Saturday , September 26 2020

Kinsley: Free Trade Means Free Trade

Back when I was more liberal and more inclined to be influenced by a dwid in bad glasses, I was a Michael Kinsley fan. But he has been way on the wrong side of the War on Terror, too rabidly anti-Bush without giving him any credit for his successes, and has had little or nothing to say to me for some time.

But, just to show you can never entirely write someone off, all of a sudden he has summarized and clarified my own free trade position better than I ever have, and I now stand in admiration of the pencil-neck wonk once again:

    Schumer and Roberts are alarmed by some of the effects of the high-tech revolution. And the alarm is understandable, if misguided. When David Ricardo first articulated the theory of free trade a couple of centuries ago, he was thinking bushels of wheat. In the 20th century, it was cheap clothes and heavy metal cars. But now we’re talking electronic blips of information. So, you’ve got $20,000-a-year software engineers in India replacing $150,000 software engineers here. The consolation for losing, say, the shoe market to some dirt-poor Third World country was that we still had the market for computers. When foreigners started churning out computers, we still had the software. But when you’ve got doctors in Asia reading the brain scans of patients here in the United States, what is left? How can America possibly compete?

    The core of free-trade theory is the concept of “comparative advantage.” Schumer and Roberts make the classic college-student mistake of confusing comparative advantage with absolute advantage. Nations trade because for each one there are goods or services it is more efficient to buy from abroad than to produce at home. If there is nothing America can offer the world that is either uniquely desirable or cheaper than elsewhere, the world will not buy anything from America. And after a while the world won’t sell anything to America either, because we won’t have the foreign currency to pay for it. So, even in this extreme case there is no need to restrict trade because trade will restrict itself. But in fact, as Ricardo demonstrated, there will always be something worth trading. Even if Nation A can produce both apples and oranges more efficiently than Nation B, it will still make sense to concentrate on producing one fruit and import the other. And Nation B will make itself poorer, not richer, by keeping out fruit from Nation A. If Nation A retaliates by keeping out fruit from Nation B – and why shouldn’t it? – Nation B will be doubly punished.

    ….Traditionally, the most troublesome thing about free trade – apart from the difficulty of persuading people that it works – is the unequal distribution of its benefits. The whole country is better off, but there are winners and losers. Generally, the losers are lower-income workers, whose jobs are the easiest to duplicate in less-developed countries. It seems misguided to me to avoid a policy that makes the whole nation richer because it makes some individuals poorer. With more to play with, it ought to be easy to ease the burden on free trade’s losers.

    ….the real difference between traditional trade in heavy earth-bound objects and 21st-century trade in weightless electronic blips, or in sheer brainpower, is that the losers in new-style trade are more likely to be people that U.S. senators and fancy economic consultants actually know. These are people with advanced degrees and high incomes. Their incomes will likely be above average for our economy even if they are driven down by competition from poorer economies. Under these circumstances, denying the benefits of free trade to the whole nation – and denying opportunity to the rising middle class in developing countries – in order to protect the incomes of a relative few seems harder to justify, not easier, than it was back in the days when our biggest fear was Japanese cars.

    ….The reasonable free-trade position (i.e., mine) is that buying a product does implicate you to some extent in the process by which it was made. And there are working conditions so wretched and wages so low and practices, like child labor, so heartless that you do want your own government to ban imports of the product at issue, to avoid the taint of association and, with luck, to pressure the exporting nation to change.

    But this is very different from demanding a “level playing field” on environmental regulations, worker health and safety, and so on. American standards on these things are a luxury of affluence. If we had insisted on these standards for our own economy while we were becoming affluent, we never would have gotten there. And indeed, the effect of a “level playing field” rule – blocking imports that weren’t produced in accord with American-level regulatory standards – will not be to make jobs in poor countries as well-paying, safe, and good for the environment as jobs in America. The effect will be to wipe out those jobs.

So there you have it: with a few caveats for the most egregious labor offenses against common decency, free trade means free trade. I give Democrat Kinsley high marks for intellectual honesty and for coming down on his fellow Democratic presidentail candidates for their politically expedient “free trade but” positions that are really mean “free trade not.” President Bush, you’d better take note as well – that steel tariff thing was absolutely your worst move so far. Thank goodness you saw the light – let’s not pull that kind of crap again.

About Eric Olsen

Career media professional and serial entrepreneur Eric Olsen flung himself into the paranormal world in 2012, creating the America's Most Haunted brand and co-authoring the award-winning America's Most Haunted book, published by Berkley/Penguin in Sept, 2014. Olsen is co-host of the nationally syndicated broadcast and Internet radio talk show After Hours AM; his entertaining and informative America's Most Haunted website and social media outlets are must-reads: [email protected], Facebook.com/amhaunted, Pinterest America's Most Haunted. Olsen is also guitarist/singer for popular and wildly eclectic Cleveland cover band The Props.

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