Cold Fury

Harshing your mellow since 9/01

Free trade

Isn’t.

What was the bait and switch? This. Lure intellectuals and then politicians into a lobster trap of one-world government by means of the promise of greater wealth through free trade. Create free trade alliances that are in fact not free trade but rather trade managed by international bureaucrats. This is a combination of low tariffs and detailed regulations of production and distribution. Economic regulation favors large multinational firms that can afford lots of expensive lawyers. This regulatory system creates economic barriers against newer, more innovative, but under-capitalized competitors. In short, use the bait of greater national wealth to persuade national leaders into agreeing to a treaty-based international government that requires member nations to surrender much of national sovereignty. The final stage is the creation on centralized regional governments that absorb national governments into an immense international bureaucratic system that regulates most areas of life.

The arguments favoring free trade go back to David Hume in 1752, and later to his friend Adam Smith, whose Wealth of Nations (1776) presented a comprehensive case. Liberty is more productive than statist bureaucracy.

Free trade simply means that two people can legally agree to an exchange if they choose to. Simple. The idea of voluntary exchange is hated by those producers who cannot compete effectively, but the case is both logical and moral.

The reason why the Rockefeller Foundation paid F. A. Hayek, Wilhelm Röpke, and Ludwig von Mises to write books on international trade was to provide the economic bait.

Raymond Fosdick went on John D. Rockefeller, Sr.’s payroll no later than 1913. He went on Junior’s payroll no later than 1916. He had met Fosdick in 1910. Fosdick was one of Woodrow Wilson’s protégés at Princeton. A brief summary of his career is here. It does not cover his time at the Versailles Peace Conference, where he and Jean Monnet worked together in 1919 to create the League of Nations. It does not mention Monnet. It also does not cover his time as Junior’s personal lawyer and advisor, 1920-1936. His brother Harry was on the board of the Foundation from 1917 on.

Another Wilson protégé was John Foster Dulles. He was the grandson of John Foster, Secretary of State under Harrison, known as “the fixer.” He was also the nephew of Robert Lansing, Wilson’s Secretary of State, who helped take the government into World War I. He was Secretary of State under Eisenhower. He was the defense attorney for Harry Emerson Fosdick in Fosdick’s 1924 trial for heresy in the northern Presbyterian Church. He had been one of America’s richest lawyers in the 1930’s. He was a committed globalist. He was a deal-maker between American firms and the Hitler government until a revolt in his own firm got him to stop. He was an early promoter of the World Council of Churches, founded in 1948. He also presented a program in the 1930’s for creating an international government funded by a low tax on international trade that would be created for the sake of huge firms — his clients. They would be exempted from national tariffs.

These men were globalists. They proclaimed the doctrine of free trade, but always with this proviso: free trade was the bait for creating an international government with managed trade.

Worth pondering the next time you hear Krauthammer or George Will or some other de facto Hillary supporter pounding on Trump over his lack of commitment to a “free trade” ideal which has never been even close to existing in the first place.

Via Vox, who adds:

My belief is Gary North is gradually stumbling his way towards the truth, which is that there is no bait-and-switch, the globalists genuinely believe in free trade because free trade destroys nations and national sovereignty. After all, no less a personage than Karl Marx supported it for precisely that reason; he considered it a weapon in the arsenal of international socialism.

Free trade has been a bedrock Republican shibboleth for about as long as I can remember. Might be about time we reconsidered that one, too.

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5 thoughts on “Free trade

  1. As is so very often the case he who controls the meaning or perception of language controls the people who use that language. The term ‘free trade’
    is another in a long line of meaningless phrases conjured up to fool people
    into buying into some BS being pitched by someone who stands to gain money,
    power or both. It’s like the euphemism ‘affordable’ care act……the rules
    imposed by that act are many things but affordable is NOT one of them.

  2. “use the bait of greater national wealth to persuade national leaders into agreeing to a treaty-based international government that requires member nations to surrender much of national sovereignty. The final stage is the creation on centralized regional governments that absorb national governments into an immense international bureaucratic system that regulates most areas of life.”

    Sounds familiar. Except that Hamilton and Madison had the additional bait of paying off war-debt and the fear of England or other established powers.

  3. Trade negotiations and Trade Blocks are presented as the “good fight” by governments to improve the well-being of the people. It reduces to “We won’t let our people buy from your people (by restriction or tariff) unless you allow our people to sell to your people.”

    This rests on the fallacy that exporting goods is more valuable than importing goods. In fact, imports provide greater choice to consumers and the competition lowers the market price. The purpose of production is to consume, and the consumer is king in a free society. Consumers should not begrudge a profit to companies, but it is not the consumer’s responsibility to guarantee that profit or go along with protectionist schemes which limit consumer choice. Schemes like trade restrictions, taxes, and tariffs.

    The purpose of a government is to secure the greatest freedom and wealth for the people and to give the widest range of choice to deal with anyone in the world. The purpose is not to arrange a captive public to purchase only from politically connected businesses or only from businesses located in the US or its territories.

    Governments start by restricting imports as a favor to businesses, unions, or their associations in exchange for political contributions (bribes). Then, some groups which want to export will apply additional pressure and bribes to obtain trade agreements which will allow them to sell into another country.

    Being able to export is indeed good, but not at the expense of first restricting the population from buying imports. Trade negotiations are complicated political fights where the highest bribes win.

    Tariffs and trade restrictions are corporatist and crony-socialist.

    Free Trade as a policy of individual freedom is very good overall. It has the same good and bad effects as competition. Massachusetts can’t restrict imports from California by placing a tariff on those goods. But, the US does restrict imports from Mexico through tariffs, mostly because California businesses object to the competition. A consumer should have the freedom to buy from anyone in any place without paying a tax (tariff) on the disfavored producer.

    Distinguish free trade as an individual right as being entirely different from free trade agreements, which are complicated grants of power to special interests.

    Non-tariff trade is good. Regulated and arranged trade is usually a political monstrosity.

    The Essence of the Case for Free Trade
    http://cafehayek.com/2016/03/40504.html

  4. @Andrew Garland
    Sounds very nice in the textbook. How come, in the real world, nothing is ever getting cheaper? Why are our wages in real terms never growing? How come our ability to consume has not been able to grow in the last 16 years at least?

  5. To kennycan,

    The “wage” received by a worker is not just the cash received, and not just the cash plus taxes withheld. It is all of the money spent by the employer to pay for wages, taxes, benefits, regulatory fees, and the costs of regulation.

    Costs paid by the employer because of employment have the effect of reducing the cash which can be paid to the employee. In that sense, all regulatory burdens are paid by the employee out of his production.

    The biggest benefit is healthcare insurance, rapidly rising in cost. Regulatory fees include charges for unemployment insurance. The cost of employment regulation shows in such things as filing requirements, defending audits of workers not working through lunch, proving that everyone has received the minimum wage, and proving the proper classification of worker, manager, or independent contractor.

    Despite all of this government applied cost, major expenses such as entertainment, phone service, internet service, automobiles, and appliances have decreased, measured by lifetime costs and the quality of service provided.

    Regarless of income, a person might prefer to buy a Korean or Malaysian made shirt and spend the savings on something else. That is a personal benefit from free trade. The savings on cheaper manufactured goods are multiples of the profits made on those cheaper goods. That is, the public gains multiples more from savings than the profits lost to US companies.

    Competition should operate despite losses to the companies that lose, and so despite the unlucky employees of those companies who lose their jobs. Adapting to a changing market is good. Freezing that market at higher consumer costs is bad.

    The worst effect of our increasingly socialist government is to regulate small companies out of business or deter them from starting. People losing their job are finding it hard to find another one. Small companies are the primary source of new jobs without the burden of a “corporate culture” that excludes many people.

    Regulation is the problem, not a solution. Placing rules and tariffs on trade won’t help, just as placing tariffs on goods from California wouldn’t help. Politicins love tariffs because these raise the competitive barrier defending large, politically connected companies, and selling protection from ruinous tarrifs provides graft to politicians.

    This is an observation of real life, not an abstract theory from a textbook.

    http://www.adamsmith.org/blog/economics/compensation-is-compensation-and-wages-are-only-a-part-of-it

    === ===
    [edited extracts]

    One of the oft used statistics these days is that US household incomes have pretty much stood still over recent decades.

    The first problem is that such claims always use household incomes. Households have changed in size, getting smaller, so income per capita has in fact risen. Higher income is spread across more households, lowering the reported amount per houshold, [but increasing per capita].

    The second problem is that wages and salaries are only a part of compensation. Healthcare benefits are now a large part. [Rising non-cash benefits are given in place of increasing salary.]

    In short, even if not quite exactly, if you get $6K worth of health care insurance from your employer then you don’t get $6K worth of wages. [And, your labor share is accounted as lower than your actual, total compensation.]

    Health insurance is usually an employer provided benefit in the US. Health care costs have been rising in recent decades from 9% of GDP to about 17%. Worker wages and salaries may have stayed constant but total worker compensation has risen. The extra that employers are paying is going to rising health care insurance costs.

    The profit share also hasn’t changed much over the last 30 years. It’s the other two components of national income which have risen, mixed income and taxes minus subsidies.
    === ===

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