Free Trade, Fair Trade and Other Economical Comicals

Updated on September 20, 2018
Garry Reed profile image

Garry Reed combined a professional technical writing career and a passion for all things libertarian to become The Libertarian Opinionizer.

Commentary From Your Libertarian Opinionizer

Libertarians come into their libertarianism from numerous different directions; many from the political Right, some from the Left, others from None OF The Above and an unknown number from Rand or Rothbard or other philosophical Isms. But many are carried across the threshold into the movement from exposure to economics.

They’ve read Friedman or Mises or Hayek or Hazlett and actually understand economics and the difference between laissez-faire capitalism and crony corporatism.

For anyone to even begin to make sense of economics the very first step is to perform the economic calculation of whether it’s worthwhile to order or download and read a copy of the absolutely essential and renown classic Economics in One Lesson by Henry Hazlett or not. It is the First Move in your checkers game, the Start Here in beginning a maze, The GO square on your Monopoly game board. (Monopoly. Economics. Get it?)

Book Break: Your Libertarian Opinionizer’s Pick

Economics in One Lesson
Economics in One Lesson

As an introduction to free market economics, this book is quite simply the consensus starting point. Hazlett has performed an enduring service by stripping the dismal from the dismal science and rendering it reachable by every receptive mind.

Acclaimed as a major influence on modern libertarianism, Hazlitt defends capitalism and the free market from economic myths and blatant lies that persist to this day.

In chapters that range from the now-famous “Broken Window fallacy" to “The Lesson Restated” the author succinctly explains the realities of taxation, tariffs, price-fixing, minimum wage laws, inflation and much, much more.

Libertarian thought, free markets and the voluntary society cannot be understood and appreciated without Hazlett’s “One Lesson.”

 

Tradesplaining for Protectionists

The following article is not an attempt to explain economics or markets or trade; this is just an attempt to make sense out of the nonsense of the real world, it also being an economic world.

Take trade for instance.

“Since The Wealth of Nations appeared more than two centuries ago, the case for free trade has been stated thousands of times, but perhaps never with more direct simplicity and force than it was stated in that volume.”—Henry Hazlett, Economics in One Lesson.

Trade is an excruciatingly complicated topic for most people. Governmentcrats continually engage in wringing of teeth and gnashing of hands over America’s “imbalance of trade” with other countries. President Trump has bigly complained, “We lose $800 billion a year on trade, every year” yet nobody ever seems concerned about their own trade imbalance.

You buy cinnamon mocha raspberry Frappuccinos from Starbucks but Starbucks never buys stuff from you. That’s a 100% trade imbalance.

But wait. Didn’t you just engage in a one-for-one exchange of stuff you didn’t want for stuff you did want? Even trade. No deficit. Right?

If you buy a can of beans at Walmart for $1.50 all you have done is to trade a buck fifty worth of Federal Reserve notes for a buck fifty worth of beans. Even trade. No deficit. Right?

So, logically, if the people of America use their dollars to buy $800 billion worth of stuff from China and Paraguay and Lower Slobovia (its primary trade good being yak butter) then Americans now have $800 billion worth of stuff. Even trade, right? No deficit?

This whole business seems to be a “problem” when trade crosses international borders but not when it goes across state borders. We never hear of trade imbalances when, say, someone in Zap, North Dakota (a real place) buys a tote bag that was originally designed and manufactured by eqpt in Twisp, Washington (a real business in a real place).

But we need tariffs to protect American consumers from that horrible $800 billion international trade deficit! Right? Even if it means that every American consumer must pay the increased costs for those trade goods that the tariffs add. Right?

“It is true that the tariff hurts all consumers as such. It is not true that it benefits all producers as such. On the contrary… it helps the protected producers at the expense of all other American producers.”—Henry Hazlett, Economics in One Lesson.

But let’s leave all of that up to the economics intellectuals and instead take a brief look at the different concepts of “trade.”

Trade

The first recorded instance of a "trade" in the newly formed country called These United States occurred three seconds after final ratification of its Constitution. Twelve-year-old Jonathan Hancock III of Beacon Hill, Boston, Mass, suckered his cousin, Benjamin Lake Champlain, by swapping three Delaware Blue Hen Regimental Regulars, a Roger's Rangers French & Indian War veteran, and a Connecticut Provincial second-string Militiaman for Marquis de Lafayette's rookie card. Since this trade was consensual, voluntary, and completely unsupervised, it is an excellent textbook example of a "trade."

Free Trade

A free trade is really the same as a trade, except that the adjective "free" is required in today's world to distinguish it from other, politicized, subsidized and regulated forms of trade. Free trade, as we shall see, is no longer legal anywhere in the so-called free world beyond such small person-to-person exchanges of things like my windowsill tomatoes for your backyard garden carrots.

“Practically all government attempts to redistribute wealth and income tend to smother productive incentives and lead toward general impoverishment.”—Henry Hazlett, Economics in One Lesson.

Fair Trade

From a book review of "The Fair Trade Scandal: Marketing Poverty to Benefit the Rich" by Ndongo Samba Sylla.
From a book review of "The Fair Trade Scandal: Marketing Poverty to Benefit the Rich" by Ndongo Samba Sylla. | Source

Fair trade is a difficult concept because it involves something called "Social Justice." Since "social," which refers to "society," and "justice," which refers to "fairness" are both ideologically subjective and amorphous concepts, "Social Justice" is a concept of a concept. "Fair Trade" is better understood as "Politically Correct Trade," and works as follows:

A cup of coffee with sugar and cream is a "fair trade" commodity only if:

a. The coffee beans are shade-grown, organically fertilized, and handpicked by cheerful unionized peasants while liberal guilt-addled American Peace Corps rich kids lecture them about sustainable development, social responsibility, and the proper way to use a condom.

b. Sugar, beets or cane, must be grown without pesticides or chemical fertilizers, be frankenfood-free, co-op grown and hand-harvested by unionized "associates" during a thirty-two hour workweek who meet minority, gender, sexual and all other diversity requirements.

c. Cream must be unprocessed, non-pasteurized, non-homogenized, and produced only on people's cooperative dairy communes. All bovines must be free-range grazers properly diapered against gaseous methane environment-endangering discharges and may be milked only by virgins (female, male and others) with soft, tender fingers while crooning soothing lullabies into the ears of the noble beasts.

Interstate Commerce

Cows produce milk. Sheep produce wool. These creature-goods may become ingredients used in products that might conceivably be shipped across state lines, meaning that they are subject to the regulations of the Constitution's Commerce Clause. Don't bother to read it. What counts is today's warped, politically self-serving interpretation of the Commerce Clause.

Additionally, all livestock must be branded, ear-clipped, RFID-embedded and AKC registered so they can be tracked for mad cow, mad pig, mad sheep, or bonkers goat diseases, and tested for bird flu, chicken flu, duck flu, goose flu, the “one flew” over the cuckoo’s nest and the chimney flue.

Trade under contemporary Interstate Commerce Clause laws is designed to keep lawyers' cowhide billfolds filled with moo-la.

International Trade Disagreements

“Now the same people who can be clearheaded and sensible when the subject is one of domestic trade can be incredibly emotional and muddleheaded when it becomes one of foreign trade.”—Henry Hazlett, Economics in One Lesson.

International trade is an oxymoron—nations don't trade, people trade. But don't tell politicians that. All trade in today's world must be managed trade to guarantee that the thousands of worldcrats get their cut of the skimmed cream (tax) from other people’s trade activities. Otherwise, they might be forced to get actual productive jobs.

Trade Deficit

And here we are again. Remember, we are told by economic theorists that this is an imbalance in international trade that occurs when a nation imports more than it exports.

But as noted above the Cato Institute pointed out in an article years ago the really real reality of international trade:

“Nations do not trade with each other; people do. America’s trade deficit with the rest of the world is only the sum of the individual choices made by American citizens. Those choices, to buy an import or to sell an export, only take place if both parties to the transaction believe it will make them better off. In this way, the “balance of trade” is always positive.”

But wait. Cato Institute is a front for those hateful evil lying manipulating multibillionaire Republican-Libertarian Koch Brothers. No righteous “mainstream” liberal is going to believe anything they say.

So let’s turn to that bastion of phony hypocritical deceitful yellow journalist purveyor of lefty-liberal Fake News, the multimillionaire Ochs-Sulzberger family-owned New York Times:

“Most economists do not see the trade gap as money “lost” to other countries, nor do they worry about trade deficits to a large degree. That’s because trade imbalances are affected by a host of macroeconomic factors, including the relative growth rates of countries, the value of their currencies, and their saving and investment rates. For instance, America’s trade deficit narrowed dramatically during the Great Recession, when national consumption faltered.”

So why is President Trump so worked up over trade gaps? Is it possible that the millions of people who are most likely to vote for him are the very same people who are currently working in industries that produce stuff that people in other countries aren’t buying?

And if so is Trump really worried about a “trade deficit” or is he worried about a “vote deficit?”

Read More

Now that you've learned about the basics of trade in the modern world you might wish to investigate something called "the illegal black market," which libertarians refer to as "the free market." For reference, see "Trade" above.

People who would at least like to understand the different varieties of libertarian economics can watch an 18-minute black & white video narrated in English English called “Chicago School vs. Austrian School: Four Types of Libertarianism” which, despite its title, actually lists out seven different libertarian or “libertarianish” schools of economics:

  • Classical School—Adam Smith, David Ricardo, John Stuart Mill
  • Neo-Classical—Alfred Marshall, William Stanley Jevons, Léon Walras
  • Austrian School—Carl Menger, Ludwig von Mises, F.A. Hayek
  • Chicago School/Hoover Institute—Milton Friedman, Gary Becker, Thomas Sowell
  • Cato Institute/Public Choice—James M. Buchanan, Steven Horowiwitz, David Boaz
  • Anarcho-Capitalism/Mises Institute—Murray Rothbard, Walter Block, Thomas DiLorenzo
  • Rand/Objectivism—Leonard Peikoff, Alan Greenspan, George Reisman

Have fun economicaling.

References and Links

Fair Trade or Fairy Tale? Article argues that Fair Trade has become just another commercial brand marketed in neoliberal crony corporatist packaging, more about feel-good politics for the rich than poverty relief for the poor.

Neoliberalism vs. Libertarianism While similar, a very long article by Jeffrey Tucker warns that a neoliberal state with a social mandate can quickly become a roaming beast: you “wouldn’t want to be alone with it in a dark alley.”

Free Trade or Protectionism? Trade has always been regulated for political reasons, and like everything else that is politicized trade isn’t really about trade but is all about benefiting the people who have the most political power.

New to libertarianism and the Zero-Aggression Principle? From “The Basics” to “Morality and Law” to many ideas in between you can jump in and learn about the voluntary post-statist concept of “governance” as opposed to coercive “governments.”

Video View: Your Libertarian Opinionizer’s Pick:

Questions & Answers

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      • Garry Reed profile imageAUTHOR

        Garry Reed 

        3 weeks ago from Dallas/Fort Worth, Texas

        Hi Rocky. Like it or not, agree or not, Fair Trade is just another form of government-coerced trade. All tariffs are paid by you and me whenever we buy anything that has had a tariff imposed on it. Tariff is just a specific kind of tax, nothing more, nothing less. Like all taxes it benefits people with political connections to the detriment of people who have no political connections. When you insist on any kind of tax you are actually saying "I insist on paying more for that thing!"

        Remember, countries don't trade, people trade and governments tax and live off of those trades.

      • profile image

        Rocky 

        3 weeks ago

        Your thinking doesn’t seem to factor in the use of US Tariffs being placed on foreign nation’s exports to the US solely as a means of pressuring said foreign nations into dropping Their Tariffs already in place upon US exports.

        It’s horse trading. The only ‘free trade’, is ‘fair trade’. ie; no Tariffs from either side.

      • Garry Reed profile imageAUTHOR

        Garry Reed 

        3 weeks ago from Dallas/Fort Worth, Texas

        Thanks for your comments Doris. I always use lots of humor whenever I attempt to talk about economics because I'm mostly ignorant on the subject and try to cover it up with humor, nibble around the far outer edges of it and just quote people I know are a whole lot smarter than me. Sometimes I get away with it.

      • MizBejabbers profile image

        Doris James-MizBejabbers 

        3 weeks ago from Beautiful South

        "Free trade, as we shall see, is no longer legal anywhere in the so-called free world beyond such small person-to-person exchanges of things like my windowsill tomatoes for your backyard garden carrots."

        Ha, only if you pay income taxes on the fair market value of the barter between the carrots and the tomatoes, which of course, nobody does. I had to laugh because the explanations of free trade make about as much sense to me as I sit here addled on my allergy meds (benedryl) as they do when I'm completely sober witted. Yes, I do my own taxes and I have read the IRS publications.

        Thanks for at least trying to get an understanding across to us in an entertaining manner. I avoided economics in college because I knew I would not make a good grade in it.

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