Free Trade Made Simple

free-trade

Free trade is one of the most hotly debated issues in the world today. The majority of economists will tell you that free trade is good because, while it can hurt specific parties, the total benefit to society is better than when you put up all sorts of trade barriers. Put simply, this is because specialization fosters prosperity and interdependence forces peace. However, many people still argue against free trade and insist that we must limit it as much as possible. The interesting thing about opposition to free trade, though, is that people on opposite extremes of the political spectrum tend to agree on it – just for completely different reasons.

 

The Fascist Perspective

“Our country is the greatest in the world, but it is a victim. When we trade freely with other countries, we can never win. Those foreigners rob us of our identity and our sovereignty by buying up our means of production. They subject our low-level workers to unfair competition with cheap foreign labor. They subject our high-level workers to unfair competition with superior foreign products. Whatever they may buy from us, it is never enough. Whatever they may sell to us, its quality is never good enough, though our market does not seem to be able to realize that. We may go to war with them in the future, so we should stop being so reliant on them. Why should all of our hard-earned wealth flow out to everyone else? Our country is the most competitive in the world, and that is why we should never allow anyone to compete with us.”

 

The Socialist Perspective

“Even though our country is so prosperous, it is among the worst in the world. When we trade freely with other countries, it is never ‘free’, because it always means taking advantage of them and stealing their freedoms. Our massive corporations choke out small enterprises in emerging markets. Our massive factories pollute sensitive ecological areas. Whatever we may pay foreign workers, as long as it is less than what they would make here, it is never enough – no matter how happy they may be to get it. We do not want them to hate us or develop misunderstandings about us, so we should stop investing in their countries and stop buying from them. We should stop enslaving them, because that could cause us to go to war with them in the future. No country can compete with us on a level playing field. Why should the economy of a country that values freedom be built on the backs of slaves? We will always have an unfair advantage. So, for the sake of the world, we should not enter into such imbalanced trade agreements, no matter how much poor countries may want us to.”

 

Reality

“Corporations sometimes pollute and take advantage of people!” Regulate. “Cheap foreign labor puts our low-level workers out of jobs!” Retrain. “The market changes!” Adapt. “Our old industries will die!” Build new ones. “Competition raises the bar!” Compete.

If you consider yourself a patriot, you should believe in your country’s ability to compete and contribute in an important way.

If you value international cooperation, you should not constantly try to erect barriers. Nothing fosters communication and cultural interchange like simple commerce.

If you think that everyone has something of value to contribute, let them do it.

If you believe in peace and communication, one of the best ways of making countries maintain peace even when they do not want to is by allowing them to become codependent through free trade.

If foreigners are buying means of production, that means wealth is coming into the country. (Why are both American jingoists and Chinese jingoists against Chinese investors buying real estate in the U.S.?) It probably also means that those means of production are going to be updated and expanded.

If you are against free trade because of the corruption that you see, consider what will happen when that corruption is no longer subject to international scrutiny.

If people rejoice at the opportunity to earn $3 per hour and you deny them that opportunity, how have you helped them?

If you believe in freedom, you should believe in economic freedom.

Some people lose in situations of open international competition. This will happen. A nation cannot try to completely shield all of its citizens from competition and then expect to remain competitive as a whole. The proper role of government in a market is not to stifle competition, but to help citizens adapt to competition by offering unemployment benefits, funds for education and training, etc.

It makes little sense for Republicans to argue against free trade on the grounds that it is unfair to us when Democrats argue against free trade on the grounds that it is unfair to everyone else. The truth is that it both helps and hurts all countries involved. The net effect, however, tends to be very positive, as long as corruption is minimal. Free trade certainly can sometimes enrich specific parties at the expense of the general population – particularly when corruption is rampant – but trade barriers tend to do so even more. Even with all of the problems we have in the world market today, free trade in the modern era has given rise to one of the most remarkable achievements in human history – the lifting of billions of people out of poverty – and we should stop ignoring this fact. The era in which we now live is both an American era and a global era, and neither of these things is bad.

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