By Michael Beitler View all 5 articles by Michael Beitler Published 06/27/09  
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This article is to a large extent written as a reaction and response to my friend Joe Bechtold's article entitled "Why Unfettered Free Trade is Bad for the U.S." (published at ReformAmerica.net). While I appreciate Joe's sincere desire to improve economic conditions, I disagree with him on several points. Joe begins the article by saying, "I am of the belief that trading with nations that do not have similar wage, labor, and environmental standards as the United States will rob the wealth of many Americans." In fact, everybody would be wealthier if we traded with every country. Protectionism and tariffs harm everyone; it's a lose/lose. By definition, we only trade with somebody when we both profit. If I don't profit from the proposed trade, I walk away. If my potential trading partner doesn't profit, he or she walks away. If we both profit, we are delighted with each other and hope to trade with each other again soon. Free trade promotes positive relationships between individuals and nations. And as Adam Smith pointed out, if we all specialize in what we do best, everybody benefits. Joe goes on to say, "wealth. . . cannot be created but only transferred." He gives the example of you selling me a tree for $5. I now have a tree but not the $5; you have the $5 but not the tree. Apparently neither one of us has profited. Not true. I would not give Joe $5 for the tree unless the tree was worth more than the $5 to me; Joe would not give up the tree unless the $5 was worth more to him than the tree. (Call me Joe. I'll give you $5 for the tree, if you're willing to pay for the shipping from Chicago. I have a place for it here in North Carolina.) Joe expresses his concern about trading with countries like China and third-world countries with different (lower) wage rates and environmental standards than ours. But if we want to help the poor in other countries we should buy their products. Slapping a tariff on these products reduces sales for the foreign countries. The tariff itself is nothing more than another tax. Of course the protected industries (and their lobbyists) benefit from protectionism and tariffs, but the buyers in the U.S. and the sellers in other countries suffer. Joe's article says unfettered free trade is the problem. In fact, the world has never seen unfettered free trade. Government always steps between willing buyers and willing sellers to pay back its political supporters (protected inefficient domestic producers). Cronyism in the form of protectionism and tariffs is a big threat to the world economy and world peace. Fettered free trade is the problem. Let's help poor people around the world by allowing them to trade with us. Copyright © 2009 Campaign for Liberty |
Also by Michael Beitler:
Thanks for Producers 12/30/09
Don't Merge Big Auto 03/31/09
Fannie & Freddie: Why Should You Care? 03/09/09
Roots of the Banking Crisis 02/13/09
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