International Trade: Oh God, Not This Again

Aright, bitches, the free trade thing.

This is not one of my “issues,” and I incline toward free trade, but the people who create these so-called free-trade deals obviously aren’t setting up free trade, and many of these “elites” (we need a better word for power-mad idiots) have an end-goal of eliminating western populations. They love treaties that destroy jobs held by European-descended people.

But they have much more dangerous ways of working toward that goal, which is why trade is low on my list of priorities. But for those for whom it is a high priority, some advice about debate:

Don’t contest free traders on theory. That’s their strength. Contest them on the thing that actually matters: the practical realities.

Why not take them on in the arena of theory? Because comparative advantage theory is not speculation. Its core proposition is a theorem, like the Pythagorean Theorem. That is, its core conclusion is proven to follow from the premises. We can judge from the amount of chatter that economists devote to it that the core proposition of comparative advantage theory is this:

If two nations have different tradeoffs in production, then there exists the possibility of mutual gains from trade.

(“Tradeoffs in production” means the slope of the production possibilities frontier, which describes a nation’s tradeoffs of one good for another. Like, how many apples they must sacrifice to grow another orange.)

This is the proposition free-traders have in mind when they repeat their mating call, “Ricardo!”

PPF
A production possibilities curve, showing tradeoffs in production.

And how are these gains from trade to be realized? Answer: if two nations have different tradeoffs in production, then it can be proven that they can minimize their joint costs of production… IF they trade in the right way.

The right way is the cost-minimizing way, where “cost” means the cost in terms of other goods you must sacrifice. (E.g., if you switch land from growing apples to growing oranges.) Minimizing costs of output means more output. So produce and export goods of which you’re the low-cost producer. That’s trade according to comparative advantage.

You cannot dispute the if-then statements in bold without looking like a doofus to anyone who is knowledgeable.

So don’t dispute them. If someone tells you, “Here is a triangle that is NOT a right triangle, and the Pythagorean Theorem tells us that…” you should point out that the Pythagorean Theorem doesn’t apply if it’s not a right triangle. Don’t dispute the Pythagorean Theorem; you’ll look like an idiot. Dispute its relevance to the matter at hand.

If you want to argue against so-called free trade agreements, here are some points you can make:

1. Verifying what a county’s comparative advantage is, is empirically impossible as a practical matter. Note what the central theorem says and doesn’t say. It says that if countries have different tradeoffs, then there exist some mutually beneficial trading opportunities. It doesn’t say that we know what those opportunities are… let alone that we can guarantee that actual trade is according to those mutually beneficial possibilities.

2. So-called free trade agreements are never actually that. Many people have made this point. They’re managed trade agreements, in which governments tweak the interventions they do in international trade.

Even George F. Will, before he became a contemptible cuck, pointed out when NAFTA was passed that if it were really a free trade agreement it would only be a couple of sentences, not hundreds of pages.

3. The proposition that there exist mutually beneficial gains is a statement about the aggregates of a nation. The theory does not say that all groups within the nation benefit. It leaves open the possibility that one group benefits to the tune of 10 units while another group loses 8, for a total aggregate gain of 2. OK, but if you’re in the group that loses 8 it’s not clear why you would support such a move. This is actually not heterodox, apparently. I once read on some Econo-blog about a (peer-reviewed!) paper that concluded that one group could benefit and another lose, from moving to free trade. I can’t cite the paper(s) off the top of my head, but apparently this has been out there in the literature for years now.

4. The theory says nothing about who captures the gains from trade even on a nation-to-nation level. It could be, in principle, that one nation captures all the benefits from trade and leaves the other nation exactly as well off as it was before. Except that not really, because all the adjustment costs are real costs, and then you never get any benefit. Adjustment costs include e.g. having to move to a new state to get a new job. Ricardian comparative advantage theory totally ignores adjustment costs.

The same point applies if your nation gets a small benefit from adjusting its industries, but the benefit is smaller than the adjustment costs.

* * *

Of course there is a real case against government interventionism in trade. The real case against interventionism is that governments are no more knowledgeable or angelic here than they are in any other area of life. They are ignorant and corrupt assholes, and there’s no reason to let them tell us what we can buy or sell.

Above I pointed out that many of the people who create “free trade deals” hate western populations. Well, giving those same psychopaths power to limit the trade we can do would be even worse than the current situation. In the current pro-free-trade political environment, they at least have to pay some sort of lip service to reducing trade barriers, which has occasionally forced them to actually do such. If we tell them, “Go ahead and control who we can trade with,” they will do exactly that, with great joy and gusto, and it won’t be with our best interests at heart.

If these people ever get the unlimited power they crave, they’ll try to starve us to death, following Stalin’s Ukraine genocide. Part of that attempt will be outlawing food imports. They’re likely to try that anyway, if they think they can get away with it, but for fuck’s sake let’s not make it any easier for them.

But all this is a relatively long-term issue. In the current political situation, worrying about international trade is rearranging the deck furniture on the Titanic just after it got hulled by the iceberg. Right now we need to worry about emergencies like immigration and the lawless judiciary. Once we solve those problems, we’ll have all the time in the world to worry about trivia like trade policy.

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