Cry freedom, not ‘fairness’

When reading U.S. Commerce Secretary Wilbur Ross’s op-ed in The Wall Street Journal this week, I was reminded of a popular history book published in Quebec a few decades ago. It reproduced a painting by Charles William Jefferys on which Pierre Esprit Radisson, the 17th-century explorer and trader, is supposedly exchanging goods with an Indian chief. The caption asks a tendentious question: “In an exchange, there is always a winner. Is the winner Radisson or this Indian chief?”

This is exactly not the way to think about free trade, which is not a zero-sum game, whatever one party’s handicap may be. A voluntary exchange benefits each of the parties; otherwise, the harmed one would have declined the exchange.

Many of Mr. Ross’s readers may think he did a good job showing the hypocrisy of those foreign leaders who claim to defend free trade but whose own governments impose higher tariffs than the U.S. government does. But all governments are hypocritical in a deeper way: they side with producers against consumers, which is what protectionism does, while draping themselves in nationalist flags. The U.S. government is certainly not the worst of them, which is what contributed to post-war America becoming such a great economic power. Now, Mr. Ross wants to change that.

The first striking thing about the Commerce secretary’s protectionist plea in the Journal is that it relies on typical socialist terminology. His short article uses “fair trade” three times, and “level playing field” twice. Interestingly enough, those are the same sacrosanct shibboleths that the World Trade Organization uses to justify allowing developing countries such as China to impose higher tariffs on imports — as if protectionism could bootstrap economic growth! A careful reader will notice also that Ross always talks about “nations,” never about individuals. Bernie Sanders would not have done much worse.

Free trade is like free exchange in general: it is the liberty of the individual to buy imports, not the freedom of “the nation” to export. What makes us free is when our own government does not (partially or totally) forbid us to trade. We aren’t made free just because all the banana republics in the world allow their subjects to buy our wares.

Free markets are about consumer sovereignty, not producer domination. Trade is about consumer benefits, not about the enrichment of crony capitalists who beg Washington or Ottawa to protect them against foreign competition. Free unilateral trade — when a country decides to just unilaterally abolish all of its own import barriers, as in Hong Kong or in 19th-century Britain — would produce many if not most of the benefits of multilateral free trade. The fact that America has some of the lowest tariffs in the world is reminiscent of a time when America was a bit greater, and its government realized, although not consistently, that unilateral reductions of tariffs was in ordinary people’s interests.

Ross boasts about the numerous actions his government has brought against American consumers, or as he prefers to call them “trade-remedy actions,” chalking up 54 anti-dumping and countervailing duty investigations compared to 40 in the first seven months of last year. They’ve gone after not only the Chinese scapegoat, but also Canada’s lumber producers and its state pet, Bombardier. The U.S. government has become a master at gaming the system, at using WTO exceptions to protect American companies against American consumers. Douglas Irwin, a professor of economics at Dartmouth College, writes that it is “hard to avoid the conclusion that (anti-dumping laws) are simply a popular means by which domestic firms can stifle foreign competition under the pretence of ‘fair trade.’”

Speaking of the Chinese scapegoat, does Mr. Ross realize that the proportion of U.S. consumer expenditures on Chinese goods is all of 1.2 per cent? Consumers spend most of their money on largely non-traded goods like education, health, and housing.

Defying economic and individualistic logic, Mr. Ross says he wants to “make better deals with our trading partners…” A national government does not have to make deals on behalf of individual citizens in loco parentis and then impose them from the top down. Free trade means letting everyone — individual or corporation — make their own private deals.

It is perhaps a good sign that Mr. Ross at least tries to drape himself in the mantle of free trade. But what he calls “free trade” and “protectionism” inverts the meaning of the two concepts. The protectionist emperor is still intellectually naked.

It is free trade — not “fair trade” — that is an essential part of the difference between a free and an unfree society. Any one of those aforementioned banana republic’s leaders has his own self-interested idea of what “fairness” means. George Fitzhugh, the 19th-century defender of slavery, understood the direct connection between free trade and individual freedom, and so he consistently argued against both. “Admit liberty to be a good,” he wrote, “and you leave no room to argue that free trade is an evil – because liberty is free trade.”