Wednesday, October 30, 2019

What if 'Free Trade!' Undermines a Free Market and Liberty itself? - Economic Politics vs Political Economy pt1

Of the hot topics making the rounds at the moment, bringing up the Hong Kong protests, or economic Tariffs, or both, is sure to get you peppered with opinions from all perspectives, each more confidently given than the last (glances at mirror, winks), many of which are sure to be delivered with a rousing round of 'Principles!'. Funny thing though, many of those 'Principles!' folk who are upset about LeBron James and some in the NBA & Hollywood caving in to Communist China to keep the $$$ flowing despite China's lawless abuses of 'human rights', are often the very same Libertarian-ish folks who are advocating for 'free trade!' with Communist China to keep the $$$ flowing despite China's lawless abuses of 'human rights'.... because... uhhh...hmmm.

Why... it's almost as if some people's 'Principles!' are more rooted in ideological positions, than in a principled view of reality.

What do I mean? Well, if you've read any of my posts, I probably don't need to explain why I support of the Hong Kong protesters against the actions of Communist China. But maybe you question how 'Free Trade!'rs opposition to 'Tariffs' against Communist China, somehow conflicts with fundamental principles of Liberty?

I'm so glad you asked!
What if it's thinking that "It's all about the Economy, stupid!",
that's stupid?

We'll eventually need to clarify what is meant by 'Free Trade!' of course, but starting with first things first, let's look closer at those "Principles!" folks, who're so adamantly insisting that their economic "Principles!" should be consulted first in anything and everything that's even remotely related to economic matters. There are several questions which, if they take their 'Principles!' seriously (most do not, hence my annoying italics) they should have carefully considered and worked their way through in the process of arriving at their "Principles!", which if you ask them questions like these the next time they raise their 'Principles!', the blank stares that will follow from most, will help separate the principled from the posers. For instance:
  1. From what basis does the core of those principles of yours come from?
  2. ... and what sort of principles, if any, do those 'Principles!' of yours displace...?
  3. Did you derive and develop your 'Principles!' through those fundamental first principles that are rooted in the beginnings of Western Civilization?
  4. Or... maybe you feel those that (somehow) 'sprang up' from the 18th & 19th century political economists such as Richard Cantillon (if you don't recognize that name,Hayek did), Adam Smith, Jean Baptist Say, Frédéric Bastiat & Richard Cobden are plenty good enough all on their own, so... why ask why?
  5. Or do you trace your "Principles!", as most today do, to those who built the appearances of them into our lives in the late 19th and early 20th Centuries, as Pro-Regressive 'Progressives' actively pursued political power and influence in their take over of America's systems of higher education... and beyond?
Did you realize that there may be some conflicts between what are taken as 'principles', between one or more of those groups? How do you evaluate and decide between them (or do you bother to)? Of those groups, how much do you want to bet, that the latter one's "Principles!", have more to do with exerting political power, than with what is right and true - economically or otherwise?

If you're not sure what I mean by that, I've got an outstanding book that'd be well worth your while to read, from, of all people, a Professor at Princeton, Thomas C. Leonard, "Illiberal Reformers: Race, Eugenics, and American Economics in the Progressive Era ". Each page is an eye-opener, and to this particular point, on page 19. he notes how the original vehicle of the Free Market, under 'Political Economy', began to be progressively transformed into a more statist friendly system of ideological
thinking under the more progressive name of 'Economics', whose rise:
" ...can be measured against the classics, the longstanding foundation of the traditional college curriculum with which the upstart social science disciplines were vying. In 1880, college courses in Latin outnumbered courses in political economy by ten to one. By 1890, however, the ratio had decreased to three to one, and by 1900, it was down to two to one. At leading schools in 1900, there was parity. By 1912, only English had more undergraduate majors than did economics at Yale University.

The course of American political economy's establishment as an academic discipline was tracked by the increasing currency of its new name, "economics." The name was exceedingly rare in university catalogs and other literature in the 1870's. "Political economy" predominates well into the 1890's. But by 1900, "economics" had displaced the older term altogether."
(a good overview of and interview about the book, can be found here)
It's critical to understand that the purpose of the new Economists wasn't simply to graft 'Economics' onto academia, but in keeping with the still popular German model, it was their intention to put their ideas at the very center of education, and of society, and so to operate as the default start of all justifications for the uses of government power.
"...The American university gave the economists more than academic chairs, a decent library, and students. The American university gave the economists scientific authority - a gift not elsewhere obtainable and one that was essential to the progressives' mission..."
The particular policies they advanced, whether as Free Trade, or Socialist, or a Managed or Statist economy, are of less importance, than the ominous proposition which all then, and most now, agreed upon - that 'Economic Thinking' should be at not only the center of modern thought, but that for 'thoughtful' people, it should be the starting point of all such thought. Those who thought differently, were snickered at, or mocked, for their 'unprincipled' thinking.

Even those of you today who see yourselves as being all about 'Liberty!', and opposed to the statist direction of the AEA (American Economic Association), and more inclined to the views of Hayek than Keynes, by buying into the notion of having your economic "Principles!" at the center of all social and political thought and action, you are already buying into a revolutionary way of thinking which overthrows much and that reaches far deeper and wider than you may have considered, and which were central to the Pro-Regressive 'Progressives' ideal: that the world should revolve around their expertise, efficiency and pragmatic utility - with that accomplished, it really didn't matter much whether you identified with Marx, Keynes, Bastiat or von Mises: the critical work having had already been accomplished within you - the rest is but a matter of time & degree.

Are those the principles which you understood your principles to be following from?

Because for me, seeing as a Free Market (yes, we'll need to define that as well) cleansed of morality and ethics, is but utilitarianism in the early stages of fermenting into socialism, which leaves the minor fact that your particular economic ideals oppose the communists in 'practical economic matters', as being about as reassuring as whether or not the poison that you are asking me to drink is organically grown, or synthetically manufactured - Sorry, but no matter how you concocted it, I'll pass.

Another question I'd like to ask of the principled folk's approach, is this: Is it enough that you say you believe in and are committed to liberty, without having to consider or show how these "Principles!" of yours comport with liberty, or with how well (or poorly) your conception's of Liberty integrate into those wider principles which make Liberty possible? Hint: We're talking about more than mere economic prosperity here. To put a finer point on the issue, let me come at that from an entirely different direction: Consider the matter of the professional men of science who were unquestionably dedicated to saving lives in the late 1700's. It was just such men who tried their best to save George Washington's life... by heavily bleeding his ill body, as 'common sense' medical understanding of the day advised, which doubtlessly weakened his ability to survive and perhaps hastened his death - did that matter? You might well protest that that's not fair of me, as they didn't know that the practice would soon be repudiated, which is very true. But those well intentioned doctors had nearly the same medical knowledge as the fellow who soon afterwards began questioning the efficacy of the practice of bleeding patients, the real difference is that another doctor questioned, what they didn't. I'm not blaming them, I'm just asking this: did their ignorance masked as 'common sense', matter? It did to George Washington's life, didn't it?

It's with that image in mind that I ask you, do you know from your own considered judgment, that what you are promoting won't actually hinder or undermine liberty, but will in fact support and strengthen it - both now and in the 'long run'? Do you yourself know what your principles are developed and derived from, and for what purpose? Do you yourself have a clear conception of what Liberty is and what it requires to prosper? I'm not suggesting that you don't, I'm just asking if it's your own understanding that you argue for, or the words of some other well meaning 'doctor' with a reputation for being knowledgeable, which you've accepted and committed to memory as common sense truths to be trotted out as need be in lieu of being able to make an actual argument of your own?

But then I'm also asking... if your answer to those questions was 'no', have you ever dismissed another person's position as if you did understand the concepts behind the arguments you gave? Do you see the problem here?

Current events and commentary on them, bring these questions up often, and as with the protests that are still going on in Hong Kong, rarely are such matters confined to 'economic principles' alone, even though many of the "Principles!" folks try to deal with them as if economics was the first, and last, word in thinking that we need be concerned with.

A case in point: A Libertarian Facebook friend, Duane, posted some memes earlier this year that've been typical of on-going popular responses to Trump's tariff policies, and without taking anything away from the good work that he does in his extensive travels across the nation, the discussion threads sparked by those memes, illustrate my concerns that the reflexive promotion of 'Free Trade!', too often serves to undermine the Free Market, and Liberty itself. You've probably seen the memes:
"Are you tired of #winning yet?"
, as well as, following Trump's threat to apply tariffs on Canada, China, Mexico, etc., as the 'experts' declared that prices would go up because of those tariffs (shortly before Trump announced that a deal had been reached to remove those and other tariffs, which reportedly was his actual goal) they meme'd on:
'...If only someone had warned us...'
While these lines do have a certain "Told-ya-so!" cuteness to them, they hide, even evade, a couple of key issues which seems to blur out the full context involved. The reason why that matters, is that when the full and proper context isn't being considered, then the thinking that you think you're doing with your "Principles!", is probably thinking about the wrong things, in the wrong way, because when principled thinking becomes so narrowly focused upon your own favorite issue, to the point where it seems to be all that matters, then those principles that you are so intent upon the process of principled thinking with, are at great risk of reducing your thinking to something more akin to a mindless compliance with ideological bullet-points. And of course, it doesn't help matters that so many tend to do so while virtually bathing before you in ideological pools of their own virtue signalling. Blech.

Unfree Traders
And it's to that point, that I have a particular problem with the "Principled!" thinking of most 'Free Trade!'rs, and especially in regards to the Tariffs issue. My disagreement with them has less to do with the best aspects of having the liberty to trade freely (I absolutely support a Free Market, within which trade is best able to be conducted freely, once the prerequisites of Individual Rights and the Rule of Law have enabled a Free Market Economy to appear and operate... which is not the same thing as 'Free Trade!'), than with what the issue of 'Free Trade!' typically evades, and even hides.

For example, 'Free Trade!'rs' like Duane are quick to trot out economic truisms and principles, such as,
"Tariffs are a tax upon your own people, the other nation doesn't pay them, you do"
, which is a line that packs a punch - in the right context, such as between America and pre-1997 Hong Kong, for instance, which Milton Friedman rightly celebrated as a paragon of a Free Market. But as true as the line is when used in the proper context, it is less so in a different context. For instance, if the context is that of trading with Communist China and you repeat the 'Principle!' that tariffs hurt the economy of the nation imposing them, as if that was the whole truth which needed to be considered in that context... shouldn't Communist China be eager for us to impose more tariffs upon them... in much the same way that a boxer would be thrilled to see his opponent punching himself in the nose? Well... if that were the whole truth, yes, but... it isn't and they don't. Why do you suppose that is? The answer to that is more easily found by attending to what the purveyors of 'Principles!' leave unsaid. I asked:
"While I don't think that tariffs have any positive economic value, that they amount to taxing your own people, etc., why do you suppose the Chinese don't want to have them imposed on them?"
, and after some prompting the reply came that no one wants such policies imposed on them, as
"...They create a barrier to markets which makes their products higher priced and therefore, less attractive."
Not only does that grudgingly acknowledge what his initial statement obscured (that there is a cost born by the targeted nation), but this is a very economic reply concerning actions and consequences taking place between nations, without even a hint that there are any more fundamental political concerns which might (should?) be involved in the consideration of such issues. The full context takes such a beating in an answer like that, that it becomes fragmented and casts shadows that should not be left unexamined. I asked,
"... so is the proper response to other govts imposed market barriers, to accept them, or to take counter measures, and if the latter, what measures other than tariffs, should be taken?"
, to which came the adamantly economic reply that the only proper response to trade sanctions being imposed upon the people of your nation, was to eliminate any restrictions and tariffs that your nation might be imposing upon their nation, without regard to the nature of that nation and the status of the individuals living, working, perhaps slaving, in that nation - in order to achieve that Libertarian ideal of:
"...unilateral, unrestricted, free trade..."
... to keep the $$$ flowing? How does that differ from the much reviled LeBron James wanting to keep people's mouths shut so he can make a buck off of Communist China? Is he not seeking unimpeded 'Free Trade!' without regard to the abuses of the Hong Kong protesters at the hands of Communist China? How do Libertarians and an awful lot of Conservatives, not deserve the same derision?

This is the worldview of someone who holds Economics as the fundamental starting point, aim, and justification for all such concerns. Really... with no need of concern for, or regards to, any other contextual concerns, such as to the nature of the nation (and those it subjects) that your good intentions of trading with, will enrich and entrench the power of? There's a lot of important context being ignored in that, if not flat out dropped, which, again, makes taking actions based upon the sort of principled thinking that our nation was founded upon, difficult, if not impossible to even begin to apply. I replied,
"So given that no nation enjoys market barriers being imposed upon them, because that "...makes their products higher priced and therefore, less attractive...", on the world market, the proper response is to unilaterally remove all such barriers, in order to create a one sided, unrestricted, 'free trade'... with, in this instance, Red China? Is that an economic response to a political issue, or a political response to an economic issue? Or something else?"
And his reply was that it was:
" economic action in response to an economic reality, with political repercussions globally..."
IOW: Economics (in this view) comes 1st, and 2nd, in thinking about any such matters of international relations, with political concerns (such as, I dunno, the health & safety of your own nation, and other 'free' nations later dealing with a dangerous tyranny enriched from the $$$ of your 'Free Trade!' with them) being a mere afterthought to the more important economic issues involved. There is a limited sense wherein that can be true, but it's nowhere near the whole truth in this context or about the nature of the repercussions being felt, or pursued, and it is, IMHO, closer to having the matter exactly backwards. There are a number of negative consequences of that, not the least of which being, what if what he considers to be " economic reality...", isn't looking through a broad enough perspective to be representative of the larger reality which he is trying to illustrate and guide us through? And of course, because what is actually meant by the supporters of 'Free Trade!', as being 'Free Trade', varies wildly depending upon the philosophy or ideology of the person or group you hear promoting it, the term is able to be misused and abused as a means of sanctioning (and even sanctifying) political behaviors that fall well outside of the limited context of purely economic concerns, even while doing so on the basis of purely economic concerns.

As a consequence of such an impossible perspective as that, 'Free Trade!'rs view of reality is too often distorted, leading not infrequently to bad political and economic advice (with not a few collectivist and protectionist tendencies of their own). And with 'Free Trade!', meaning very, very different things to very different people who're promoting it for very different reasons, we're left stumbling about in a target rich environment for error and self deception.

Or in other words, what if it's the thinking that "It's the Economy, stupid!", that's the stupid thinking?

That's something which I think is worth paying closer attention to, even if it takes a bit of digging to reveal it, because the 'Free Trade!'rs good intentions towards liberty aren't going to help preserve our liberty, anymore than the faulty premises of 'common sense' medicine on the part of those well intentioned professionals, who diligently tried to save George Washington by bleeding him to death's door(!). As George discovered, reality wasn't much impressed with their good intentions and much admired credentials. Personally, I'd like to guard against such a thing on a national level.

There's much to dig into here, beginning with examining the many conflicting meanings of 'Free Trade', the 'Free Market', and what separates one from the other, which we'll begin doing in the next post.

No comments: