In a truly free world, trade is uninhibited and at the discretion of both parties involved.Â The arbitrary boundaries imposed by various states are irrelevant.Â Whether it be with the local grocer or a clothing merchant on the other side of the world, market transactions are always mutually beneficial for those in engagement.Â More importantly, trade is conducted on an individual basis only.Â No amount of awe-inspiring (vomit inducing is a better description from this writer’s perspective) nationalistic rhetoric ever nullifies such an economic truth.
Individuals trade; even in the most complex transactions.
It’s always a joy to hear politicians attempting to disprove this fact by passing “free trade” deals with other countries in an attempt to abolish (some, never all) restrictions on trade and liberalize markets.Â Their allegiance lies not with the people they claim to represent but to the mother state.Â The only reason limits on free trade were established was at the behest of politically favored industries and as a violent means to keep taxable wealth within national borders.Â Trade restrictions are extensions of the antisocial mentality that finds itself gathered en masse in the parliaments and Congresses around the world.Â They are about control and control only.
With that in mind, consider Canadian Prime Minister Stephen Harper recently announcing his desire to pursue a free trade agreement with Japan.Â From The Globe and Mail:
During a weekend meeting in Tokyo, Mr. Harper and Japanese Prime Minister Yoshihiko Noda announced the formal launch of talks aimed at reaching a treaty to spur trade and investment between the nations.
Only in government would someone be paid to announce “the formal launch of talks”Â “Time is money” may be the axiom of entrepreneurs battling it out for market share but the political class makes the utterly wasteful use of resources look like a professional sport.Â Here is a question to Canadians, how much did you pay for PM Harper to fly to Japan to chit chat over possibly getting a better price on the big screen TV you were eying up at the local Walmart?Â My guess is that the way any self-important narcissist, which is typically the personality one needs to run for public office, likes to or is accustomed to traveling, you probably got a raw deal just accounting for the security costs alone.
Free trade is such an enriching state of affairs that hardly any economist with an ounce of credibility questions it.Â Even the love child of Keynesianism himself, Paul Krugman, has written a wonderful book on the topic.
That says a lot for a man who never found an excuse for central banks not to print money.
Those who deride free trade are often the tool of some special interest group who would rather use the guns of government to stop consumers from being just that; bargain seeking consumers.Â Unions hate free trade because it creates too much flexibility in the worldwide division of labor and undermines the state’s ability to practice mercantilism.Â Populists hate free trade because their short-sightedness sees immediate job loss without the subsequent prosperity brought by labor specialization and capital investment.Â And of course politicians lose the authority to dictate whom private individuals can transact with if free trade flourishes.Â Each of these groups sees wealth as a fixed pie to extract from by any means possible; most times involving state sanctioned coercion.Â Their ignorance of the market process prevents them from seeing peace and transactional harmony as the best conditions for the improvement of the human condition.
But defenders of the market must be wary when political leaders get together to discuss free trade deals.Â Just because the word “free” is tossed around doesn’t mean liberty in all commercial transactions will be restored after being violently prohibited.Â As Murray Rothbard wrote at the time of the U.S. Congress considering the “North America Free Trade Agreement”
Bush’s major trade legacy, now coming to a head, is of course the much heralded Nafta. Well, it says “free trade” right there in the title, so it must be good, right? Wrong. But unfortunately, the push is on, and free-market economists are leading the hysterical propaganda parade for Nafta.
The point is this: while leftist critics of Nafta are wailing about evil Mexico avoiding those wonderful statist and welfarist U.S. “labor” and “environmental” regulations, the real problem is precisely the opposite. The real problem is that these rotten statist measures will be enforced by supra-government commissions, commissions which have acquired super-sovereignty, over Americans, Canadians, and Mexicans, thereby injuring the consumers and the economies of all three nations.
Government imposed free trade is an oxymoron.Â Restrictions on trade are only the outcome of government intervention.Â Â The need for a “free trade agreement” wouldn’t exist if not for previous barriers on the free flow of goods and services.Â They are the product of force and deliberate pandering to vote suppliers.Â To believe that the political class would voluntarily give up the authority they have spent decades, even centuries, confiscating is to misunderstand the whole nature of the state.
Much like macroeconomics which treats the science as completely alien to micro principles, the same fallacy is often applied to trade.Â If my transacting with local retailers is mutually beneficial, the same must then apply to any seller around the globe.Â Invocations of patriotism and “what’s good for the country” are often guises for those who profit off the state apparatus to convince the gullible of the merit of their argument.Â Economic logic unfortunately takes a back seat to the blind allegiance some have to a flag.
Though free trade with Japan, or any country for that matter, would undeniably be beneficial for Canadians, it doesn’t take PM Harper schmoozing over a taxpayer-funded,catered lunch with Japan’s Prime Minister to make it so.Â As Rothbard writes:
Real free trade doesn’t require codicils and compromises and agreements. If the Bush administration had wanted real free trade, all they’d have had to do is to cut tariffs and quotas, abolish the International Trade Commission, the “anti-dumping” laws, and the rest of the panoply of monopolistic trade restrictions that injure American consumers and coddle inefficient producers.
Any “free trade agreement” that is reached will hardly be “free.”Â Government itself is an impediment to freedom; it can’t, by definition, grant liberty without at first abrogating it.Â According to Manuel Ayau, NAFTA had “two thousand pages, nine hundred of which are tariff rates.”Â In today’s modern governments where the length of laws is so deliberately enlarged with erroneous citations and references to obfuscate their true effects, cost, and hidden pork barrel spending, all free trade agreements should be fully scrutinized and not favored simply by the virtue of their name.
Mises said it best,
It is hopeless to expect a change by an international agreement. If a country thinks that more free trade is to its own advantage, then it may always open its frontiers.