What’s Wrong with the World

What! The Economists aren't going to lead us to a Great Big Beautiful Tomorrow. They promised.

http://blog.mises.org/6673/7-years-of-market-revolution-in-china/

An article at Mises, which features the last line:

"China is going through a market revolution that is changing life for tens of millions of Chinese at a record-breaking pace. There is hope in the air in China. Finally."

To which a reader, says in the comment section.

“There is hope in the air in China. Finally.” Why? Only because now in China you can drive a car, put your money in market stocks, become an owner or a millionaire, use cell phones and other tech gadgets?!?!?!?! What a great perspective, dude! A real moment of truth… I wish you could only talk about the downsides of this so-called market revolution too. Here, we’re just double-blinded. BRAVO!

Now even though I disagree with this guys slightly anti-capitalist outlook, I understand his point, that because there libertarians, and they see all things through a economic lens, they don't seem to notice that, all though the amount of economic freedom pay have increased, most other freedoms are deteriorating in that country, and instead of seeing them and worrying, they look at the economic success and celebrate without reverence to anything else.

Its similar to when I heard Peter Schiff on his radio show telling everyone to invest in China. A female guest came on and started talking about there policy's and human rights abuses, and that she didn't like the idea of investing in a country (and in essence giving that country money) if it did such amoral things. All Schiff could keep repeating was, well as the country gets more free market these things will get better, the more money we invest in that country the more free the country will become, but I just didn't get it, and neither did she, because the more money we give that country through investments the more power we supply to the government, the more money we give them, to infringe on peoples freedoms. I'm not sure what there idea is, the communist party has all the power and won't be willing to give that up, it won't suddenly decide to become democratic (or Anarcho- Capitalist), so there main hope seems to be that the communists will see the success of capitalism, see that a libertarian philosophy is the best equipped way to handle said society and hence convert.

A good short article giving a critique of the Lefts view of the Chinese Economic Miracle.

http://mises.org/daily/2960

There are a lot of good things that the Invisible Hand can do, but making men good is not one of them. And when one introduces semi- or pseudo-capitalism into a completely unfree society, the idea that it will magically make the society free is, to put it mildly, conjectural, and it has been to no small degree falsified in the case of China.

In the Von Mises situation, I believe there is another factor at work here: There's a certain type of libertarianism that is very definite about the freedoms it seeks on the domestic front but which maintains a "see-no-evil," non-judgmental approach to many foreign countries, including (sometimes I think especially) those that engage in _egregious_ human rights abuses and violations of human freedoms against their own citizens. On this perspective, trade with America is very nearly a right held prima facie by all foreign countries and the denial of free trade very nearly an act of aggression.

Put that together with the notion of "capitalism magic" according to which economics makes men good, and we have a situation ripe for ideologically motivated excuse-making and falsification of the actual human rights situation in a country like China, with which the organization wants to encourage continued free trade.

On this perspective, trade with America is very nearly a right held prima facie by all foreign countries and the denial of free trade very nearly an act of aggression.

Which is really funny, because under true libertarianism a person (or group, or company, or corporation, or state) has the right to decide not to trade with anyone they don't want to trade with. It may be ill-mannered, and it may be STUPID to refuse to trade with people who are willing to pay good bucks (or other value) for your stuff. But in libertarianism people are ALLOWED to be ill-mannered or stupid, it's their look-out.

I know. It's very strange how particularly the paleolibertarian brand does not apply to the U.S. government anything like the same principles it applies to individuals as far as freedom of association, friendship, trade, etc., are concerned.

"There are a lot of good things that the Invisible Hand can do, but making men good is not one of them."

Indeed. Like democracy, the market will "work" only with a moral populace. But neither of these things can create a moral populace.

On the subject of free trade, I would highly recommend Pat Buchanan’s superbly argued The Great Betrayal. I'd also recommend these essays by Tom Piatak:

http://www.takimag.com/sniperstower/article/america_first_of_course/

and

http://www.chroniclesmagazine.org/index.php/2010/04/21/bringing-back-the-old-economy/

In the 19th century, the right generally opposed free trade, as they saw it destructive of tradition and local markets, while liberals generally supported free trade for business interests. (These debates, between the left and right, are captured in Anthony Trollope's Palliser novels.) It's also noteworthy that in some cases the left supported free trade precisely because they saw it as destructive of tradition and ethno-national cohesion.

"But, in general, the protective system of our day is conservative, while the free trade system is destructive. It breaks up old nationalities and pushes the antagonism of the proletariat and the bourgeoisie to the extreme point. In a word, the free trade system hastens the social revolution. It is in this revolutionary sense alone, gentlemen, that I vote in favor of free trade." ~ Karl Marx, 1848

Free trade is intended to lead to the “peaceful, ecumenical, and indissoluble union of the peoples of the world.” ~ Frederic Bastiat

Thing is, though, M.A., I've found a curious and surprising reluctance on the part of some of Buchanan's supporters to agree with the idea implicit in this post: That it's legitimate to limit trade with the likes of China on the grounds of their human rights abuses. To save American jobs, sure. To stick it to the "greedy" corporations who are taking jobs abroad, sure. To support "tradition and local markets," check. But because the Chinese Communist government is an evil and tyrannical regime and we are enabling it and rewarding it with trade--not so much. In fact, a distinct discomfort emerges with that idea. I fear that the "see no evil in the evil regimes that mainstream conservatives dislike in order to separate ourselves from mainstream conservatives and show how savvy and realist we are" tendency applies not only to paleolibertarian but to paleoconservative, all too often. Thus, what should be a point of agreement between social cons like myself and those who are not generally doctrinaire free-traders--namely, limiting trade with the likes of China as a punitive measure--doesn't end up being a point of agreement.

This sort of argument doesn't seem very convincing to me, for the same sort of reason that some Christian's struggling with sin doesn't refute Christianity. To very poorly approximate something C. S. Lewis once wrote, probably alluding to a quip by Evelyn Waugh, being a Christian doesn't mean you won't sin: if you think someone is bad now, just imagine what he would have been like if he wasn't a Christian! So the question for the libertarian thesis is whether China is a freer place to live overall than it was before they started moving in a capitalist direction, and not whether all the evils there have or are about to disappear.

One other point. In the U.S., we often worry about the burden posed by illegal immigration on the government budget, and this in a country of 300 million people and change. In China, they have our 300 million and change, and another billion people on top of it. That doesn't justify what they do, but it's an obvious motivator that one wouldn't expect to immediately fall away thanks to a few steps in an anti-Statist direction.

The trouble is, Dennis M, that the libertarian thesis postulates continued upward progress in a free-ing direction. It's sort of like crude 19th-century views of evolution. "Lead us, evolution, lead us, up the future's winding stair." Except here it's "free trade."

If Steve Mosher of the Population Research Institute told me that free trade is good for freedom to have babies in China, I'd sit up and take note. But that's because I know that Steve Mosher is really committed to freedom for parents to have children in China. I know that he doesn't have an economic and libertarian agenda to downplay what's going on in China and, in fact, has probably risked his life and has certainly worked with other people who have risked their lives to bring the truth about the on-going one-child policy to an America (under Bush, no less!) that would have liked to pretend the problem was magically, gradually going away. Mosher knows what helps and what doesn't in many foreign countries that have coercive population control policies. (Often people in the U.S. think China is the only one.) Again, if he told me that our free trade with China is worth it, in terms of consequences for bringing more freedom in this area of great evil, I might listen. But it would have to be someone like him who really looks unblinking at the truth of what's going on and who realizes passionately how truly evil coercive population control is.

Lydia,

Your characterization of paleoconservatives is largely correct - at least in my case. I oppose free trade because I think it (1) is detrimental for local jobs, (2) it undermines traditional folkways and local markets, and (3) rewards corrupt corporations. But I do not oppose it, in the case of China, because of human rights' abuses. One, I am skeptical of "rights" talk in the first place, and, two, however tyrannical the internal policies of China may be it is not our business. In practical terms, I don't really see what we can or should do about China's internal policy.

As a side note, I wouldn't conflate paleolibertarians with paleoconservatives on trade. Paleoconservatives generally oppose free trade. Paleolibertarians, on the other hand, call "managed trade" what everyone else calls "free trade". They claim they oppose managed trade, but support "real free trade," even though it seems not to exist on earth but only among the Platonic forms.

Regarding libertarian criticism of Buchanan on trade, I'm quite fond of this Buchanan quote: "As you may have heard in my last campaign, I am called by many names. "Protectionist" is one of the nicer ones; but it is inexact. I am an economic nationalist. To me, the country comes before the economy; and the economy exists for the people. I believe in free markets, but I do not worship them. In the proper hierarchy of things, it is the market that must be harnessed to work for man - and not the other way around."

Lydia,

Disregard the above comment. I sent it before I was finished typing.

Your characterization of paleoconservatives is largely correct - at least in my case. I oppose free trade because I think it (1) is detrimental for local jobs, (2) undermines traditional folkways and local markets, and (3) rewards corrupt corporations. But I do not oppose it, in the case of China, because of human rights' abuses. First, I am skeptical of "rights" talk; and, second, however tyrannical the internal policies of China may be it is not our business. In practical terms, I don't really see what we can or should do about China's internal policy.

As a side note, I wouldn't conflate paleolibertarians with paleoconservatives on trade. Paleoconservatives generally oppose free trade. Paleolibertarians, on the other hand, call "managed trade" what everyone else calls "free trade". Paleolibertarians claim they oppose managed trade (although they often in fact do support managed-trade policies), but support "real free trade," even though this ideal seems not to exist on earth but only among the Platonic forms.

Regarding libertarian criticism of Buchanan on trade, I'm quite fond of this Buchanan quote: "As you may have heard in my last campaign, I am called by many names. "Protectionist" is one of the nicer ones; but it is inexact. I am an economic nationalist. To me, the country comes before the economy; and the economy exists for the people. I believe in free markets, but I do not worship them. In the proper hierarchy of things, it is the market that must be harnessed to work for man - and not the other way around."

Right, I didn't mean to be unclear. My point was that while paleoconservatives generally oppose free trade, they agree with paleolibertarians in considering what China does "not our business." Hence, their reasons, as in your own case, are not the ones I would be most interested in. Sometimes this could even have practical results, though I don't know that it does in the case of China.

On this:

In practical terms, I don't really see what we can or should do about China's internal policy.

The "can" part, especially as regards trade, seems to me to be an empirical matter. If cutting or threatening to cut trade and not give China what used to be called "most favored nation" status on trade will influence them to change their internal tyrannies, this is something we will only find out for sure if we try it. Certainly Mosher has chronicled the fact that in various countries a change of American administration has made a difference to internal policies. For example, during the Clinton administration things were much harder for activists trying to stop human sex trafficking in foreign countries, because the U.S. aid organizations believed that prostitution should be legal and hence would not tie their aid to serious government action against traffickers. So, given the fact that _as things are_, America is so widely involved in matters like foreign aid (which I don't necessarily approve of, but that's where we're at) as well as trade, there's actually quite a lot we can do about internal abuses in other countries.

By the way, "I don't believe in rights talk" is a complete red herring. One can as easily reword the convenient phrase "human rights abuses" as something like "fundamental and horrifically evil, systematic, tyrannical practices against the citizens of the country" or something like that. Such as those described in the post, for example.

For both M.A. Roberts and Maximos,

I thought you'd find this extended quote from a review of Buchanan's book interesting:

Early reviews have taken Buchanan to task for faulty economic analysis. Indeed, as history or as a handbook for economic policy, the book’s defects are legion. Yet to dismiss it on those terms is to overlook its significance as a polemic. However imperfectly, The Great Betrayal peels back the polished veneer of establishment politics and offers a glimpse of what lies beneath: a democracy in an advanced state of disrepair.

A long-time Nixon loyalist, archconservative commentator, and Republican presidential candidate, Buchanan now identifies himself as a populist. Indeed, his insistence that a protective tariff will pave the way for moral and political revitalization is analogous to the fervor of populists a century ago who believed that the coinage of Free Silver would correct the inequalities produced as a byproduct of industrialization.

The populists of the 1890s were wrong about the money supply. The populists of the 1990s are wrong about trade. Yet to say that populists of whatever era tend to make lousy economists is not to say that their complaints are without foundation. The infatuation of the original populists with Free Silver did not invalidate their critique of modern industrial capitalism. The tendency of latter-day populists to see the WTO and NAFTA as part of a shadowy conspiracy of arrogant elites should not dissuade us from attending carefully to their discontent.

The fact is that the much-celebrated process of creating a global economic order is leaving by the wayside a considerable number of American citizens. These are the castoffs for whom successive waves of consolidation, downsizing, and restructuring have meant the loss of jobs, status, and self-respect. Less visible than these unfortunates is a much larger number: those who seemingly manage to keep up, but who view the ongoing change in our everyday life with a deep and growing sense of unease.

In a profound insight, Buchanan identifies the anguished and the left behind as "the rooted people"—rooted, like the populists of old, in place and time, adhering to received truths, clinging to traditional folkways. The rooted people identify with what is familiar and close at hand. They value continuity over change. They are instinctively patriotic and nationalistic. They view with suspicion the outsider and the cosmopolitan. When it comes to translating grievances into political platforms, they are not articulate and may too easily fall prey to appeals to a utopian past.

These are Buchanan’s constituents, the millions he would mobilize under the banner of a New Populism and with whose support he proposes to mount a counterrevolution. It is a stirring, even inspirational summons that points unerringly to a dead end. Buchanan’s New Populism will fail not because he misapprehends the phoniness of what currently passes for "good times"—the potential for grassroots upheaval is real enough—but because in attacking free trade he has set off in pursuit of the wrong culprit.

Buchanan would have his readers believe that, at root, the problems of the world’s most affluent nation are economic—that a redistribution of wealth will cure what ails America. It is up to the federal government, in his view, to put paid to the Great Barbecue of the 1990s, to impose restrictive new rules governing economic activity, and to abandon our hegemonic pretensions. Surprisingly, for an old conservative stalwart, he ascribes to Washington a capacity for enlightened governance that outstrips by several orders of magnitude what we have come to expect.

No less significantly, he underestimates the impact of the economic transformation underway for the past several decades. That transformation is irreversible: a policy of national autarky is neither feasible nor desirable. (Buchanan tacitly acknowledges as much, calibrating his 15 percent tariff so as to be "high enough to generate a powerful stream of revenue, but low enough not to destroy trade.") Above all, however, Buchanan’s analysis falls short of the mark in his unthinking deference to the market, artificially confined to North America above the Rio Grande, as a mechanism to correct growing political, social, and moral problems. The real populists at least understood that the market—industrial capitalism—was itself part of the problem.

Thus, for all of its trappings of radicalism, Buchanan’s is a limp, derivative critique that shrinks from reaching genuinely sweeping implications. Buchanan places the inflammatory rhetoric of 1890s populism at the service of economic policies out of fashion since the 1930s in hopes of restoring his Golden Age of the 1950s. What purports to be a bold political pronouncement is actually a sterile exercise in nostalgia. The times may in fact demand a populist critique, but The Great Betrayal falls well short of the mark.

The problem with Buchanan's anaylsis and all the economic attacks on free trade from the paleos, besides the fact that it willfully insists on ignoring all the benefits of trade (i.e. people actually benefit from having the choice of buying a wider variety of goods that are made cheaply), is that as the review above suggests -- the problem is much bigger than free trade. Either you believe in markets (broadly speaking) or you don't. There is no difference to the blue collar worker from losing his job to a machine (i.e. technology) or to a smarter competitor from another State (e.g. look how a company like Nucor was able to compete with the old, union steel mills in the North). Capitalism is about change -- whether that change comes from the guy down the block, in the next town over, across State lines, or overseas -- it will come and disrupt life.

That's ultimately what drives rural disruption as well -- which is why I thought I'd mention Maximos in this combox. I think he's ultimately right about what needs to be done if folks want to save rural communities -- I just think he's wrong to want to do so.

Finally, since this comment is sort of off topic, let me just say an amen to Lydia's 5:00 PM comment. We could also use our trade leverage to pressure the Chinese on religious freedom, a topic which should be at least of passing concern to all of us here who worry about Christendom as our Chinese Christian brothers and sisters face real persecution while trying to practice their faith in their officially godless country.

Jeff, I think you are right. The underlying reality, much deeper than any specific tariff or system of them, much deeper than industrial capitalism, is the fact that people will go out and improve productivity. This forces change in social responses to the product, and cascades up and down the line. A rigid, static ideas of how to produce something is not the human way.

Capitalism is about change -- whether that change comes from the guy down the block, in the next town over, across State lines, or overseas -- it will come and disrupt life.

If "change" is the essence of capitalism, capitalism can kiss my petunshka. But thank you for illustrating so clearly why capitalism and conservatism need have nothing to do with each other.

"Capitalism is about change -- whether that change comes from the guy down the block, in the next town over, across State lines, or overseas -- it will come and disrupt life."

Capitalism may be about change, but capitalists of a certain sort forget that change isn't always positive. If one believes that capitalism by its nature is always moving us onward and upward, or that the trade-offs engendered by the expansion of markets are always net gains, then he is a species of progressive, and no conservative.

In this case, China could use some change. But the only thing that would bring the relevant change would be getting rid of the Communist government (and not replacing it with another one with the same goals and powers). Kitschy panda socks sold to the U.S.A. are just not going to do that.

I suppose part of the burden of my post, and part of what has annoyed me about advocates of "trade magic" in China, is that I think we should stick with the notion that capitalism (aka the free market) and Communism are antithetical. If one wants to advocate the free market, one shouldn't acquiesce in the strange commingling of some measure of purely economic change with a blatantly totalitarian government and then rest _anything_ as far as the evaluation of what "freedom" can do on what happens next. That's crazy. While some advocates of the free market may seem to make their position unassailable in an illegitimate way by always, no matter what, saying that "true capitalism" has "never been tried," this is a pretty self-evident case where what most of us ordinary folks mean by "the free market" and "capitalism" is manifestly _not_ being tried. So why act like it is? The aspects of free markets having to do with non-totalitarian governments need to be retained in our definition. I'm certainly not saying the people of China would be models of pro-life behavior if they were free from the one-child policy, but as this story makes evident, there are at least noticeable numbers of them resisting sterilization, and the government is blatantly forcing them into it. So to _that_ extent, they would be more pro-life if simply left alone.

Nearly every country in the world - except the U.S. and a handful of others - has trade barriers. In short, most countries act as normal countries and protect their industries. The fact that the U.S. does not seems to be in part due to ideological shortsightedness and a handful of powerful interests, which is only underscored by the shady circumstances under which NAFTA was passed. Other countries are not so naive. As Buchanan recently wrote:

"In today’s world, America faces nationalistic trade rivals who manipulate currencies, employ nontariff barriers, subsidize their manufacturers, rebate value-added taxes on exports to us and impose value-added taxes on imports from us, all to capture our markets and kill our great companies."

I really do not see the "benefits" of trade of which Jeff Singer writes. Free trade agreements have devastated the American economy. Countries, like China, which maintain multiple trade barriers are in much better shape than the U.S.

Even free traders like Paul Krugman have admitted that free trade has not exactly turned out to be beneficial for the U.S. In a rather candid op-ed a couple years ago, Krugman admitted that free trade, for the most part, has been negative for the U.S., but then remarkably went on to say that we should continue with such policies because they are beneficial for the Third World. In short, he implicitly argued that free trade is a type of wealth redistribution from the First World to the Third World - a good thing in his eyes.

While one can point out differences between Marxism and globalist capitalism - the net result of both often seems to be the same. Thankfully, many on the European right are becoming as skeptical of globalist capitalism as they are of Marxism. Let's hope this sanity spreads across the Atlantic.

Lydia,

I'm a bit confused by your position. Are you saying that helping the downtrodden in China (indirectly through various economic measures) is more important than helping those in the U.S. who have been harmed by free trade? Shouldn't self-interest trump the interest of the downtrodden in China? Shouldn't the manner in which free trade affects US outweigh what takes place in China?

Don't we have greater duties toward our own?

As Thomas Aquinas wrote:

"[A]fter his duties towards God, man owes most to his parents and his country. One’s duties towards one’s parents include one’s obligations towards one’s relatives, because these latter have sprung from [or are connected by ties of blood with] one’s parents . . . and the services due to one’s country have for their object all one’s fellow-countrymen and all the friends of one’s fatherland."

As Cicero noted in his discussion of classical natural law, one has greater duties toward those of his own ancestral kinship.

Unfortunately, globalist Christianity today seems to have reversed the hierarchy of these older obligations.

Nearly every country in the world - except the U.S. and a handful of others - has trade barriers.

America does have trade barriers against many African Countries that are in the most need of free trade for there highly specialised products, Paul Wolfowitz and the World Bank have criticised this practice before.

"Even free traders like Paul Krugman have admitted that free trade has not exactly turned out to be beneficial for the U.S. In a rather candid op-ed a couple years ago, Krugman admitted that free trade, for the most part, has been negative for the U.S., but then remarkably went on to say that we should continue with such policies because they are beneficial for the Third World."

Paul Krugman is not a Free trader he believes in government centralisation of many sectors, and he only believes in some form of highly regulated free trade. He has also advocated with his New Trade Theory, for a form of mild Protectionism, as he refers to it.

Here's a short analysis and critique of his views:

http://mises.org/journals/rae/pdf/rae10_1_9.pdf

On Krugman, try this website for critiques of his work:

http://krugman-in-wonderland.blogspot.com

Here's an article on Krugman's defense of free trade as the "white man's burden":

http://www.thefreelibrary.com/Welcome+to+the+global+market:+work+the+same+hours+for+a+smaller...-a0168335341

M.A., we have "greater duties toward our own," but

a) in the case of trade per se, the question of who is helped and who is harmed *among our own* is a real one and a more complex one than anti-free-traders usually admit. For example, there are those among "our own" who are helped by lowered prices of the goods they purchase. So it isn't a cut-and-dried "our own vs. people in other countries" issue.

b) I consider, to put it mildly, that having your parents locked up in a crowded prison until you rush home to have your tubes tied by exhausted doctors working round the clock who may or may not harm you in some other way (apart from the maiming of having your tubes tied), that being dragged to the hospital to have your child murdered in your womb, and the rest of the horrors of the one-child policy are vastly, wildly, beyond and incomparably worse than losing your job because your employer got tired of paying union scale and outsourced to another country. The harm to the individuals is not even remotely on the same scale, and the actual, direct, clear and unarguable wrongness of the acts is not even remotely on the same scale. The harms of outsourcing are not worthy to be compared with the sheer evil of the one-child policy.

c) in any event, if both your priorities and mine argue for using trade sanctions against China, it's not clear what the point is in comparing the things compared in b. Perhaps there could be cases where some material good of "our own" would somehow come in conflict with fostering evils done to "others." If anything, someone might argue that (see a) we are helping "our own" _by_ trading with China (for cheaper goods) and therefore should set aside the evils of the Chinese government in order to help "our own" by trade. So your "our own" vs. "others" distinction may come back to bite you, precisely because of the actual, empirical questions raised in point a) as to whether trade with China is a net material gain or loss for Americans.

Here's one for you: Should Americans be able to go to China to purchase kidneys harvested from unjustly executed political prisoners? Hey, it's us vs. "others," right? We have a greater duty to "our own," right? See, that's just too simple-minded a slogan to deal with a whole lot of situations in the real world.

Phantom Blogger,

Perhaps I should have phrased it meaningful trade barriers. It seems irrelevant to me whether our trade barriers against Africa harm Africa. What matters is what benefits us.

But rest assured, if our trade policies harm Africa, I suspect that Obama, who is a free trader (despite the rhetoric), will review them. As the Great One himself said:

“I think it would be a mistake ... at a time when worldwide trade is declining for us to start sending a message that somehow we’re just looking after ourselves and not concerned with world trade….”

http://www.takimag.com/sniperstower/article/obama_the_free_trader/

The problem is that Krugman constantly contradicts himself, he has at times said that people who don't believe in the success of capitalism and free trade are the equivalent of creationists denying evolution, and at others times he has refereed to people who believe in the Free Market as Fundamentalists who can't see the need in government regulation and centralisation because there so driven by ideology.

Link to an essay called The Anti-Free Traders:

http://mises.org/freemarket_detail.aspx?control=604

Quote:

Paul Krugman of MIT currently leads the pack among the new "strategic trade" economists attacking free trade. His models show that in certain theoretical instances, protection improves social welfare. When would this happen? When a company's profits, just by luck, are higher than the normal rate.

In his view, the government should keep profits up by restricting foreign competition. In fact, high profits are due to the ability of entrepreneurs to fulfill consumer demands. There is no reason to believe that protection can shift entrepreneurial ability from foreign to domestic firms.

Lydia,

I'm pleased we're both opposed to free trade, although it seems to be for different reasons.

You make a valid point that what is in our interest is a matter of argument. True. But it is still quite important, I think, to frame the debate in terms of what is in our interest. While rational minds can disagree what is in our interest, this is an empirical exercise in terms of trade. Yet, the end of such debates will remain to prove what is best for our country. Although some free traders will argue that free trade is truly in our interest, framing the debate this way will exclude others, especially neoliberals who argue for free trade because they think it benefits the Third World or those who think that such "creative destruction" will undermine the world's traditions and usher in a new age of politically correct globalism. Just by framing the trade debate in terms of national interest one will undermine much of the universalist globalism nonsense that we read in the NY Times.

While I agree with you that some practices in China are deplorable, in terms of trade I would see these issues as periphery at best. When discussing free trade, it seems to me that the summum bonum should be how it affects us - Do we benefit or suffer from it? Although this is an empirical question, it is still the right question.

MA, I notice you didn't answer the question about organ selling. Maybe you think (understandably enough) that it's going off-topic. My problem with the position that "our interest" is the only right question is that things can get really crazy if it's really in our interests (materially speaking) to cooperate fairly directly in despicable acts. To try to put the matter really starkly, suppose you could make a pile of money and send your own children to a college that you think will really help them in life, and the most direct way for you to do this was to own a sex-slavery ring in Nicaragua. So your special duties to "your own" (the best material good of your children) might seem to dictate not worrying about the evil done to "others" in another country--the enslaved Nicaraguan women. Now, I'm not saying anyone is offering you this option. But the point is that one really can't say that "one's own" or "our interest" must always be the only question. Sure, there are degrees of separation, and there's no way to avoid all indirect assistance of evil. No doubt there are people who profit off of my simple purchase of a gallon of milk who do bad things with the money. But the more direct one's profit and involvement gets and the more heinous the acts get, the less one is excused by saying that one doesn't will the evil or that one is helping "one's own." I just don't see how you can avoid taking those things into account when they are put "in your face," as it were.

Lydia: "Here's one for you: Should Americans be able to go to China to purchase kidneys harvested from unjustly executed political prisoners?"

No. The question whether American citizens be able to import (in their bodies or by other means) organs unethically harvested in another country concerns directly the moral character of the U.S. We could easily pass law outlawing American citizens from engaging in such acts. But I don't really see this as a trade issue, but as a type of legislation concerning the behavior of Americans.

It is a point of some curiousity to me that the proponents of capitalism and "free" trade in this thread are willing to contemplate trade sanctions against China on grounds of that nation's morally repugnant internal policies, yet not on the grounds of preserving American jobs, middle-lass lifestyles for the cognitive non-elite, or any other cognate reasons. The effects of policies enacted on the latter set of grounds are apparently inherently unknowable, perhaps undecidable, and so we should not acts against Chinese mercantilism with a view to assisting our own countrymen. Which is so odd: the suffering of foreigners is a reason to act, while the hardships of our own people are not reasons to act, because there exist no demonstrable relationship between the proposed policy and the desired result. If, therefore, there would be no relationship between American protectionism and American prosperity, then surely there must be no relationship between Chinese mercantilism and currency manipulation and Chinese prosperity. But no sensible observer of the geo-economic scene could believe such a thing, with its implication that the tens of millions of Chinese fleeing the countryside for the factory towns are not, in fact, seeking higher remuneration, and that the Chinese regime itself is deluded as to the means by which prosperity is attained. In sum, were such a thing true, there would be no Chinese economic miracle, and no prospect whatsoever that the Chinese regime could employ industrialization as a prophylactic against rural unrest, one of the principal objectives of Chinese economic policy. The entirety of the Chinese situation belies the claim that protection cannot work for a nation; the only outstanding question concerns whom it will benefit.

To return to the odd ethical asymmetry itself, there are clear analogies to foreign affairs, where most Americans are willing to countenance moral grandstanding as the utmost in policy probity, though the sanctions applied to the enemy du jour do little to destabilize detested regimes, and much to immiserate, even kill, the ordinary citizens of the targeted nation, in whose names we feign to act. They did not work with regard to Iraq; they will not work with regard to Iran; and they would not work with regard to China, which is not about to relinquish the one-child policy and its accoutrements over a trade dispute, regarding the hypothetical additional Chinese citizens as just so many more impoverished mouths whose deprivation might incline them to oppose the regime. Since regimes do not respond to one threat to their operations by acceding to another, this entire proposal is a non-starter, if we are concerned to actually effectuate desirable policy shifts.

Advocates of capitalism would be more credible were they to concede that, while there are benefits to trade, there are costs as well, where these costs are real and substantial, and not, "oh, well, that's progress, we shall have to resign ourselves to it" costs, either. In other words, to apply a favoured rhetorical trope or market fundamentalists everywhere, there aren't any free lunches. Not only is humanity made of the proverbial crooked timber, reality is as well, and no political economy can deliver us unto a world in which the benefits manifestly outweigh the costs, from any evaluative perspective one might bring to bear upon the situation. Any concrete system of political economy is relative to the goods and ends it instantiates and facilitates, and if one would justify such a system, one must justify those ends as over against the alternatives to them.

For example, it is all well and good to asseverate that free trade results in a more diverse profusion of goods at lower prices. It doesn't appear to me that relatively mercantilist nations such as Japan and Germany are suffering, as evaluated by these metrics, but let us assume, for the sake of argument, that this is true enough. The pertinent question, then, is, "So what?" As I argued at length over two years ago, the evolution of the meritocratic economy of free-trade, globalization, and outsourcing has undermined the older economy of manufacturing, greatly augmenting the returns to the cognitive elite and the upper reaches of the income distribution tables. Structurally, and in the rhetoric of its defenders, the compensation for this is precisely the profusion of cheaper consumer goods, where the ostensible improvements to our lives as consumers are supposed to outweigh the diminution of opportunities for stable, middle-class employment, where this latter is increasingly correlated with employment in high-value-added fields of 'symbolic manipulation', this is correlated with education, and educational attainment in the meaningful sense with cognitive ability. There is, that is to say, a manifest and incontrovertible trade-off in play with regard to free trade, and it is question-begging in the worst sense to presuppose that the evaluative framework of consumerism suffices to capture the most pertinent consequences of the transformation, not least because, as I wrote when this particular controversy first arose on this website:

This decentralized processing of information must occur within a broader societal framework conditioned by ethics, religion, tradition, custom, and a sense of the imperatives of limits and balance; for this is the very essence of the specifically political: to pursue justice, to deliberate as to its nature and obligations, and to strive for its approximation. The market, considered in itself, is at best orthogonal to justice, inasmuch as justice is apprehended by reason, and elaborated by reason in tandem with tradition, while the deliverances of the market are mere transcriptions of desire; and desire is not merely other than reason, but is that which must, if the soul and the society are to attain to a right order, be itself limited and submitted to the tutelage of reason.

Lydia,

As usual, I can't add anything to your 12:24 PM comment except "amen". As much as I love the market for the economic goods it provides, I harbor no illusions that it will solve all our moral/foreign policy problems. Which is why I'm in total agreement with Lydia that it is right and appropriate to sacrifice economic efficiency sometimes when moral goods are at stake.

Jeff C.,

You say: "If "change" is the essence of capitalism, capitalism can kiss my petunshka." This is coming from a man who is writing a blog on the internet -- goods that would have been inconceivable without capitalism and change. Or would you prefer to stick with the typewriter? Or is the printing press suspect in your worldview?

M.A.,

You say: "Free trade agreements have devastated the American economy. Countries, like China, which maintain multiple trade barriers are in much better shape than the U.S." I say -- are you serious? By what measure? Our GDP per capita remains over 10x as large, our "devastated" American economy had around 4% unemployment just a couple of years ago (and throughout most of the 90s), consumers enjoy all sorts of luxuries that folks 100 years ago could only dream of (once again, Mark Perry is the man to go to for perspective:

http://mjperry.blogspot.com/2007/08/blog-post_21.html

and

http://mjperry.blogspot.com/2009/01/good-old-days-are-now.html)

and we seem to be recovering from the worse of the "Great Recession" (although Obama and the Democrats are determined to screw it all up). In short, you have to present more evidence than a handful of rustbelt cities that are suffering, while cities like Boise, Houston, San Jose, and Dallas thrive (not to mention their suburbs).

Excellent post, Maximos.

Maximos, I'll be blunt: I'm more interested in punishing China to try to stop the one-child policy than in limiting trade to try to encourage jobs in America because I think what the Chinese government is doing is a heck of a lot more evil, and should be more upsetting, than what the outsourcing companies are doing. You assert that it wouldn't make any difference. Forgive me, but I prefer to ask questions about what we can to do try to change China's one-child policy of people who show more outrage over the one-child policy and spend more obvious time worrying about it than you appear to do. And certainly more time than your amen corner, MA Roberts does, who has said outright that it's "none of our business." The heck with all you paleos who think it's none of our business and that there's nothing we can do about it (yet at the same time whine about our "hegemony" in your other moments). A little moral outrage shared occasionally with mainstream conservatives would do you all a lot of good.

I think it's _plausible_ that free trade is doing us more economic good than harm. I don't know, but I don't think it's far-fetched, as you obviously do. And I think it's _plausible_ that lessening it in this area, thus doing ourselves a certain amount of economic harm (though you think it would do us economic good) could do more good than harm in China. I'm not claiming that all of this is totally unknowable. But I have my own opinions as to which side I'd rather err on and what knowledgeable people I'd trust on the matter.

Lydia,

Odd. The fact that free trade and its attendant policies (e.g. outsourcing) have rendered family members and friends as employed, have reduced the wages of family members and friends working in engineering and manufacturing, have encouraged companies to hire H1Bs to save a few bucks at the expense of people I know , have provided a bunch of cheap junk from China at the expense of local jobs and self-sufficiency, have created huge deficits (which will affect the quality of life of my progeny), and have enriched China at the expense of those close to me upsets me more than anything occurring internally in China. Doesn't charity begin at home?

This very idea of moral concern about what happens elsewhere on the planet is a product of the contemporary ideology of globalism. Do you really think that any 16th-century Englishman, for example, would really have given a second's thought to putting the interests of the downtrodden in North Africa before his own kinsmen? As Cicero said numerous times in his discussion of natural law, the interests of one's own family / clan / tribe always come before those of others. This idea of self-interst, which used to be central to Western though, has substantially been weakened since the Enlightenment - much to our detriment.

Lydia, I agree that there is a realistic chance that trade sanctions pursued intelligently at the highest levels are likely to do some good, enough to make it worthwhile to try. Maybe a lot of good, in the long run, though that's hard to foresee clearly (too many variables). What I would like to know is whether one-man and one-family trade sanctions (well, they used to call them boycotts) have any prospect of doing some good. Or is consolidated effort the only reasonable prospect of achieving some results in China?

putting the interests of the downtrodden in North Africa before his own kinsmen?

MA, again, I consider this to be an insufficiently precise way to word it. If "putting the interests of the downtrodden before his own kinsmen" meant, say, refusing to own a sugar plantation run by recently enslaved Africans, then he certainly _should_ have done so. God and the devil are both in the details. You can't just keep saying "I should put the interests of my own kinsmen before that of the downtrodden elsewhere" over and over without considering what, exactly, you are talking about. If you're talking about, say, unchecked immigration, then I agree with your probable application of the maxim, because refusing to allow unchecked immigration is not committing an active evil. If you're talking about, say, cannibalism, then, no, I don't agree, even if it would help your own "kinsmen." I give extreme hypothetical examples here, because you seem to think you can run this discussion on undefined cliches alone, and that just darkens counsel.

Tony, I don't know. I _doubt_ that individual decisions like this would help, but I wish I knew. There's may be a lot more that could be done in other governmental areas besides trade that might be even more effective. For example, what about all that sovereign debt we keep desperately selling to the Chinese? And then there's the obvious: Our funding for the UNFPA, which of _course_ every Democrat administration restores.

Jeff Singer,

The success of China obviously will never mirror the success of the U.S. For instance, China will never have a middle class like the U.S. possessed in the 1950s - a prerequisite for which is a tight labor market, something China will never have. And obviously China today has more poor people than the U.S. But the fact that China is emerged as a major creditor and exporter nation - while the U.S. has become a debtor and importer nation - looms better for the future of China than the U.S.

Lydia,

I'm sorry you feel that I was trying to "run this discussion with undefined cliches." It was not my intent. Obviously there would be exceptions to self-interest. But regarding self-interest as a general guideline to direct one's decisions, I think it's unfortunate that the West has largely lost this very basic survival instinct.

Then, MA, you ought to be able to see that there could--quite easily--be exceptions to the statement that trade decisions must always be made on the basis of national self-interest.

In fact, the "charity begins at home" slogan might even be able to be wielded against the anti-trade side: For example, suppose that _my_ family and kin benefit from free trade but _your_ family is harmed by it. Then, by the principle that charity begins at home, I should support it. Yet those who oppose free trade on grounds of its destroying America's jobs elide these differences by attempting to look at some sort of "big picture" and then, in essence, asking all the people who believe that _they_ are helped by free trade to sacrifice those benefits that they perceive for the sake of the other people in their own country who are ostensibly harmed by it. So in a sense, the "charity begins at home" maxim isn't very helpful here at all!

Regarding the present state of China, I'd highly recommend Pat Buchanan's April 23rd op-ed:

http://buchanan.org/blog/19th-century-americans-3936

Glad to see that Buchanan isn't "green." That should annoy some of his supporters.

An Essay by William L Anderson called The Economics of Outsourcing:

http://mises.org/daily/1488

Quote:

Before they can make their case that the practice of outsourcing is harmful to the U.S. economy as a whole, the anti-outsourcing advocates must be able to demonstrate that the ultimate purpose of production is not consumption, but rather production itself. This is not an arbitrary claim on my part, for unless those who wish to outlaw "outsourcing" can clearly demonstrate why it is that an economy benefits from higher costs of production versus lower costs, then they have no argument at all.

The Mengarian analysis hardly begins and ends with international trade, as one can easily apply it within an economy. For example, I currently live in an area (Allegany County, Maryland) that at one time was a thriving manufacturing center. In the past 40 years, however, almost all of the manufacturing plants that employed thousands of people have closed and the population of the county has fallen substantially. Furthermore, the rate of unemployment here is relatively high and many jobs pay low wages.

When this locality was in its manufacturing heyday, places like Greenville, South Carolina, were considered backwaters of low pay and a relatively low standard of living. Today, the situation is reversed, yet I would argue that because factors of production were freely permitted to move within this country, in the end the absolute standard of living in Greenville and Allegany County has risen.

Application of Menger's principle here is that when a less-costly way to make a good is discovered, whether it be through the application of new capital or through lower wages, then the value of the factors used for that good has changed as well. An economy cannot gain when the state attempts for force up the price of some factors so that the owners of those factors of production are able to gain an advantage. We are dealing here with the hoary fallacy of protectionism, period.

For all of the popularity of their arguments at this time – something that is being repeated by both major political parties in this current election season – the anti-outsourcing advocates have not discovered anything new. In the end, they repeat the Classical fallacy of goods deriving their value from the costs of production. Should they succeed in forcing their views into law, we can be sure that the ultimate outcome will that which befalls any society that gives into protectionism: a lower standard of living and, in the end, even more joblessness.

I’ve got no problem with outsourcing in principle. In a genuine free market, I don’t doubt it would only be implemented to the extent that it was pareto optimal.

My problem is with outsourcing under the actually existing corporate economy, in which the export of capital is massively subsidized by the World Bank and U.S. foreign policy, and therefore is promoted at much higher levels than would exist in a free market. In the state capitalism we actually live under, outsourcing is simply another state-subsidized activity, another way politically organized capital profits at the expense of the rest of us.

When big business internalizes all (and I mean ALL) of the risks and costs of operating overseas, I’ll be more than happy to let the market decide how much production is moved out of this country. What I don’t want is the taxpayers being held up at gunpoint to PAY corporations to dismantle jobs in this country.

Would it not be easier to reduce the regulations and taxes in America, and if we had to but morality taxes on corporations that engaged in trading with countries who have amoral polices and engage in the sort of behaviour that Lydia rightfully criticises. The libertarian idea is that if you create any infringements on the freedom of selling goods and services then you don't really believe in a free market, the market should also be left to its own devices and will always find the right solution, so we need no outside source of morality or rules to dictate what correct. But as conservatives I think we would say that there is certain things the transcend market process and that we should be able to infringe upon the freedom to engage in these activities if it doesn't play by our code (Prostitution for example). To believe this does not mean that we don't believe in free markets, its just that we don't believe free markets transcend morality. Even the most hardcore libertarians, who say to infringe on any transaction is to show that you don't believe in markets and there power, I'm sure they don't believe that we should have a free market in Weapons of Mass destruction, and they wouldn't consider this to be a contradiction in there principles or count this belief as meaning that they don't believe in free markets.

On the point that people say that America can not compete with cheap foreign labour, I think they forget that labour is not the only cost in a business, to ship boats thousands of miles across the sea costs huge amounts of money, and with the ever increasing price of oil it will only get higher. If America was willing to lower taxes and regulations it could easily make up for the small extra profit and benefits corporations make form cheap labour, the cost of labour may be higher in America, but the cost of making and shipping would be much lower if it wasn't for government. (Also on the environmental front I always thing its funny that liberals want higher taxes on businesses, that then encourages those corporations to outsource, which means they have too ship millions of products across the sea creating huge amounts of pollution, and then they lambaste the businesses for harming the environment. With this they show there true ideological colours, where taxing and harming corporations is more important, than there desire to protect the environment and slow global warming.)

Whether the one-child policy is more evil than the current American political economy, which betrays Americans and their interests, in favour of foreign interests and those of the "meritocracy", is quite beside the point, which is that we are utterly impotent to effect any change in the one-child policy.

Nations such as Japan and Germany - indeed, much of the European Union - maintain tax policies which disfavour American exports. Would these policies cease to be of any consequence were the Europeans and Japanese to suddenly get religion, and announce that they would maintain these policies to protest the injustice of, and punish America for, Roe v Wade?

Whether we trade with China, or impose tariffs, and maintain some sort of limited embargo, there is nothing we can do to alter the one-child policy; the only policies related to China over which we have any power whatsoever are those that would benefit Americans by altering the balance of trade. Mainstream conservatives would be done a world of good were they to admit their powerlessness over the affairs of China, and Iran, and other foreign nations, commending the manifold injustices therein to the Almighty for his redress, or vengeance, as He deems most condign, and were they to manifest some solicitude for the lessers among their countrymen, instead of celebrating whenever what little they have is stripped from them, to be given to those who have already waxed fat off of injustice.

Nations such as Japan and Germany - indeed, much of the European Union - maintain tax policies which disfavour American exports.

Is this benefiting them though, because they have much higher unemployment than America.

"the only policies related to China over which we have any power whatsoever are those that would benefit Americans by altering the balance of trade."

You need to explain how to do this without slipping into the fallacies stated in the essay I quoted from above.

Saying how powerless we are to influence these other, evil nations, Maximos, doesn't make it so, even if you say it over and over again. And I'll remember your words on the subject next time you decide to wax eloquent about how over-powerful America is in the world.

This is one of the best comment threads I've ever seen on the web. However, I'd like to disagree with a few assertions from Maximos and M. A. First, M. A., you are wrong that the ideals of self interest have weakened since the enlightenment. Quite the contrary, the ideal of self-interest began weakening with the rise of Christianity, and if anything this process reversed with the enlightenment. In particular, the Sixteenth century saw an enormous amount of money sent to Africa, Asia, and the Americas by Western countries in the form of Christian missions. They not only tried to save souls, they also built and funded schools and hospitals, funded locals to return to Europe or the US to go to universities, provided food in famines, and similar things.

Something did change over time, but what you are seeing as a change in view was really nothing more than a change in circumstances. Up until fairly recent times, Europeans were fighting for survival. In those days they quite naturally and properly focused on themselves and their families. Also, until fairly recent times there was simply no practical way even to know what was going on in other continents, much less try to help out. As the Western nations became wealthier with respect to the rest of the world and as transportation improved, Western nations became more able to stop focusing on their own welfare and to share some of their good fortune with others. It is a matter of information and opportunity, not ideals.

As to Maximos, your arguments would be more persuasive if you didn't scatter them with straw-man arguments. When you write: "It is a point of some curiousity to me that the proponents of capitalism and 'free' trade in this thread are willing to contemplate trade sanctions against China on grounds of that nation's morally repugnant internal policies, yet not on the grounds of preserving American jobs, middle-lass lifestyles for the cognitive non-elite, or any other cognate reasons." Obviously no one on the thread has said this, so all you do is annoy the other side by putting words in their mouth. They are then less likely to actually bother to read the rest where you have real arguments. As you show later, you know quite well that they are against protectionism because they don't agree with you that it will do what you say it will do.

Now this was an actual argument: "If, therefore, there would be no relationship between American protectionism and American prosperity, then surely there must be no relationship between Chinese mercantilism and currency manipulation and Chinese prosperity." However, I'll bite on your challenge and say that I have my doubts that Chinese currency manipulation and protectionism have contributed to Chinese prosperity. What those practices amount to is a national effort to keep prices low. I don't see any reason why in a completely free-trade system, free Chinese companies couldn't have kept prices low on their own and gotten the same effect.

Furthermore, those policies, by keeping prices down for American consumers, have arguably helped the US as much as they have helped China.

I should add that I resent in excelsis the idea that there is some moral absolute according to which we are obligated to ignore the evils other nations perpetrate. It as though I refer to "see no evil" foreign policy, meaning that as a negative characterization, and my paleo commentators come along and, in essence, elevate "see no evil" to a _principle_. So, MA Roberts:

This very idea of moral concern about what happens elsewhere on the planet is a product of the contemporary ideology of globalism.

I get it. Moral concern about what happens elsewhere on the planet is supposed to be some sort of "ideology." God forbid we should even be _morally concerned_ about what happens elsewhere. No, we should maintain every possible normal international relation with other countries, however evil. In fact, probably even this blog post is supposed to represent the "ideology of globalism." I cannot say too strongly how entirely I repudiate these ideas.

Is this benefiting them though, because they have much higher unemployment than America.

No, they don't. If you factor in the despairing and the underemployed, who are excluded from the headline numbers, and that as rapidly as possible for statistical purposes, actually-existing America fares even more poorly by comparison.

You need to explain how to do this without slipping into the fallacies stated in the essay I quoted from above.

No, I don't. I could with equal ease and facility state that those who object to the absence of a specific critique of some Mises Institute piece go back and read all of my material on this site, since much of it contains meta-critiques of the assumptions underlying stuff like the Mises article. To wit, the notion that the values/prices of goods and services are/should be determined by wholly economic forces is an artifact of history, and not a fact of nature; moreover, any actual set of market outcomes is the product of an antecedent architecture of law, custom, and so forth, where this is at least implicitly, and usually explicitly, politically determined. To deem complex, articulated markets natural, or to treat them, de facto, as such is to commit a category error, like calling cars organic objects, and I don't waste my time on analyses that celebrate this error. History is quite clear: for most of what is known of human civilization, we did not treat markets in this way, and then we did treat them this way.

And I'll remember your words on the subject next time you decide to wax eloquent about how over-powerful America is in the world.

You don't understand. America is incapable of effecting large-scale political or cultural change in nations such as China and Iran, where state apparatuses remain strong, or even in loose geographical regions such as Afghanistan, where indigenous tribal loyalties remain potent. In weak and divided societies, the US is occasionally capable of installing a compliant quisling, though seldom capable of effecting a durable consolidation, as the recent overthrow of the Bakiyev "Tulip Revolution" in Kyrgystan demonstrates. In other words, the US is not either globally impotent or globally hyperpuissant, but either impotent or hyperpuissant relative to some concrete set of local circumstances. To a certain extent, the impotence influences the low burlesque of power-projection, as when, for example, the failure of jaw-jaw and sanctions to induce a change of regime behaviour leads to the banging of drums for war; face must be saved, and so war becomes preferable to an admission that the original policy was pointless.

Obviously no one on the thread has said this...

Of course no one said it in precisely those words, because my formulation was a synthesis of a variety of statements, the general sense of which was that we won't know until we try whether sanctioning China for reason of the one-child policy will alter its behaviour, while there is no point in sanctioning China for its predatory mercantilism, in an effort to preserve American jobs, because the benefits are unknowable, impossible, or at variance with the complex benefits of trade.

...so all you do is annoy the other side by putting words in their mouth.

No, I annoy them by not agreeing with them, inasmuch as these political controversies are seldom intellectual exchanges simply, but are also complicated displays of elective tribal affinities. In other words, I annoy because I am 'othering' myself relative to mainstream conservatism and the libertarian/fusionist wing of conservatism.

However, I'll bite on your challenge and say that I have my doubts that Chinese currency manipulation and protectionism have contributed to Chinese prosperity.

In their absence, the prices of Chinese goods would be higher in the US, and we would purchase fewer of them, lowering Chinese growth and prosperity. I have my doubts that the entire Chinese regime is deluded on this score.

What those practices amount to is a national effort to keep prices low.

They amount to a national policy of keeping the currency undervalued, so that prices will remain low, so that we'll keep buying epic quantities of crapola, keeping Chinese factories humming, Chinese plutocrats crapulent, and the peasants from revolting a la 1989.

I don't see any reason why in a completely free-trade system, free Chinese companies couldn't have kept prices low on their own and gotten the same effect.

If the renminbi were allowed to appreciate on international markets commensurate with China's growth, this would result in the loss of some degree of price-competitiveness, much as Volcker's interest rate policy in the early 80s increased global demand for the dollar, driving up its value, and obliterating the international sales of our manufacturing. The effects in China would not be that severe in structural terms, but they could be sociologically vertiginous, which is the fear of the regime.

Lydia,

Perhaps that was poorly phrased. People naturally will have concerns about what takes place in other parts of the world - especially in those parts to which they are ancestrally tied. Jewish people naturally care about Israel. I, being of European ancestry, care about what happens in Europe. Mexican Americans are obviously concerned with Mexico. This is completely natural. But it does underscore the problem of a multicultural society. When you have a disparate population with (often conflicting) ancestral ties around the world, a country's policies can become quite incoherent. That said, the U.S. acting as the world's policeman - trying to extirpate every instance of evil under every rock in every Third World country - seems to me not only a waste of time and money but patently ideological in that it assumes the U.S is not a natural historic nation -- one limited by traditional ancestral ties and obligations -- but the moral arbiter of mankind.

BTW, I wasn't implying that your post was ideological. As I said above, I agree with some of what you're saying, and I often agree with you in general (in other posts). I didn't mean to imply that you're overtly ideological. I don't think you are.

The Chinese civilization has existed for thousands of years, and they recently massacred their own young people live in front of the international media. No, they don't care what we think of them, not all that much.

No, they don't. If you factor in the despairing and the underemployed, who are excluded from the headline numbers, and that as rapidly as possible for statistical purposes, actually-existing America fares even more poorly by comparison.

This has to do with the recession, what we were talking about was manufacturing jobs that had been deteriorating for years prior to the recession, according to you because the destuctive effects of free trade. The Employment rate in America has been much higher in general than that of Germany. In 2000, for example, at the peak of the late 1990s economic boom, when the U.S. unemployment rate stood at 4.0 percent (its close to 10 percent now due to the recession) were as the German rate has been around 8 to 10 percent for a good while and the reason it has not increased is because of major government loans and bailouts, but these can not last and as someone who believes there is still lots of trouble to come with this recession, I have to say that I think this is a falsely distorted government recovery created through stimulus, that will collapse when the funds run out. So I believe the German unemployment rate will rise when this happens, despite modest increases in the short term.

Quote from this Essay:

http://www.nber.org/reporter/summer04/blanchard.html

Second, the evolution of the average European unemployment rate hides large cross-country differences. In the four large continental countries -- France, Germany, Spain, and Italy --the unemployment rate has increased steadily and remains very high, around 10 percent.

This was written prior to the Recession.

No, I don't. I could with equal ease and facility state that those who object to the absence of a specific critique of some Mises Institute piece go back and read all of my material on this site, since much of it contains meta-critiques of the assumptions underlying stuff like the Mises article. To wit, the notion that the values/prices of goods and services are/should be determined by wholly economic forces is an artifact of history, and not a fact of nature; moreover, any actual set of market outcomes is the product of an antecedent architecture of law, custom, and so forth, where this is at least implicitly, and usually explicitly, politically determined.

This reply is terrible you didn't address anything and deliberately hide form the points. Show me these supposed assumptions in there ideas and in there points. Your analyses of the good of protectionism was the thing that was filled with assumptions. Explain how Protectionism doesn't increase unemployment, explain how trade barriers benefit the country and don't raise costs. Don't spout pretentious nonsense about "any actual set of market outcomes is the product of an antecedent architecture of law, custom, and so forth" which is no what relates to your support of these policy's. I pointed out that regulation and law effect costs, I said we should cut down on government intervention that harms trade or the ability to set up a business, and also legalisation that hurts the manufacturing sector.

The some of the specific points are:

Before they can make their case that the practice of outsourcing is harmful to the U.S. economy as a whole, the anti-outsourcing advocates must be able to demonstrate that the ultimate purpose of production is not consumption, but rather production itself.

Application of Menger's principle here is that when a less-costly way to make a good is discovered, whether it be through the application of new capital or through lower wages, then the value of the factors used for that good has changed as well. An economy cannot gain when the state attempts for force up the price of some factors so that the owners of those factors of production are able to gain an advantage. We are dealing here with the hoary fallacy of protectionism, period.

For all of the popularity of their arguments at this time – something that is being repeated by both major political parties in this current election season – the anti-outsourcing advocates have not discovered anything new. In the end, they repeat the Classical fallacy of goods deriving their value from the costs of production. Should they succeed in forcing their views into law, we can be sure that the ultimate outcome will that which befalls any society that gives into protectionism: a lower standard of living and, in the end, even more joblessness.

Explain how Protectionism doesn't increase unemployment...

I beg your pardon? Successful nations the world over practice a variety of forms of protection, not only to secure higher employment, but desired admixtures of employment types, a given quality threshold for employment, as well as other social goods, the point of these policy regimes being that political reality is complex, its success depending upon the realization of a balance of complex goods, and not simply low prices for consumers, ease of entry into business, low regulation, or maximal efficiency as defined by some abstract theory. Grasp this, or you're wasting my time.

Don't spout pretentious nonsense

Epistemic closure: actual insight from history is considered pretentious nonsense, when placed next to some economist's offerings, based on a handful of axioms.

I pointed out that regulation and law effect costs

Um, it's called a cost-benefit analysis, even when it encompasses goods not strictly reducible to the vulgarly economic. We have an FDA, which may well impose many foolish regulatory requirements, but exists because it is better to risk foolish regulation than to allow children to die as a consequence of untested, adulterated, or snake oil "medicines". Social goods, and therefore also, costs, are complex; it is the burden of the prudent statesman to weigh these goods, informed not solely by economics, but by ethics and a strong empathetic sense. You know, the part of Adam Smith's corpus that few read?

As to quote one, no, I don't have to demonstrate that, under protection, the purpose of production is production itself; the form of the indictment appears to presuppose that the purpose of production is consumption, with the implication that this should come at the lowest marginal cost, to maximize the latter, but this is simply false, because the purpose of an entire political economy is to balance production and consumption with a view towards maximizing the common good, economic and non-economic together.

As to quote two, the first sentence presupposes that purely economic costs are the determinant of factor values, a doctrine I have already rejected, inasmuch as it is reductive, in favour of the social embeddedness of economic values and processes. The underlying question is whether economics is servant or master. The second sentence is flatly false, as anyone acquainted with the history of America would know. American industrialization, despite many historical accidents involving the repression of labour and the corruption of the political and legal systems, did represent economic gains, despite being secured by protection, from its inception.

As to the third quote, retail all of that nonsense about lower living standards to the American middle class, who are more pressed in the post-industrial age than in the industrial age that preceded it. Free trade has distributional consequences, which have a significant impact on living standards and well-being, but any analysis of these is forsworn by neoclassical theory, Austrianism, and so forth.

MA, I actually think it's perfectly legitimate and even good to be concerned about what happens in other countries *even when* we have no ethnic connection with them. (I'm not Chinese, for example.) And as I pointed out before, there _are_ things that can be done, even besides cutting free trade, to show legitimate disapproval and to refuse to be involved. For example, the one-child policy has been brought up to Congress repeatedly to get them to stop funding it through the UNFPA. Because America has so many foreign aid commitments out there, we actually have influence that way. You and I both may agree that it would be better if America _didn't_ do all this foreign aid, but it would be foolish to say "there's nothing we can do" when, because of the money situation, there actually _is_ something we can do.

Tony, I hope you're still reading this thread. I can't believe I forgot to say this before:

Better even than a family-sized boycott of Chinese goods--contribute money to Population Research Institute.

www.pop.org

They have set up secret safe houses for pregnant women in China, and they either run or are trying to start an orphanage where baby girls won't "disappear." That's a conservative version in a Communist country of "direct action." :-)

Perhaps a minor point but when Maximos says:

the notion that the values/prices of goods and services are/should be determined by wholly economic forces is an artifact of history

it sounds like he is conflating values and prices. Austrian economics understands values and prices to be two different things, specifically that under laissez-faire capitalism, market prices of traded/exchanged goods or services will reflect the subjective valuations placed upon such goods or services by the end users. Mises makes clear several times in his primary treatise, Human Action, that an economic actor's subjective valuations of goods or services do not have to be based upon purely materialistc considerations alone. For example, in an effort to support local agriculture a homemaker may purchase her family's groceries from local producers and pay more than she would at a large chain supermarket.

With monopoly control over the use of force, government can easily set prices on the markets but it cannot directly alter the subjective valuations of individual economic actors (and thank God for that). I think government could certainly influence these valuations over time through outright propaganda or public education but I'm not sure that is what Maximos means here.

In short, there is nothing in Austrian theory, as expounded by Mises, that says prices or valuations (of goods or services) must be formed by purely materialistic concerns.

I'm not conflating them so as to confuse them, as though there were no distinctions to be drawn between them, but in order to emphasize that non-economic factors contribute to their determination; this might not need restatement in the case of values, and their influence on prices, if you're working with an Austrian paradigm, but in the case of prices, it means also that non-economic factors can and should influence law, and through law, prices, where this is necessary to secure some vital good.