and the relative shortage of labor in areas in which the conditions of production are comparatively favorable, production is further expanded in the former and more restricted in the latter than would be the case if there were full freedom of migration. Thus, the effects of restricting this freedom are just the same as those of a protective tariff. In one part of the world comparatively favorable opportunities for production are not utilized, while in another part of the world less favorable opportunities for production are being exploited. Looked at from the standpoint of humanity, the result is a lowering of the productivity of human labor, a reduction in the supply of goods at the disposal of mankind. Attempts to justify on economic grounds the policy of restricting immigration are therefore doomed from the outset. There cannot be the slightest doubt that migration barriers diminish the productivity of human labor.  

Gary North, "Tariffs as Welfare-State Economics", Mises Institute

The ethics and economics of restricted trade surely apply to the person who wants to trade on the other side of the invisible line known as a national border. If the arguments for restricted trade apply to the American economy, then surely they apply to the other nation's economy. Logic and ethics do not change just because we cross an invisible judicial line.... Any time a government sends out a man with a badge and a gun to restrict trade, this is an act of war. Nobody should favor a restriction on other people's trade unless the results of that trade are comparable to the results of trade during wartime.

What I find interesting about these defenders of the free movement of people, or if you prefer, free trade in labor and services, is that although the greatest among them, Ludwig von Mises, clearly recognized the potential flaw in his pro-free trade position, he not only uncharacteristically chose to wave it away, but to the extent he considered it at all, he reached what is now obviously a completely wrong conclusion.

This issue is of the most momentous significance for the future of the world. Indeed, the fate of civilization depends on its satisfactory resolution. It is clear that no solution of the problem of immigration is possible if one adheres to the ideal of the interventionist state, which meddles in every field of human activity, or to that of the socialist state. Only the adoption of the liberal program could make the problem of immigration, which today seems insoluble, completely disappear. In an Australia governed according to liberal principles, what difficulties could arise from the fact that in some parts of the continent Japanese and in other parts Englishmen were in the majority?

To continue from my observation in last night's debate, this is a 20th century defense of an 18th century argument that sounds utterly insane in the face of 21st century realities. Consider the application of this argument to current events:

In a Sweden governed according to liberal principles, what difficulties could arise from the fact that in some parts of the country Syrians and in other parts Swedes were in the majority?

What difficulties indeed?  Anyhow, it has become increasingly apparent to me that the lack of concern about national sovereignty shown by free traders is akin to that demonstrated by libertarians, and reflects a fundamental conflation of the concept of "the nation" with the concept of "the state". They simply don't understand that their positions are logically self-refuting in addition to being empirically false.

UPDATE: The paper I mentioned, Trade Wars, Trade Negotiations and Applied Game Theory, by Glenn W. Harrison and E. E. Rutström, 
can be found here.  

MC rather enjoyed the free trade debate:
This was fantastic.  Clearly one of the most substantive debates I've heard.  Both of you made your points well and it really gave the audience the ability to truly focus on the subject matter and the pertinent points of each argument.  I was impressed with Dr. Miller as he did not seem like your typical Academic, but really a guy that is interested in honest discussion (although naive).  Would love to hear more of these.

I am of the opinion that Free trade works well in theory, in a perfect world with honest players, but such a world does not exist this side of heaven.  I believe due to the fallen nature of man, protecting the nation-state is much more important than the benefits of open free trade, because of the eventual destruction of the culture and national identity.  I think the founders understood this much better than us, which is why they advocated tariffs and an American First mindset.

Great debate, I was very impressed, this is really good stuff.  More Please!
I'm glad everyone enjoyed it so much. I intend to keep doing this sort of thing and more at Brainstorm, and the more people that support Brainstorm by joining or simply showing up for the free events, the more high-quality guests like Dr. Miller and Dr. Hallpike will be interested in participating.

Speaking of the debate, some of you will recall that I felt the purely logical aspect of my critique of free trade could be improved and further refined. In that regard, a syllogism occurred to me that I believe  succeeds in succinctly and conclusively refuting Dr. Miller's corruption argument for free trade.
1.    Dr. Mill argues that free trade is beneficial because it reduces corruption by removing power from the hands of elected politicians and transferring it to the board members and executives of multinational corporations, who are presumed to be less corruptible than politicians by virtue of being answerable to the Invisible Hand of the free market.
2.    But it is the board members and executives of multinational corporations who are the primary actors responsible for corrupting the politicians.
3.    And the causal factor of the process of corruption is, obviously, more intrinsically corrupt than the various parties being corrupted by it.
4.    Therefore, Dr. Miller is incorrect, the hypothetical ability of the Invisible Hand to rein in the corruption of the corporate interests is insufficient, and free trade will tend to increase corruption by transferring power from state politicians to multinational corporate interests.
5.    Therefore, free trade is not beneficial.