The unlikely rise of Bernie Sanders and Donald Trump has focused public attention on an issue that hasn’t gotten much attention since the Civil War era – international trade.
One of the biggest controversies in nineteenth century American politics was tariffs – with Big Business manufacturers for them, and farmers and producers of other commodities against them. Corporate behemoths wanted protection from foreign competition, while ordinary consumers wanted lower prices. Furthermore, tariff revenue was used to enrich crony capitalists in the industrialized North: the federal government subsidized the building of railroads, canals, and other infrastructure, while the beneficiaries of this largesse turned cheap tariff-free commodities produced in the South and West into high-priced manufactured goods.
These days, however, the “free trade” versus “fair trade” debate is seemingly reversed, with the big corporations supposedly favoring the former while the latter is championed by leftists like Sanders and right-wing populists of the Trumpian variety. In reality, however, nothing has really changed.
It would be very easy to institute a free trade regime in the United States, and you wouldn’t need a thousand-page treaty to do it. You’d only have to abolish all tariffs, subsidies, and other government-imposed impediments to the free passage of goods across our borders. That’s free trade.
But of course other countries, not being as obliging to the wishes of their own downtrodden consumers, would not necessarily reciprocate. The native manufacturers of these countries, enjoying considerable political pull, would follow the example of our own nineteenth century corporate titans and lobby for the imposition of protective tariffs. Here in the US, our own manufacturing giants would soon raise the alarm, political pull would win out over the welfare of mere consumers, and a tariff wall would go up. This is known as a “trade war.”
Absent an international system of free trade, these trade wars are a permanent feature of global commerce. The irony is that they are now being waged in the name of ‘free trade.” A perfect example of this phenomenon is the North American Free Trade Agreement (NAFTA), which Sanders and Trump have pointed to as the villain that decimated America’s industrial capacity and turned many sections of the country into hollowed out shells. And they are perfectly right to do so – but perfectly wrong to attack NAFTA as the epitome of free trade. As Murray Rothbard pointed out over twenty years ago:
“In truth, the bipartisan establishment’s trumpeting of ‘free trade’ since World War II fosters the opposite of genuine freedom of exchange. The establishment’s goals and tactics have been consistently those of free trade’s traditional enemy, “mercantilism” — the system imposed by the nation-states of 16th to 18th century Europe….
“Whereas genuine free traders look at free markets and trade, domestic or international, from the point of view of the consumer (that is, all of us), the mercantilist, of the 16th century or today, looks at trade from the point of view of the power elite, big business in league with the government. Genuine free traders consider exports a means of paying for imports, in the same way that goods in general are produced in order to be sold to consumers. But the mercantilists want to privilege the government-business elite at the expense of all consumers, be they domestic or foreign.
“In negotiations with Japan, for example, be they conducted by Reagan or Bush or Clinton, the point is to force Japan to buy more American products, for which the American government will graciously if reluctantly permit the Japanese to sell their products to American consumers. Imports are the price government pays to get other nations to accept our exports.”
A key ingredient of the new mercantilist formula is “foreign aid,” which is really just a subsidy for American exporters. When our client states get dollars in the form of foreign aid, these dollars are used to buy American products – and enrich the corporate interests who fund our free-spending politicians.
NATO is another example of how the system works to enrich the “donor class” at our expense. Whenever a new member is inducted into the alliance, they must “upgrade” their military hardware to “NATO standards” – and there is Lockheed-Martin, or some other weapons manufacturer, ready and willing to do the job. And American taxpayers foot the bill, because our protectorates pay Lockheed or whomever with the “foreign aid” we lavish on them with abandon. The internationalists tell us we’re holding back global chaos by exercising “global leadership,” but the vulgar reality is that the “security architecture” so beloved by our foreign policy “experts” is just a cash machine for powerful corporate interests.
While the “Asian tigers” are eating our lunch – out-competing American companies, hollowing out our industrial capacity, and throwing hundreds of thousands of workers into the unemployment lines – people wonder: why is this happening? They don’t understand that this is the price we pay for imperialism: Japan and South Korea, for example, allow us to station troops on their territory, in effect accepting their roles as US satellites in exchange for dropping trade barriers – except it’s a one-way street. The Japanese get to maintain tariffs and other barriers to the entry of American goods: ditto for the Koreans. This is the hidden burden of empire.
In addition, the Japanese and Koreans are relieved of the need to pay for their own defense, leaving them free to invest in new products and methods, while US taxpayers must bear the burden, freezing billions of dollars in military spending that might otherwise go into productive investments. Trump calls this a “bad deal,” and he’s right – although his proposed solution, tariffs, will only make the economic dislocation he descries worse.
The Trans-Pacific Partnership (TPP) and similar agreements have nothing to do with free trade: they are in fact cartels set up by the signers to exclude commercial rivals. In the case of TPP, the target is China. Who benefits? Certain corporate interests, who get to exclude competitors. Consumers are the losers.
“Free trade” is nowadays used to further the globalist agenda, which seeks to substitute supra-national “standards” enforced by international “commissions” for the rule of law at home. NAFTA’s numerous “side agreements” set up a whole raft of rules, regulations, and enforcement mechanisms to “harmonize” environmental and labor regulations, taking them out of our hands and giving ultimate authority to unaccountable international bureaucracies. TPP follows the same centralizing, supranational statist pattern.
We are truly living in Bizarro World, where up is down, right is wrong, and protectionist nonsense is “free trade.” But then again, in an age like ours, when “Operation Iraqi Freedom” means destroying an entire country and delivering it into tyranny, and “Operation Enduring Freedom” translates into Operation Perpetual War, what else can we expect?
NOTES IN THE MARGIN
You can check out my Twitter feed by going here. But please note that my tweets are sometimes deliberately provocative, often made in jest, and largely consist of me thinking out loud.
I’ve written a couple of books, which you might want to peruse. Here is the link for buying the second edition of my 1993 book, Reclaiming the American Right: The Lost Legacy of the Conservative Movement, with an Introduction by Prof. George W. Carey, a Foreword by Patrick J. Buchanan, and critical essays by Scott Richert and David Gordon (ISI Books, 2008).
You can buy An Enemy of the State: The Life of Murray N. Rothbard (Prometheus Books, 2000), my biography of the great libertarian thinker, here.