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Source link: http://archive.mises.org/10440/what-is-free-trade/

What Is Free Trade?

August 11, 2009 by

There never would have been any such thing to fight for as free speech, free press, free worship, or free soil, if nobody had ever put restraints on men in those matters. We never should have heard of free trade, if no restrictions had ever been put on trade. If there had been any restrictions on the intercourse between the states of this Union, we should have heard of ceaseless agitation to get those restrictions removed. Since there are no restrictions allowed under the Constitution, we do not realize the fact that we are enjoying the blessings of complete liberty, where, if wise counsels had not prevailed at a critical moment, we should now have had a great mass of traditional and deep-rooted interferences to encounter. FULL ARTICLE

{ 11 comments }

Ron August 11, 2009 at 5:40 pm

The problem with Free Trade is that we don’t play on an even playing field. All countries want to export to us because of our consumer market, but don’t want us to be able to do the same too there’s. We have massive restrictions on business here, environmental, insurances, tax’s, OSHA, ect, ect. Were playing in a game where other countries help their main companies politically and financially. How can an American company compete with its counterpart in another country when the wage factor is $30/hr vs. $3/hr…. personal insurance for employees vs. no personal insurance for employees …..EPA restrictions vs. no environmental at all……..OSHA vs. zero safety for workers……and the TAX’s. Is America supposed to abolish EPA, OSHA, health care, workman’s comp, ect, ect. in order to compete ?????
It’s easy for the rest of the world to talk about Free Trade, but not so easy for the average American to deal with.

newson August 11, 2009 at 6:27 pm

to ron:
to the extent that the american worker is more productive than his foreign competitor, the extra costs you mentioned are tolerable (if undesirable). driving with your car in first gear still beats walking, though sub-optimal.

the “level playing field” has never, nor will ever exist.

Russ August 11, 2009 at 6:36 pm

Ron wrote:

“How can an American company compete with its counterpart in another country when the wage factor is $30/hr vs. $3/hr”

Quite simply, it can’t. Even in labor costs here in America were at more reasonable levels, without people being paid a union-mandated $28 an hour to bolt tires onto cars, they still can’t compete with $3 an hour.

This does not even begin to take into account non-economic factors. For instance, what if free trade rendered the US a veritable industry-free zone, because other countries can do it cheaper. And imagine that the US somehow survives that by being a more-or-less completely service-oriented economy. What happens if we should have to fight a big war, and our suppliers are on the other side? Are we going to be able to buy our tanks and fighter planes from the other side???

Of course, during a recession might not be the best time to start a tariff war, but at least American companies could get tax incentives to keep their manufacturing here.

newson August 11, 2009 at 9:11 pm

pay peanuts, get monkies. $3/hour workers from third-world nations have low productivity, vis-à-vis american workers.

as for arms, show me one war where there has been any problem securing them, subject to having the money to pay.

mercantilism impoverishes the countries that embrace it.

RWW August 11, 2009 at 9:32 pm

Is America supposed to abolish EPA, OSHA, health care, workman’s comp, ect, ect. in order to compete ?????

In order to compete? Not exactly. Government programs should be abolished because they are destructive.

Nathan August 11, 2009 at 10:39 pm

Someone should construct a solid Robinson Crusoe comparative advantage that includes tariffs.

I think this all really goes back to a fundamental misunderstanding of the basics of trade. Two parties trade when both desire the other good more than the one they posses. If you wish to tax my imports at 500%, ok, I have plenty of others to trade with. There will be less mutually beneficial trade between us and you will ultimitaly impoversih your country.

Briggs August 11, 2009 at 10:45 pm

how about some more Sumner pieces? He was pretty prolific and a true classical liberal, I would like some more of these.

P.M.Lawrence August 12, 2009 at 12:51 am

Newson wrote “mercantilism impoverishes the countries that embrace it”.

Actually, it did wonders for Athens after Solon’s reforms and the tyrants’ later ones, for Holland in developing the East Indies in the 19th century, in special cases like the Erie Canal (by diverting existing Great Lakes trade away from Canada), and in quite a few other instances. The challenge is to identify what made those work out differently from the general rule – and whether that is relevant here and now.

newson August 12, 2009 at 4:16 am

to pm lawrence:
the examples you’ve cited in no way disprove my contention. other, positive factors may act as countervailing effects may be in play. “impoverish” is a relative term.

newson August 12, 2009 at 4:19 am

or, not said in gibberish: “other, positive factors may be in play”.

P.M.Lawrence August 12, 2009 at 6:32 pm

Actually, Newson, the examples show that your first wording was overstating the situation by not acknowledging the possibility of other things, i.e. it was wrong (from being too general). What I wrote brought out that possibility and suggested looking into them. Your more recent remarks show that you do understand this possibility, but that doesn’t make the first formulation right, it just means you were careless in what you wrote rather than actually believing wrong things on the subject. However, writing the wrong answer through carelessness doesn’t make it right just because you really know better.

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