Sometimes I observe a public discussion and notice that each side is talking across the other and neither side is understanding. I wonder if a change to the language of the debate might be constructive.
When Donald Trumps talks about making Mexico pay for the wall by imposing a 20% tariff on imports from Mexico, the left rightly point out that this means that Americans will pay for the wall. Similarly, those who want the UK to remain in European Union talk about the importance of trade. Nearly everyone agrees that tariffs are bad and trade is good. But dig a little deeper and soon it becomes clear that people are not talking about free trade at all. They are talking about the kind of trade that involves hugely complicated and interventionist multilateral treaties between governments.
I often try to explain that I am in favour of free trade and that we do not need people in government to make complicated deals: we just need to leave people alone and they will trade with each other. I am met with various objections. Exporters will suffer because foreign governments will increase tariffs and people in foreign countries will find it too expensive to buy British goods. Foreign governments will subsidise production and people in foreign countries will be able to sell things cheaply to British people; so cheaply that British people will stop buying things from British companies until those companies go out of business. At this point the foreign people might put up their prices and if they time it right the prices might never go down again because skills required to restart British companies might be lost.
My answer to these objections is that people are clever and they will find ways to make the most of the new situation. But it will be a situation in which people are, on the whole, richer than they were before. Cheap foreign goods make us richer. Not exporting things frees up labour to do other useful things.
But I can not deny that in the short term people will lose jobs and will struggle to find new things to do. My arguments are all about how people can get richer in the end. People who think the government can help with trade want to help the man who works in the widget factory and wants to be still working in the widget factory tomorrow.
Some Trump supporters and some people in favour of the UK leaving the European Union want to reduce immigration. I am in principle in favour of freedom of movement. I would argue that the ability of people to move to where there is demand for their labour makes production cheaper and everyone richer. But I can not deny that people moving around can make life uncomfortable for people staying still if the people staying still find their wages going down as a result. It is certainly not helpful to make accusations of bigotry in the face of such concerns as people on the left often do.
It might turn out that we all agree about what happens when people are free to move and trade, we just have different time preferences.
Interestingly, some of the same people who object to unilateral free trade are also in favour of freedom of movement, even though it is equivalent to unilateral free trade in labour.
The central problem (the cause of the massive American trade deficit) is NOT Free Trade – it is the monetary policy (the Federal Reserve Credit Bubble) that is sucking in consumption goods “paid for” by I.O.U.s (credit).
This fools’ paradise must come crashing down at some point – and when it does Donald Trump will be blamed, even though it is actually the result of the Federal Reserve and their pet bankers (and other such).
As for Latin American immigrants – are they loyal to the United States (the Bill of Rights and so on) or not?
If they are loyal then they should be WELCOMED – but if not, only a city ruled by by traitors opens the gates to those who are hostile to the city. Do most Latin American immigrants believe that the United States rightly holds the land it does? Or do they believe that the wars of 1836 and 1848 were unjust and their results reversed? Do they believe in the limited government vision of the Bill of Rights – or do they believe in the “Social Justice” vision of most of Latin America which would hold (for example) that the large farms and ranches in Texas should be “redistributed” as such large land holdings have been in much of Latin America.
In Southern Mexico even having a staircase in your house marked you for death in the years after the 1910 Revolution – do most people think that is a good idea or not? The Hollwood types most likely it is a good idea – till it is applied to them (then the scales would fall from their eyes – just before they were torn to pieces by the savage “Social Justice” mobs they love, and their Beverly Hills mansions burned to the ground).
How about looting supermarkets by “the masses” – is this good or bad?
What about kidnapping the children of “the rich” and holding them for ransom in order to further “Social Justice”? Good thing or bad thing?
These are all real questions – I DO NOT KNOW what these people believe (although surveys from the Pew Research Centre are not exactly comforting). And the “Liberation Theology” of the Church does terrible harm – by encouraging evil and discouraging good. Even if Argentine Jesuits may be sincerely shocked when people take their “Social Justice” sermons literally (about the “right” of the poor to various stuff held by the rich) and start to loot and kill.
People are not machines who just go to a place to get higher wages (or whatever) – people are PEOPLE (human beings) they carry opinions (BELIEFS) with them.
For example should Europe open its gates to the forces of Islam? If European countries did that within a few decades these countries would just be a memory (if even that). To clam otherwise is not to “respect” followers of Islam – it is to show them DISRESPECT, because it treats them as machines (“economic men”) without real beliefs.
The American situation is much milder – get rid of “Food Stamps”, and “free” “emergency” medical care, and so on and the immigration problem will (MOSTLY) deal with its self. Without any need for a wall. As the wrong sort of immigrant would (MOSTLY) no longer come
Utopian?
How can the situation in the United States in 1960 be utopian? There were no welfare programs sucking in the wrong sort of immigrants in 1960 (and there was no wall) – how can it be “impossible” to go back to 1960 in terms of government spending schemes?
Lastly on Mexico.
A bigger threat to Mexico than the tariffs of Donald Trump is the policy that is being pushed on it by “liberals” – such as my dear friends the Economist magazine.
Historically in Mexico only a minority of people have been on the government “insurance” scheme for health care. With other people paying directly for medical care – care that is a fraction of the cost it is in the modern REGULATED and MASSIVE GOVERNMENT SUBSIDY SCHEME United States.
But the Economist magazine (and the rest of the “usual suspects”) are pushing the Mexican government to provide “free” health care (and so on) for all.
Such Economist magazine Keynesian financed schemes would utterly bankrupt a poor country such as Mexico. They would destroy the country utterly.
I dislike tariffs, but I dislike mass immigration (especially the illegal sort) even more. It imposes huge costs that should be included in any calculation. Better ways of paying for the wall: cutting off foreign aid to Mexico, adding a tax on remittances sent to Mexico, and increased border-crossing fees.
Interesting thought about differing time preferences. Although I’m pretty sure that everyone’s “time preference” in this context is that at a minimum a suitable new job will turn up before the guy with the scythe does.
.
I’m not sure that “freedom of movement” is equivalent to “unilateral free trade in labor,” although, generally speaking, the former does include a component of the latter. For instance, if welfare-seekers freely move to jurisdiction X in order to capture the benefits available there, while sliding by on the minimum of required work, it’s somewhat of a technicality to call the result “free trade in labor” — no? Since the idea behind “free trade” is that something of value will be given in trade for something of value. But I’m unclear as to just what is the value that the people of X get in return for their welfare. Perhaps feelings of virtue, a lift in their level of self-respect? Those are things not to be sneezed at, but it amounts to needing other people to be sick so you can care for them.
.
But an interesting piece, Rob, including the observation about the Mexican wall’s being paid for, ultimately, by Americans. Obvious when you think of it, which I sure hadn’t. Thank you.
Julie, I left out welfare and culture and other things to be succinct. These complications probably explain the apparent contradiction I observed in my last sentence.
The current electorates in the US and UK demonstrably do not consider free trade a sacred cow. They have just shown us that they have no problem with a 20% border tax or imminent loss of market access.
What makes you think they would have any hesitation in calling off an experiment in unilateral free trade were they to start feeling some short-term pain?
Nor were either of these electoral outcomes preceded by campaign promises to open up trade in the longer term. That’s not what these campaigns were about. So, time preference for what, exactly?
It’s not really a “time preference”; it’s simply an illustration of Bastiat’s “What is seen and what is not seen“.
It’s always easy to see the direct effects. But it’s the second- and third-order effects which are the most pernicious, but are so easily missed by the credulous and ignored by the perfidious.
It should be pointed out that the cost of the wall is a rounding error in comparison to the Federal Budget. Building a wall is actually a rather simple undertaking – although it would not be effective without an effective Border Patrol.
Defences are only as good as the people who undertake the defence.
Compare its cost to the vastly greater cost of the insane “HS2” scheme in Britain – a railway line that goes between two cities (London and Birmingham) that are already linked by a railway, and the new line would run trains that WOULD NOT STOP at stations between London and Birmingham (thus making the line of very limited use) – as for the idea of then building a high speed line between Birmingham and Manchester (and Leeds – and who knows where) this is just more madness, much like the proposed Californian “high speed” line that would not even go from a city to a city – the proposed Californian line would go between stations many miles from the major cities.
Also it should be pointed out that before the rise of Liberation Theology the Roman Catholic Church did vast GOOD in Latin America – and it was mainly the anti clericals who did harm.
By the way – good to see you commenting Julie.
But that is not the only downside to uncontrolled immigration is it?
When talking about places like the UK there is also the impact on housing, especially social housing and schools. These are not resources which can be turned on and off like a tap.
Since the local population feels that their concerns over immigration have been ignored for decades to the detriment of their own children there is a justified feeling of resentment and anger.
This is before you even begin to talk about the welfare aspect.
Until the government gets to grips with immigration and brings numbers down drastically (both EU and foreign immigrants), the anger and resentment will continue to bubble.
Laird, I agree. Perhaps I just noticed that some of the seen is more short term and the unseen long term.
“These are not resources which can be turned on and off like a tap.”
That’s a short term, dynamics problem, which is the sort of thing I was thinking about.
While I am not bothered to be honest about free movement of Europeans, I want a hard Brexit ASAP.
When seeing policemen armed with Assault rifles in tube stations becomes the norm, due to a certain religion of peace, then any benefits from Open borders have been well and truly eclipsed.
But this is not just about dynamics or short term issues. If your child is in a school which is suddenly swamped by large numbers of immigrant children who do not speak English with reasonable levels of proficiency, then they become a distraction from which your child inevitably suffers and that stunted educational attainment will impact that child’s entire life.
Do we really want school;s to be segregated into those whose parents can afford it and the rest who have to just put up with whatever crap they are assigned to?
That is a recipe for some very angry people who may not be rich, but they pay for the schools through substantial taxes on their meagre incomes.
It seems to be true in the USA, but that is by no means clear in the UK. Indeed there is considerable support for free trade once we get out from under the smothering regulatory embrace of the EU… or did you think that was actually free trade?
Papaya, as to “mass immigration,” it depends on the mass; whether the newcomers will respect and be loyal to the society, as both a society and a polity, that they’re joining. (And of course, “respect and be loyal to” covers a large empty space under the rug.) But in general, I tend to agree with you.
(Yet I give immigrants entering with the project of subverting certain regimes, say the Ayatollahs’ or the Saudis’ or the Kims’, etc., a pass on this…. And I wonder what such considerations imply about the justifications for the project of American “Free-Staters.” Don’t they propose to move in on and capture the political power in, for instance, New Hampshire? And does not this discomfit a fair-sized proportion of pre-existing New Hampshirites? I’ll tell you frankly, I’m not too thrilled about the idea of a bunch of Muslims, though they be American citizens either by birth or by naturalization, moving in and promptly setting about to make Shari’ah the Law of the Land. Of course, it’s a bit different, since theoretically at least — James O’Keefe’s investigations to the contrary — N.H. has “free and fair” elections, so in principle if the the N.H.-ites want to preserve their little patch of Utopia from hordes of unshaven, long-haired aging hippies who want to turn their state into a paradise of sex drugs & rock’n’roll *g*, they do have a legally-enshrined shot at it.)
It depends in part on how close are the outlooks and mores of the present and the incoming residents (let alone naturalized citizens), and more importantly whether fundamental intrasocial morality — yes, according to my understanding and judgment — are going to be observed. No chopping off of heads, no 14-year incarcerations in Attica (supermax Federal Pen in NY State) because your dog peed on the Mayor’s lawn, etc. And no dictating what education folks can or must or can’t get, ditto for jobs. Etc.
.
Adding a tax on money sent to Mexico: That one is much too close to what we already have, and which I think the entire globe and not just we Americans think is the work of the Devil: U.S. taxation of anything that can be dreamed up and argued to be taxable by the U.S. Although this thought raises the question of duties. If I use my earnings, say, to buy at auction in NYC a Fabergé Egg, and send it (whether or not purely as a gift) to my (fictional) son in Mexico, do I pay to the U.S. a duty on that (or does he)? If so, is it arguable that an additional tax on outgoing money is in principle the same thing?
Anyhow, were such a statute enacted it would strike me as yet another excuse to grab some of my honestly-earned and already-taxed income. Every time two pennies (2¢) change hands, the Gov is there to nab one of them.
.
Increased border-crossing fees: I’m unclear as to how this will help Mexico to pay for the Wall, since illegal immigrants aren’t famous for the enthusiasm with which they rush to pay any already-existing border-crossing fees. I thought the idea was to keep your head down and watch out for la migra. Seems to me the legal crossers would end up subsidizing the illegal crossers.
.
Cutting foreign aid to Mexico: That would certainly have repercussions, not all of them desirable. Of course, most libertarian-ish types are in favor of cutting out all foreign aid….
.
Pros and cons, pros and cons.
About as close as can be expected in this fallen world…
Given the vast and pervasive regulatory burdens imposed at EU level, I would have to disagree as I think even in this imperfect world, we can do vastly better.
…and no doubt could have been made vastly better had Britain actually used the threat of leaving as a proper threat. That power is gone for good.
Hi, Paul — Thank you. Alas, I am distracted from my just duties by moving-boxes. :>)
.
[To All: But suppose I’d left out the hyphen. “I am distracted … by moving boxes.” Conveys a whole different meaning, don’t it.]
.
Speaking of useless, gazillion-dollar High-Speed Rail, have you heard the one about Gov. Moonbeam’s bullet-train project in California? Such a deal! Ed Morrissey at Hot Air had this to say about it, clear back in 2013:
http://hotair.com/archives/2017/01/14/that-california-bullet-train-is-turning-out-to-be-a-real-bargain-not/
Exactly what has struck me about the “free trade vs. Trump” discussions here.
Everyone seems intent to only consider the USA, or GB, or whatever country of which they speak, as one unified whole, with a mass of fungible people within, who will, on average, always benefit when trade is free.
Laird brings in Bastiat’s tale, which is instructive here. At the end of the tale, it is clear that the mass of people in France, averaged out, will do better if trade is free.
But what if you consider that France is comprised of different sectors of people? What if you place Mr. Protectionist and his employees and stockholders and relatives in Sector A, while the multitude of nailmakers, metalworkers, cartwrights, mechanics, blacksmiths, and plowmen comprise Sector B?
With Mr. Protectionist’s plan in place, Sector B is undoubtedly worse off, while Sector A does very well.
The overall result – the combination of Sector B people with Sector A people along with everyone else – yields a result that lags behind the overall profitability available with Mr. Protectionist’s tariff gone.
But assume, for irrelevant reasons, that Sector B has been taking into itself rather huge profits for some time, while Sector A has struggled. Assume you are a politician who has been elected through the votes of Sector A voters, who are angry that Sector B has been taking all of the money.
In that case, the financial success of Sector A might be far more important to you than the financial success of Sector B, and also more important than the overall success of the country as a whole.
In that case, what Trump is threatening could be seen simply as a shot across Sector B’s bow, telling Sector B to either start sharing success or lose their own.
It’s not “Trump’s USA versus The World.” It’s “Trump’s Sector A versus Sector B.” It’s class warfare.
If the result leaves the USA as a whole in slightly worse shape, but improves the lot for Sector A, Trump wins. And his protectionist ideas might well accomplish that.
Julie – so, you’re moving boxes? Or moving moving-boxes? Or are you moving moving boxes? (I suppose you could be moving moving moving-boxes, which WOULD be more distracting . . .)
>It seems to be true in the USA, but that is by no means clear in the UK. Indeed there is considerable support for free trade once we get out from under the smothering regulatory embrace of the EU
Yes, one of the (numerous) advantages of Brexit was that many left-wingers were forced into declaring what a wonderful thing free trade was, and now they can’t turn around and start talking about tariffs.
It’s been my experience that left-wingers can stop and turn on a dime.
Firstly, Cameron did not want to leave, so it would not be a credible threat.
Secondly, the Powers-that-be in Brussels simply did not believe UK would vote to leave, given that the overwhelming majority of the media and establishment were arrayed against Brexit. And they remain in complete denial regarding the political and social realities in the UK.
Thirdly, there is no real interest in France in reforming the EU to make it less of a regulatory nightmare. Not really. So even a reform minded UK staying in EU was never going to change things substantively. And the UK under Cameron was not genuinely reform minded, so the point is moot.
bobby b, that is a very important observation — the point that the argument assumes “a mass of fungible people, who will, on average, always benefit when trade is free.”
The assumption about “fungible people” is the only one that will serve when the person with ultimate decision-making authority knows none of those people, knows of none of them, and thus has no way to choose amongst them. It is only at that point that “the greatest good of the greatest number” kicks in. (And, what constitutes the “greatest good”? Even Prof. Epstein gave the nod to this point, or a close relative, at least twice … before scurrying back to Mr. Pareto in Econ-Land*.)
But it does not serve when, in the mind (or heart, or whatever) of the Decision-Maker, there are differences among those people. He may be more sympathetic to one group or another; he may believe (for whatever reason) that the Greatest Good lies in putting Group A ahead of Group Alpha, or vice-versa … and, of course, he may or may not be consciously aware that he’s making that decision … and even if he is aware, what then? He can purposely subvert himself by deliberately serving what seems to him the interest of his un-preferred group instead of his preferred group, a thing which many of us are trained to do from babyhood. Anyway, it’s a bell you can’t un-ring. It makes life very confusing.
This, by the way, is where Nicholas Gray’s point about a “fixed ideology” comes in. Our Decision-Maker MUST have some ideal, to reaching for which one is utterly committed, even if one knows the ideal can never (technically speaking) be reached. He then has a fixed criterion by which to judge. (That’s not to say anybody else would agree with the criterion. Nor that it can rationally be expected to achieve his goal. It’s just that in the real world, it’s the one — or one of the ones — he’ll end up using.)
*I gladly accept the denunciation as an “Epstein phreak,” but I am not an Epstein Phreak. I love the Great Man, but I tend to disagree with him a very great deal, so Worship per se is off the table. I have my problems as well with the other pre-pre-PRE-eminent American libertarian legal prof, namely Randy Barnett, but his jumping-off place philosophically is a lot closer to mine, I think. Randy seems to think along the lines that the thing of overarching importance is the real, individual human person, which means first of all his “right to himself” [shorthand!], and that’s my starting point too.
Still. In the end, part of a human’s human nature lies more toward protection and realization of his need to live as seems best to him (his “right of self-determination”), and part lies much farther along in the direction of sociability, and social coöperation, and a bonding with or identification with some other individuals and also groups.
At times, the two parts of our nature clash. One of the main sources of human unhappiness; and the circle which Richard as much as the rest of us tries to square.
. . .
But all of that is merely prompted by bobby’s comment. But I think it’s important, and it is properly part of deliberation that bobby is conducting; just a few layers down.
As to the comment proper, it’s quite well thought-out and well presented, an excellent observation, and I’m very glad to have read it. Thank you, bobby.
Foreign governments will subsidise production and people in foreign countries will be able to sell things cheaply to British people
Hurrah. Yes, bring it on. If foreign governments are stupid enough to subsidise their exports then we are, in the end, talking about a direct transfer of foreign tax-payers’ money to UK consumers. Our collective wealth rises commensurately.
bobby,
LOL!!
I keep waiting for the dam moving-boxes to move themselves, but so far they’re sitting there, inert lumps. Just like a lawn-mower I used to have, that needed repair. I parked it by the trunk of the car and waited a good six weeks or more, but the lazy thing would NOT hoist itself into the car so I could take it to the mower-doc. In the end I had to lift it up and put it in myself. (I mean, put it into the trunk myself. It was too big to fit in me.)
Hmph.
Thanks, Julie. You’re very good for my ego. 😀
I’ve noticed that the people arguing most strongly for P-optimality are usually found on the right-hand side of the bell curve setting out economic or social position. “Keep the average up” is meaningful if you’re presently above the average.
Bobby b: “With Mr. Protectionist’s plan in place, Sector B is undoubtedly worse off, while Sector A does very well.”
Given enough time with a slightly higher rate of growth as a result of liberal policies, compounding, even sector A does better.
I’m not unsympathetic to group A’s plight; I’m wonder how we can get both groups richer despite the short term problems.
1. Thank you Laird for reminding me of Bastiat. I need to re-read him.
2. Bobby B: Not only can they turn on a dime, I have an entire cadre of leftist relatives that can take two diametrically opposed positions and argue them simultaneously from both sides of their mouths.
For a good example of that, look at the recent Women’s March: one of the organizers was Linda Sarsour, proponent of sharia law (which among other things, prohibits abortion). And yet pro-life women were not welcome on the march…?
bobby, I’m all for feeding a deserving ego a special treat of healthful, nutritious approval. 😉
. . .
Speaking of the Terrible Two R’s, that is, Randy and Richard, has everyone seen the written debate entitled “Coercion vs. Consent,”
http://reason.com/archives/2004/03/01/coercion-vs-consent
that Reason ran clear back in 2004? Richard has the lead piece, entitled “The Limits of Liberty — Why we need taxation and eminent domain.”
The piece ends with this paragraph:
Ugh.
Randy has the first response, “The Lesser Evil — Sometimes the cure is worse than the disease.”
He proceeds to explain how so, in this particular context. On the way he criticizes what he sees as overestimates (or at least I sure do!) of “free riding” and the “lone holdout.”
.
And I say, Thank the Great Frog for the Lone Holdout! Sometimes because he’s the only one with the practical clout to prevent the State from building its projected handy-dandy 95-lane A5 Expressway right through my living room. And sometimes he’s the one who insisted, No! We are not going that way! I’m telling you, if we drive down that way we will find ourselves in the middle of the White Sands Testing Range!
And sometimes he’s the guy who filibustered on the Senate floor for 144 hours, until the Evil Opposition got so tired they all went home, and we were spared the ugliness of the dread Bill to Enact
ShrillCthulhu as President for All Eternity….Lone Holdouts are like everything else around here. Summer good, summer bad, and you and I can and often do disagree as to which is which. But the Lone Holdout has become a bogeyman with which to frighten gullible children.
We really oughtn’t to hand the enemy extra ammo, thereby also shorting ourselves.
This news from Scotland might be ‘Mother-in-law driving your new car over a cliff’ for visitors to this parish.
Plans for legislation to enable the development of the UK’s first commercial spaceports have been delayed by Brexit, BBC Scotland understands.
The UK government announced in the Queen’s Speech in May last year that it would bring forward a bill.
Two Scottish sites have announced plans to bid for the spaceport licences – Prestwick airport and Machrihanish.
However, the government said there was currently no timetable for the introduction of the bill.
There is a growing market for launching small or nano satellites which could be used for communications such as broadband.
The Scottish sites want to tap into this market and also lay down the infrastructure for future developments such as space tourism.
Legislation concerning space is reserved to Westminster.
Julie, I left out welfare and culture and other things to be succinct. These complications probably explain the apparent contradiction I observed in my last sentence.
Culture is NOT a “complication.” Welfare is, but culture is not. The argument over immigration boils down to two things. One is the economic argument, which you acknowledge. The “how will we make a living”. The other is “how then shall we live?” CULTURE. People move in order to find what they hope will be a better life. Economic improvement is a FACTOR in that, but not, by any stretch, the whole thing. Often people will take an economic downgrade if the cultural factor is attractive enough. By the same token, people resist interlopers when they fear that the interlopers will change the culture for the worse, even if the interlopers promise economic benefit.
“…those who want the UK to remain in European Union talk about the importance of trade.”
No they do not. From my observation their argument is about UK exports, their reasoning being that exports make British people wealthier, and imports are a bad thing and destroy the economy skills, jobs, etc.
In fact it is imports that make citizens richer – consumption makes us richer, not production: the USSR demonstrated that!
Exports are a cost; British capital and other resources being used to ship stuff abroad for the benefit of Johnny Foreigner rather than being used within the UK for the benefit of the British.
Of course the British earn foreign currency by exporting, but that only makes them wealthier when they use it to buy imports.
And this is the point being missed. The more a Country exports the more they can afford to import, and that applies to the EU too, so if they limit imports to the UK, they limit their exports to the UK.
And the main point is the EU is not the only gal in town. The UK can still export to the rest of the World, in aggregate a substantially larger market, and once free to make its own trade deals can increase its exports thereto and since it will be earning non-EU currencies, import more therefrom.
By applying tariff or non-tariff barriers to the UK (if they do) then they are cutting themselves off from a substantial and important market for their own goods.
The UK will do what it has done very successfully over the last 500 years – a substantial part of which time ‘Europe’ has been unavailable for UK exports because of wars and protectionism – shop the World.
The problem is that operationally, ‘the long term’ is a whole lot of short terms laid end-to-end; it exists only from a historical perspective.
BikerDad: Very true.
PfP: Yes, a good point. You can think about your long-term interest (or everybody’s, for that matter), but the only thing that makes that reasonable is your idea that you (or they — whoever is the object of your thinking) will be around to enjoy it.
I do believe, of course, that in the last analysis Rob is right about the long-term good financial effects, at least, of truly free international trade on practically everybody; but bobby is also right, that in some (perhaps many) cases there is a Sector A, and the folks in it don’t see any particular real-world advantage for themselves in international free trade, even when they do get it abstractly. As a matter of fact, if you are sufficiently desperate you may feel forced to survive at the specific expense of some “long-term” interest, such as eating. And the idea is rather counter-intuitive, after all. Just like the idea that abolishing Medicare: What, you want to make medical care unavailable to the old and the poor and the sick? Heavens! The milk of human kindness runs thin in your veins, doesn’t it. Anyway, it’s hard not to sympathize with those folks.
It also seems to me that the economists’ “time preference” just amounts to shortspeak for the fact that some people think short-term, some long-term, and some somewhere between those two goalposts.
(Of course, most of us sometimes think short-term and sometimes long-term and sometimes in between. Just sayin’.)
I repeat the point I made some moments ago……
Neither the British or the American people can go borrowing vast sums of money and using it to “pay for” imported consumption goods.
That is a fool’s paradise – and it must collapse.
Vast borrowing to finance endless imports of consumption goods is NOT what David Ricardo meant by the Law of Comparative Advantage.
Comparative advantage works if trade is balanced. If one side is mercantilist while the other tolerates importing more endlessly, then you’ll have a situation that is bad all around. The mercantilist’s companies and laborers will be paid less than they think they are being paid, while the counterparty will suffer higher unemployment and high debt levels. Eventually a rebalancing will be needed, and it may come with no choices and much pain.
Long ago trade was balanced naturally because trade had to be settled in gold. Now dollars are the gold, but it can’t last this way forever!
It always ends wise for the mercantilist though, at least so far.