David Boaz

Too many advocates of trade liberalization don’t really understand the case for free trade. Consider this sympathetic interview by Steve Inskeep of NPR with U.S. Trade Representative Michael Froman, the chief negotiator of the Trans-Pacific Partnership:

INSKEEP: Froman argues the TPP, the Trans-Pacific Partnership, will give U.S. industries more access to foreign markets. Granted, there’s a trade-off. Other nations get more access to the U.S. for their products. Froman contends that, at least, happens slowly as tariffs or import taxes drop.

FROMAN: The tariff on imported trucks from Japan, as an example, won’t go away for 30 years. On apparel and textiles, we worked very closely with the textile manufacturers in the U.S. to come up with an outcome that they could be comfortable with, so that we’ll let in clothes coming that are made Vietnam or made in Malaysia, but they’ve got to use U.S. fabric.

Inskeep refers to the lowering of U.S. tariffs as “a trade-off,” and Froman accepts that characterization. Both operate from the premise that Americans want other countries to reduce their barriers to our exports, and that the “trade-off” for that benefit is that we must reduce our own trade barriers.

That’s backwards. The benefit of trade is that we get access to goods and services that we might get otherwise, or we get to pay lower prices for the goods we want. More broadly, we want free – or at least freer – trade in order to remove the impediments that prevent people from finding the best ways to satisfy their wants. Free trade allows us to benefit from the division of labor, specialization, comparative advantage, and economies of scale.

This is a point that Cato scholars and our Herbert A. Stiefel Center for Trade Policy Studies have been making for years. As Center director Dan Ikenson wrote last year:

Arguably, opening foreign markets should be an aim of trade policy, but real free trade requires liberalization at home. The real benefits of trade are measured by the value of imports that can be purchased with a unit of exports – the so-called terms of trade. Trade barriers at home raise the costs and reduce the amount of imports that can be purchased with a unit of exports, yet holding firm to those domestic barriers while insisting that foreign markets open wider is the U.S. trade negotiating strategy. Indeed, that’s almost every government’s negotiating strategy. It is the crux of reciprocity-based trade negotiations, which, at its core, is a rejection of free trade.

Ikenson and Scott Lincicome made that case at greater length, with specific emphasis on the “central misconception” that “exports are good and imports are bad,” almost five years ago.

Thirty years ago in the Cato Journal, the economist Ronald Krieger explained the difference between the economist’s and the non-economist’s views of trade. The economist believes that “The purpose of economic activity is to enhance the wellbeing of individual consumers and households.” And, therefore, “Imports are the benefit for which exports are the cost.” Imports are the things we want—clothing, televisions, cars, software, ideas—and exports are what we have to trade in order to get them.

And I wrote more about this persistent misunderstanding in The Libertarian Mind (buy it now!):

Politicians just don’t seem to get this. President Obama’s official [2010] statement on “Promoting U.S. Jobs by Increasing Trade and Exports” mentions exports more than forty times; imports, not once. His Republican critics agree: Senator Rob Portman says that a trade agreement “is vital to increasing American exports.” More colorfully, during his 1996 presidential campaign, Pat Buchanan stood at the Port of Baltimore and said, “This harbor in Baltimore is one of the biggest and busiest in the nation. There needs to be more American goods going out.” That’s fundamentally mistaken. We don’t want to send any more of our wealth overseas than we have to in order to acquire goods from overseas. If Saudi Arabia would give us oil for free, or if South Korea would give us televisions for free, Americans would be better off. The people and capital that used to produce televisions—or used to produce things that were traded for televisions—could then shift to producing other goods. Unfortunately for us, we don’t get those goods from other countries for free. But if we can get them cheaper than it would cost us to produce them ourselves, we’re better off.

Sometimes international trade is seen in terms of competition between nations. We should view it, instead, like domestic trade, as a form of cooperation. By trading, people in both countries can prosper. And we should remember that goods are produced by individuals and businesses, not by nation-states. “South Korea” doesn’t produce televisions; “the United States” doesn’t produce the world’s most popular entertainment. Individuals, organized into partnerships and corporations in each country, produce and exchange. In any case, today’s economy is so globally integrated that it’s not clear even what a “Japanese” or “Dutch” company is. If Apple Inc. produces iPads in China and sells them in Europe, which “country” is racking up points on the international scoreboard? The immediate winners would seem to be investors and engineers in the United States, workers in China, and consumers in Europe; but of course the broader benefits of international trade will accrue to investors, workers, and consumers in all those areas.

The benefit of international trade to consumers is clear: We can buy goods produced in other countries if we find them better or cheaper. There are other benefits as well. First, it allows the division of labor to work on a broader scale, enabling the people in each country to produce the goods at which they have a comparative advantage. As Mises put it, “The inhabitants of [Switzerland] prefer to manufacture watches instead of growing wheat. Watchmaking is for them the cheapest way to acquire wheat. On the other hand the growing of wheat is the cheapest way for the Canadian farmer to acquire watches.”

I hope that USTR Froman, Senate Finance Committee chair Orrin Hatch, and other advocates of trade liberalization will come to understand and to advocate the strong case for free trade, which economists have understood since Adam Smith in 1776.

Sometimes I think Republicans get a bad rap from mainstream journalists, who tend to be more sympathetic to liberals and Democrats. The problem may be particularly acute when it comes to social conservatives, whose views seem especially unpopular among journalists.

But right now three conservative Republican presidential candidates are mostly getting a free pass from the media on their appalling judgment over the weekend.

“Ted Cruz, Bobby Jindal, and Mike Huckabee fete a man who thinks the Bible says we should execute gays.”

Ted Cruz, Bobby Jindal, and Mike Huckabee spoke at a conference in Des Moines called “Freedom 2015: National Religious Liberties Conference,” a two-day event that began last Friday. Now, that doesn’t sound so bad. In fact, my colleagues at the Cato Institute and I have recently defended the rights of Hobby Lobby, the Little Sisters of the Poor, and the bakers and photographers who don’t want to participate in same-sex weddings. 

But this conference was about something far different from liberty, although you wouldn’t know that from bland media coverage like this CBS News article. So it’s a good thing that The Daily Beast and Rachel Maddow of MSNBC picked up the story, with video from People for the American Way’s RightWingWatch.

The conference was organized by Kevin P. Swanson, a minister in Colorado and host of the Generations Radio Show. Swanson is part of the Orthodox Presbyterian Church and the far-right fundamentalist Christian Reconstructionism movement, which author Walter Olson wrote about at length in 1998. Swanson gave the conference’s opening and closing talks and interviewed Cruz, Jindal, and Huckabee. And in his closing keynote address, Swanson ranted at length about topics that would hardly be characterized as religious liberty:

YES! Leviticus 20:13 calls for the death penalty for homosexuals. YES! Romans Chapter 1, Verse 32, the Apostle Paul does say that homosexuals are worthy of death. His words, not mine!  And I am not ashamed of the Gospel of Jesus Christ. And I am not ashamed of the truth of the word of God. And I am willing to go to  jail for standing on the truth of the word of God.

To be sure, he did say that “civil leaders” should not apply the death penalty today, not until the culture has changed and gays have been put on notice that they must repent or be put to death. Thanks for small favors, I suppose. But it’s also worth noting that at least two other speakers at the conference likewise have advocated the death penalty for gay people.

And as Maddow notes, this is not just something that the conference host has said in the past, though he had said it plenty of times, as a Google search would have revealed. This is what he said in the keynote address at the conference attended by three candidates for president. 

That wasn’t the full extent of the crazy at the conference. As the gay website Towleroad reported:

Swanson has also said that the government should put gay people to death, warned that the Girl Scouts and the movie “Frozen” turn girls into lesbians and blamed natural disasters on gay people and women who wear pants. Swanson has also said that churches accepting gay couples will lead to the persecution, imprisonment and murder of Christians, and wished for the good ole days when country singer Kacey Musgraves would have been hanged for her pro-gay lyrics.

Jake Tapper asked Cruz about his attendance at the conference, and Cruz responded that he did not “know what this gentleman has said” but that religious liberty is a very important issue. Would Cruz accept that answer from a presidential candidate who spoke at a conference where the host and keynoter yelled “God damn America” or said that Christians should be executed? I doubt it. He should be asked about his participation again, as should Jindal and Huckabee.

And American conservatives should be asked if they find all this acceptable. Can you actually support presidential candidates who stand on such a stage, answering questions from such a person?

If the three Democratic presidential candidates accepted the invitation of, and answered the questions of, an equally extreme leftist, a person who advocated the execution of peaceful people he disliked, conservatives everywhere would be outraged. I hope they start holding their own candidates to the same standard.

Friday afternoon Rush Limbaugh took a call from a conservative teenager who wanted to know how to help his generation “realize what’s happening in our nation.” Rush offered some thoughts, beginning with this:

Liberalism is so easy.  All you have to do is see some suffering and tell everybody that you see it, and that it really bothers you. Right there, you are given great credit for having great compassion, and people will say great things about you.  All you have to do is notice it.  You don’t have to offer a solution.  If you do offer a solution, say, “The government ought to do something,” then they’ll really, really love you. Liberalism’s easy. 

That’s why a lot of people end up going there, is no resistance to it. It doesn’t take any kind of thought because it’s all based in emotion, and thinking is harder than feeling.  Thinking’s an applied process. 

That’s a good point. It is indeed easy to see a problem and say “the government ought to do something.” People don’t make enough money? Raise the minimum wage. Don’t think about what the effects of that might be. Or just increase welfare. And again, don’t think through the long-term effects. IBM is too big? Break it up, even as new competition is about to leave IBM in the dust. Part of the problem here is taking a snapshot view of the world – which at any point will be full of inefficiencies and inequalities— rather than a dynamic view. The world is constantly changing. Economic growth is a process. Things that are first bought only by the rich become cheaper and more available to the middle class and then to everyone. And centralized, compulsory “solutions” to immediate problems may impede growth, improvement, and progress.

But Rush might have mentioned that sometimes “conservatism” is easy, too. All you have to do is see a problem and demand a government program. Some people get in trouble with drugs? Ban ’em. The Middle East is in chaos? Bomb some more countries. Russia is assertive? Stand up to ’em! “It doesn’t take any kind of thought because it’s all based in emotion, and thinking is harder than feeling.  Thinking’s an applied process.” And when you think about it, you might realize that prohibition introduces all sorts of new problems, that the United States can’t control the whole world any more than it can control the American economy, that threatening war with a nuclear-armed Russia might have disastrous consequences.

Yes, thinking is harder than feeling. It’s easy to say, “The government ought to do something.” And both liberals and conservatives default too easily to such easy answers.

I hope everybody’s read my book The Libertarian Mind. Not to mention the companion volume The Libertarian Reader.

But for those who prefer listening or watching videos to reading, I’m excited to announce my new online Introduction to Libertarianism, the first of several Guides to libertarian ideas produced by Libertarianism.org. Each Guide will include an introductory video, a series of video lectures, and a featured book, along with additional reading lists, essays, and links to other materials. Here’s a peek:

Coming soon: Guides on such topics as economics, political philosophy, and public policy, generally with a short original book to accompany the videos. For the Introduction to Libertarianism, the accompanying book is The Libertarian Mind. The 14 short lectures – 10 to 20 minutes each – track the sections of the book:

The Early Roots of Libertarianism

The Classical Liberal Era

The Modern Libertarian Revival

What Rights Do We Have?

The Dignity of the Individual

Pluralism and Toleration

Law and the Constitution

Civil Society

Networks of Trust

The Market Process

The Seen and the Unseen and International Trade

What Big Government Is All About

Public Choice

The Obsolete State

My colleagues at Libertarianism.org and I have tried to create the best available introduction to libertarianism here in 2015. And by the way, even though it’s called “Introduction,” I think almost any libertarian will find some new and interesting material in both the lectures and The Libertarian Mind.

Read the book! And check out the video lectures at Libertarianism.org. 

Before he launched his presidential campaign, Jeb Bush released his emails from his eight years as governor. Now he’s released a 700-page book of selected emails. According to Amazon’s search function, I’m not in the book. But I did have a brief exchange with Governor Bush in 2003. As a libertarian, I wasn’t convinced by his argument. But I was impressed that the governor personally answered an email that I didn’t even send to him but rather to a member of his press staff. Governor Bush announced the creation of the Governor’s Task Force on the Obesity Epidemic, with such goals as:

1. Recommend ways to promote the recognition of overweight and obesity as a major public health problem in Florida that also has serious implications for Florida’s economic prosperity;
2. Review data and other research to determine the number of Florida’s children who are overweight or at risk of becoming overweight;
3. Identify the contributing factors to the increasing burden of overweight and obesity in Florida;
4. Recommend ways to help Floridians balance healthy eating with regular physical activity to achieve and maintain a healthy or healthier body weight;
5. Identify and research evidenced-based strategies to promote lifelong physical activity and lifelong healthful nutrition, and to assist those who are already overweight or obese to maintain healthy lifestyles;
6. Identify effective and culturally appropriate interventions to prevent and treat overweight and obesity;

When the announcement of this task force reached my inbox, courtesy of the governor’s office press list, I had this exchange (read from the bottom):

From: Jeb Bush [mailto:jeb [at] jeb.org]
Sent: Thursday, October 16, 2003 8:05 PM
To: David Boaz
Cc: jill.bratina [at] myflorida.com
Subject: FW: Executive Order Number 03-196

David, the reason for this is that obesity creates huge costs to government. If you believe in limited government, you should support initiatives that reduce it. I know you believe that it is not the role of government to deal with these demands, which I respect, but until you win the day, we need to respond to the challenge.

Jeb

—–Original Message—–
From: David Boaz [mailto:dboaz [at] cato.org]
Sent: Wednesday, October 15, 2003 10:30 AM
To: DiPietre, Jacob
Subject: RE: Executive Order Number 03-196

Why is what I eat any of the government’s business? This is the very definition of big government.

—–Original Message—–
From: DiPietre, Jacob [mailto:Jacob.DiPietre [at] MyFlorida.com]
Sent: Wednesday, October 15, 2003 10:21 AM
To: ALL OF EOG, OPB & SDD
Subject: Executive Order Number 03-196

Memorandum
DATE: October 15, 2003
TO: Capital Press Corps
FROM: Jill Bratina, Governor’s Communications Director
RE: Executive Order Number 03-196
Please find attached an Executive Order creating the Governor’s Task Force on the Obesity Epidemic.

As I said, I wasn’t persuaded. I’ve written that obesity is not in fact a public health problem. It may be a widespread health problem, but you can’t catch obesity from doorknobs or molecules in the air. And the idea that our personal choices impose costs on government, through semi-socialized medicine and similar programs, has no good stopping point. If obesity is the government’s business, then so are smoking, salt intake, motorcycle riding, insufficient sleep, cooking all the nutrients out of vegetables, and an endless stream of potentially sub-optimal decisions. (I was going to include drinking whole milk, but … well, you know.)

I’m glad to note that last month Jeb Bush said that a federally developed anti-obesity video game, “Mommio,” was a waste of “scarce resources.” Maybe he’s coming around.

Republican presidential campaigns are supposed to be simple. Republicans nominate the next guy in line. More precisely, Republicans nominate the guy who ran second the last time around. (And so far, it’s always been a guy.)

Ronald Reagan in 1980, George Bush in 1988, Bob Dole in 1996, John McCain in 2008, Mitt Romney in 2012 — each of them had been the runner-up the last time the GOP nomination was open.

The only exception was George W. Bush in 2000, and that was at least partly because there really was no credible runner-up in 1996. Polemicist Pat Buchanan and publisher Steve Forbes finished with more votes than any other candidates.

And thus, as Michael Kinsley wrote, “it was decided that the Republican candidate for president [in 2000] should be the less impressive of the two political sons of the man who had most recently lost them the White House.”

“Three months before the first voting in Iowa, there’s nothing simple about this Republican race.”

And now the Republicans face another year like 2000. No one from the 2012 primaries seems like a credible candidate this year, so the race is wide open. Some thought the rule would be, “If there is no runner-up, nominate the next Bush in line.” But widespread if belated dissatisfaction with the previous Bush presidency has put that plan in jeopardy.

Today Republican voters face a choice among several kinds of candidates.

Leading the polls are two men who have never before sought or held public office, Donald Trump and Ben Carson. Both have a certain appeal but are given to odd, extreme, and offensive comments. Republicans haven’t nominated a non-politician since Dwight Eisenhower, and he had been Supreme Allied Commander during World War II. It’s highly unlikely that Carson, Trump, or Carly Fiorina will make it to the finish line — which means that more than half of Republican voters are not yet committed to any likely nominee.

The second category includes the safe establishment candidates, the fading Jeb Bush and Ohio’s John Kasich. Both have been twice elected governor of a major state. Kasich also chaired the House Budget Committee. Bobby Jindal could have been this group, except that the Rhodes Scholar who ran Louisiana’s health department at 25 decided to play down his 19-year career in public sector management and campaign as a yahoo.

Some observers put Marco Rubio in the establishment category, too. He’s handsome, a good speaker, right at the center of the Republican party ideologically. And safe, like Bush and Kasich. The difference is that Bush and Kasich have records of accomplishment. I have yet to find a Rubio supporter who can cite a single accomplishment as senator or as speaker of the Florida House. That may be a problem as voters come to focus on the more plausible candidates and their records, though first-term senators with thin records have been elected before.

The final category would be the inside outsiders, or the anti-establishment politicians — people with some political experience who still offer a real challenge to the establishment candidates. This fourth group includes senators Ted Cruz and Rand Paul. Like Jindal, Cruz is a product of elite universities campaigning as a tub-thumping preacher. He thinks he can combine evangelical and tea party voters, take libertarian voters from Paul, and then go head-to-head with the last standing establishment candidate.

Paul thinks he can bring out a larger libertarian vote than most observers count on. After all, his more staunchly libertarian father, as a 76-year-old House member, got more than 20 percent of the vote in both Iowa and New Hampshire. He’s making a strong push for college students and independents with his stands on marijuana and criminal justice reform.

Despite the conventional wisdom about Republican hawkishness, Paul thinks there’s an opening for a candidate who’s skeptical of wars in the Middle East and with Russia. He knows that 63 percent of Republicans in a Pew poll — and 79 percent of independents—said that the Iraq war wasn’t worth the costs. Paul and Trump are the only Republican candidates who opposed the Iraq war. In the second debate, Paul said, “If you want boots on the ground, and you want them to be our sons and daughters, you’ve got 14 other choices. There will always be a Bush or Clinton for you if you want to go back to war in Iraq.”

Three months before the first voting in Iowa, there’s nothing simple about this Republican race.

The government of China has launched its 13th five-year plan (known as 13.5), sticking with the form if not the substance of Stalinism. But in our modern and networked world, China wants the world to understand its planning process, so it released this catchy video in American English:

The video explains how comprehensive the planning process is: 

Every five years in China, man
They make a new development plan!
The time has come for number 13.
The shi san wu, that’s what it means!

Don Boudreaux recently despaired that only 26 percent of economists surveyed agreed that

If the federal minimum wage is raised gradually to $15-per-hour by 2020, the employment rate for low-wage US workers will be substantially lower than it would be under the status quo.

In the University of Chicago Booth School of Business’s regular survey of distinguished policy economists chosen for ideological diversity, 24 percent disagreed with the statement, and 38 percent said they were uncertain.

Some said that employment effects were likely, but they might not be “substantial.” That’s an empirical question, of course, and knowing the direction of a change doesn’t necessarily tell us its magnitude. In addition, each person’s definition of “substantial” might be different. Boudreaux doesn’t think there should be much uncertainty:

Would 74 percent of my fellow economists either disagree that, be “uncertain” that, or have no opinion on the question of whether a forced 107 percent increase in the price of the likes of 737, 777, and 787 jetliners would cause airlines to cut back substantially on the number of new jetliners they buy from Boeing?  Or what if the question were about the prices of fast-food?  Would 74 percent of these economists either disagree that, be “uncertain” that, or have no opinion on the question of whether a forced 107 percent increase in the prices of the likes of Big Macs, Baconators, and buckets of KFC fried chicken would cause consumers to cut back substantially on the amount of food they purchase at fast-food restaurants?

But who am I to jump into this battle of economists? Just a lowly newspaper reader, that’s all. And as it happens, Boudreaux posted his critique on Sunday, and on Monday I read an interview in the Wall Street Journal with Sally Smith, CEO of Buffalo Wild Wings. She runs a chain of more than 1,000 sports bars, and she’s trying to expand. Here’s part of her interview:

WSJ: How are minimum-wage increases affecting the way you make business decisions?

MS. SMITH: You look at where you can afford to open restaurants. We have one restaurant in Seattle, and we probably won’t be expanding there. That’s true of San Francisco and Los Angeles, too. One of the unintended consequences of rising minimum wages is youth unemployment. Almost 40% of our team members are under age 21. When you start paying $15 an hour, are you going to take a chance on a 17-year-old who’s never had a job before when you can find someone with more experience?

WSJ: Are you turning to automation to reduce labor costs?

MS. SMITH: We are testing server hand-held devices for order-taking in 30 restaurants now, and we’ll roll them out to another 30 in the next month and another 30 by the end of the year. Servers like it because they can take on more tables and earn more tips. Eventually we’ll have tablets where guests can place their own order from the table and pay for it.

Ms. Smith is no economist. (She has a BSBA in accounting and finance, and served as CFO of Buffalo Wild Wings and other companies for about 10 years before becoming CEO in 1996.) She’s just a CEO trying to make revenues come out ahead of costs. And when she thinks about a substantial increase in the minimum wage, her thoughts turn to not expanding, hiring more experienced workers, and using technology so fewer servers can serve more customers.

She doesn’t seem as uncertain about the effects on employment as the academic economists do.