Response 52 on Free Trade

The current sequence:

• Caplan sez: Economics knowledge and IQ increase support for free trade.
• Foseti on Caplan
• Aretae on Free Trade
• Sonic Charmer on double-agreement
• Foseti expanding
• Sonic Charmer doubling down

I largely endorse Sonic Charmer's analysis. I would, however like to hit a point or two of Foseti's

1. Foseti:

Finally, it’s not clear that what we should be most concerned about is maximizing the financial position of everyone. I would argue that we have higher concerns and I think this is our fundamental disagreement. If what matters most to you is the current level of wealth in society, you should listen to and agree with Caplan and Aretae.

I think Foseti is right that this is our core disagreement, though I would phrase it differently. It took me ~20 years to get to the position, but my current conclusion is that economic growth rate is the god-metric. I believe that ALL (!!!!) other social metrics that matter follow from level-of-wealth, which follows necessarily from growth rate. I (and, I can assume Caplan) am not arguing for current wealth...I'm arguing for growth rates.

2A. Aretae: Fact 3:

Trade restrictions do exactly TWO things. (1)Pay off favored constituencies at the cost of making the whole country poorer. (2) purchase support for politicians. They always incur a cost of (say) $1 from each of the 300M people in the USA, and pay GM $100M in trade benefits. Net $200M loss. Collecting $.50 from everyone in the country, and giving it to straight to GM is better for EVERYONE, except the politicians who are hiding the the net $ transfers behind anti-foreign bias.

2B. Again, this is not a fact. A fixed and flat tariff would not satisfy criterion (1) or (2) and it is a trade restriction.

This is true. a fixed, flat tariff simply screws everyone in the country, and everyone we trade with, with no net benefit to anyone. It's as useful as burning $, with the corresponding ozone depletion from the smoke. It does, however, collect some revenue. I forgot that this position was on the table. It does, however, make it so our "competitiveness" relative to other countries without such trade barriers suffers, and it does mean that our populace will tend towards stable, useless jobs instead of value-positive jobs. I guess that makes it potentially value-positive to "our enemies". I wonder if the Russians were economically smart enough to use their Gramscian influence to encourage trade restrictions to weaken the USA...or whether anyone in the state department is economically literate enough to use said techniques to weaken our enemies? Or is it just SO bad that it's like dropping a nuke on a next-door neighbor...screws them real bad, but we get lots of radioactive fallout too.

3. Foseti:

No one is pretending that they’re doing something to enhance economic efficiency. Would you rather pay a guy to sit at home and play video games or pay them to show up to a job every day?

I'm down with workfare. Indeed...I anticipated this objection, and argued for workfare in the portion of the post that Foseti was responding to that:

Pretending they’re doing something useful is pure delusion. Digging trenches and refilling them is less value-destroying.

I'm not sure how much we disagree that doing something is better than NOT. Though I'm nowhere near as certain of this position as I think Foseti is. Overall, my ideal taxation scheme looks an awful lot like the Kling-style flat/negative consumption-tax...politically impossible, because it eliminates the possibility of graft, but awful good in a lot of places.

4. Overall, I think Foseti's strongest point is the following:

I find it fascinating that Aretae believes that any restraint of trade would be terrible because politicians will screw it up while simultaneously believing that politicians could run a perfect wealth transfer system without corruption resulting. What am I missing?

Not much. I overstate the easiness of this. Overall, I figure government will break everything it touches (incentive problems). Universal free trade is untouched by government, and thus not broken (as one of his commenters suggests), while tariffs have grubby government paws on them, and thus necessarily suck. My relatively realist/heartless-libertarian position that economic growth REQUIRES folks to lose their old jobs and switch to new jobs that are more value-creating. So cope already. If you're not switching into new roles semi-regularly...you're mostly parasitic on productive folks.

Something like 1 in 30 people in the USA switch jobs in any given month...and the RATE at which job turnover happens is (substantially) positively correlated with economic growth. Stable jobs are value and growth destroying, if convenient, pleasant, and nice for lazy folks.

My policy preference space (what I think is good for the country, net) is:

1. No powerhungry bastards preventing trades between consenting adults. Full stop.

2. No powerhungry bastards preventing trades between consenting adults. With retraining support.

...

35. Burning ants with a magnifying glass.

...

52. Protectionism.

5. Sonic Charmer says that the disagreement is:

The free-trader would say ‘that’s a wrong/immoral and we could help that worker more cheaply anyway’ – which I believe is correct. The protectionist would say ‘however true that may be in the abstract, I live here and now and I doubt your thought-experiment solution would or could become reality’ – which is a fair point

If I heard the protectionists acknowledge up front that there's HUGE NET value destruction going on in protectionist policies...but that the other policies available have EVEN WORSE value destruction...that's an argument worth having. Arguing in the politically viable space is even harder...and the kind of argument Will Wilkinson likes to have. I'm less convinced that ANY politically possible choice can be good...and it's always about minimizing how much more damage the government does.

6. I'm relatively sympathetic (when talking in the government/nonspace) to arguments that are anti-government discretion. Flat+Negative consumption tax minus a single flat per-person deduction, free trade, required Health Savings Accounts, unrestricted education vouchers.

If Foseti is making the argument Sonic Charmer is making...I hear it as...

"the system is already incredibly screwed up...since fixing it would have some costs, let's screw it up even more, which might have lower visible costs."