What's Right With the World Wednesday presents...
Last week's What's Your Economic Style? Quiz was loads of fun. I've edited it for accuracy, so if you didn't like the results last time, try again, and let me know what you come up with!
This week, instead of criticizing the Democratic party, I want to focus on something the Democrats are getting right again: free trade. Now, if only Obama would listen...
When Goods Can't Cross Borders, Terrorists Will
This phrase should be burned into your mind. Go ahead, I will wait while you repeat it to yourself silently. You have to fully grasp the importance of this concept, otherwise you will fall prey to detrimental thinking that presupposes this idea: protectionism, keeping jobs "at home," revising (i.e. further restricting) NAFTA, increasing tariffs.
When a man is not free to trade with his neighbor, or his neighbor or someone within his home country imposes barriers to trade, he is going to be mad. He will see opportunity stifled and will perceive said barriers as menacing roadblocks to improving his life. Once he is sufficiently weakened and angry, he will try to kill you and take your things.
Why You Don't Get Shot at The Home Depot
Would The Home Depot do well if they killed people who purchased items from their store? (Let's just say I'd short their stock.) No, they need your money to survive just as much as you need them not to kill you to buy their stuff. Likewise, if a country is trading with you, they are far less likely to want to kill you. Trade works to encourage peace, because you shouldn't kill your trading partners. This concept is so simple, I'm baffled that any halfway sentient being ignores it. Those who encourage protectionism are unecessarily frightened they won't get their fair share in life (which, of course, must match their personal criteria of fair).
They are unimaginative, except when it comes to their fantasy-based pay grades. They are not willing to work harder than someone in India, but somehow find plenty of energy to encourage unions and politicians to force companies to artificially inflate their incomes. If someone is willing and able to perform my job equally well for less pay, I'm robbing my employer and my antics should not be tolerated. This kind of thinking is what perpetuates global poverty, not improper wealth redistribution.
The Democrats Are Finding a Pulse
I know I give the Democrats a hard time. I would be remiss to withhold credit where due. You must read this Wall Street Journal article, "Free Trade Can Fight Terror," by Democratic think-tankers Edward Gresser, director of the Trade and Global Markets Project at the Progressive Policy Institute and Marc Dunkelman, vice president for strategy and communication at the Democratic Leadership Council.
Our tariff regime puts many nations in the Middle East, whose young people are susceptible to the sirens of Islamic fundamentalism, at an unintended disadvantage. This works against our efforts to stamp out jihadism. Fortunately, the problem is easy to fix.
Sen. Maria Cantwell (D., Wash.) has taken a step toward fixing this problem, by introducing a bill, the Afghanistan and Pakistan Reconstruction Opportunity Zones Act of 2008, to waive tariffs on many goods from Afghanistan and Pakistan's frontier provinces. The next president should follow up with a broad, tariff-exemption initiative to help the Muslim world break its downwards spiral, revive trade and put its young people back to work.
Another compelling article, "Democrats Once Did Free Trade," offers historical highlights of Democrat Cordell Hull's opposition to Franklin D. Roosevelt's detrimental New Deal policies, which are eerily similar to some of Barack Obama's proposals.
Hull believed that trade was one of the best ways to prevent a repeat of the carnage of World War I. He wrote: "Though realizing that many other factors were involved, I reasoned that, if we could get a freer flow of trade -- freer in the sense of fewer discriminations and obstructions -- so that one country would not be deadly jealous of another, and the living standards of all countries might rise, thereby eliminating the economic dissatisfaction that breeds war, we might have a reasonable chance for lasting peace."
Franklin Roosevelt named Hull secretary of state in 1933, but at first lent scant support to Hull's cause. New Dealers, believing that the government should manage trade and not free it, were suspicious of him.
Hull's efforts to reduce trade barriers were not a big success in his day. Then, as now, Democrats were divided in their support for freer trade. With Europe heading toward war, the secretary of state's initiatives were too little too late.
Economics is Not a Zero Sum Game
Most uninformed people believe that there is one big money pie in the world and that when some people get a big piece that leaves less portion for everyone else to share. These same uninformed people call the guy who gets a big piece greedy and likes to discount his contributions to society despite the fact that this man most likely employs many other fellow citizens and provides items they like to consume, like Macs or PCs.
The concept that when You Win - I Lose may be true in Monopoly, but not in the real world. The reality is, we can bake pies all day long. Wealth is created, not simply distributed. How sad and ironic that the book that pioneered this idea in its infancy is free to peruse on any internet connection.
Tell your friends.
3 Comments:
I'm curious to see what you are thinking...