Thursday, December 13, 2018

Is this the way to promote free trade?







I tip my hat to the new Constitution
Take a bow for the new revolution
Smile and grin at the change all around
Pick up my guitar and play, just like yesterday,
Then I get on my knees and pray: we don't get fooled again!

The Who

When I read about NAFTA2 - oh, excuse me, it's called the USCMA (U.S., Canada, and Mexico Agreement) - I cannot stop The Who's classic rock anthem from ringing in my head.  Unfortunately, we all HAVE been fooled again, because in all reality, NAFTA1 and USMCA are pretty much the same thing.  Only the name has changed.
This article is pretty much a follow-up to my previous article "Deliver us from competition", wherein I argued that government has no business trying to protect whiny, wimpy, crying businesses from competition.  And it matters not which side of some arbitrary "border" the competition is coming from. 

When I was researching material this article, my original intent was to familiarize myself with the new trade agreement, so that I could speak intelligently about what has changed.  But after just a few paragraphs, my eyes glazed over and I gave up.  So, dear reader, if you really want to know all the gory details, you can read about it here.

If they had asked me to write up a new trade agreement for the U.S, Canada, and Mexico - or the U.S. and ANY country around the world - I would have simply grabbed the nearest dinner napkin and scrawled the following:

     "The government shall not interfere with trade."  
     Capt. David

There.  See how easy it is?
One of the crummiest arguments that pundits make to justify government meddling in trade is that we have a "trade deficit", a major problem that must be "fixed".  Oh for crying out loud.  There is no such thing as a "trade deficit".  Allow me to explain: 

A few blocks from home is a Kroger grocery store.  Over the many years, I have spent thousands of dollars - possibly TENS OF THOUSANDS of dollars - buying their merchandise.  Yet, in all those years, how much of my services have they purchased from me?  Answer:  Zero.  Zilch.  Nada.  By golly, there is a HUGE trade deficit here!  I need to quit patronizing them, until they start working to even out this "trade deficit"!

The fallacy, of course, is that we are all part of one vast economic system, where every dollar spent changes hands over and over, circulating around and filtering and disbursing through the economy.  What goes around comes around.  What's good for Kroger is good for everyone.

It's no different when an American business and a Mexican or a Chinese business do business with one another.  We all live on the same planet, and in the long run, it all comes around.  Trade is good.  Restricting trade does not create wealth.

But what if the Mexicans or the Chinese or whoever are being unfair?  What if they don't pay their workers the right salary?  What if their government is really, really bad?  Should America just trade away, letting them "get away" with their many crimes against humanity? 

Those who use that argument are looking at the situation backwards.  America is supposed to be the good guys - the role model.  We should be the ones demonstrating what a free market is really like, and demonstrating to the world how much wealthier and stronger our economy is, because our government gets the hell OUT OF THE WAY and lets the market do its magic.  We should be preaching the gospel of freedom and minimal government, and working hard to convince the rest of the world that THIS is way to promote stability and a high standard of living.  Instead, we keep getting it backwards.  We let the rest of the world, including all those socialist, fascist, communist, tyrannical, despotic, corrupt, inefficient, busybody, despicable governments convince US to do it THEIR way. 

Trade is good.  If it wasn't good, they wouldn't do it in the first place.  Let freedom ring.  And don't be fooled again.




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