The Corporate Myth of Free Trade
Posted on March 27th, 2009
by Timothy P. Carney |
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It’s a bit amazing in these days of burgeoning state control of the economy, but you still hear politicians–the same ones who foisted corporate-welfare stimulus and bailout plans on us–cursing protectionism and singing odes to free trade.
To be fair, many free-trade defenders these days are real laissez-faire types fighting to prevent yet another assault on economic liberty, but so many who rail against “protectionism rearing its ugly head” seem to believe in an odd distinction: the government can intervene internally in the economy, heightening regulations, mandates, and subsidies; but once we get to the borders, hands off.
But even that gives them too much credit. Many “free traders” support subsidies for our exporters. My column today in the Washington Examiner looks at lobbying records and legislative records, and analyzes this odd dynamic:
For instance, newly confirmed Commerce secretary Gary Locke, during his two terms as Washington State governor, was very close to Boeing and Microsoft. In 2003, he pushed through a $3.2 billion package of special tax breaks for Boeing. More to the point, he heads an agency that spends taxpayer dollars to support American companies. Nevertheless, Locke has long espoused “free trade.”…Last November, weeks after bailing out Wall Street and while pushing a $34 billion bailout for U.S. automakers, President George W. Bush, signed an agreement with other world leaders proclaiming, “we underscore the critical importance of rejecting protectionism and not turning inward in times of financial uncertainty.”…But this mindset—protectionism bad, corporate welfare good—is inconsistent only if you look at it from a principled mindset. If you look at it from a practical perspective—that government ought to help our biggest multinational corporations—it’s perfectly consistent.
But the businessmen, I find, are not duplicitous in this way. I called Cal Cohen, CEO of the Emergency Committee on American Trade, whose members include the CEOs of Boeing, GM, and Caterpillar, and asked him if there was an inconsistency between the free-trade talk employed against “protectionism” and the bailouts and subsidies these companies enjoy. His response was frank:
“ ‘Free trade’ is a theoretical construct. What we’re talking about is practical business transactions.”
Filed under: Conservatism, Economics, Trade, libertarianism
I think this gets at an issue that’s long bugged me. So often it seems—indeed all the time—you see so-called “conservatives” or “capitalists” seeming to mistake a belief in same for a belief in *individual* businesses.
But of *course* individual businesses are not out there because they too necessarily believe in capitalism or whatever. They are out there to make bucks. So when they essentially proclaim a belief in privatizing their gain but socializing their losses, no-one ought be surprised. They’re half-Marxists, in essence, just as there are others who want to socialize gain but privatize loss.
Of course the correct posture towards both is then obvious, but modern conservatives for some reason who say they embrace capitalism never seem to like that Adam Smithian/hidden-hand/Jos. Schumpeter part of it that notes that it’s competition and therefore the inevitable “creative” destruction of some businesses that is at the heart of the matter and ought to be celebrated.
Seems to me then that this means that true Socialists are at least on a higher, more honest plane than the half-Marxians on either side: At least the former say they are willing to socialize both gain and loss while the others are just looking for ways to get their bread buttered at someone else’s expense.
Cheers,
A refreshing expression of honesty in language. “Free trade” is a sham. We have managed trade–managed for the benefit of transnational corporations with substantial political presence. What is ignored is the extent to which we permit “free trade” (managed trade) to be managed in a manner that undermines small corporations and, in particular, manufacturing (as evidenced by the loss of millions of manufacturing jobs in recent years.)
No doubt your article will elicit comments from libertarian bleating about the nonexistent “market” (there are, as Thomas Fleming appropriately noted) only markets, not a single, overarching and all-powerful “market.” Those markets have differing interests and dynamics at play in them.
And note that the President, SoS Clinton, et al., never discuss specifics of trade practices by other nations.
WRW wrote:
“No doubt your article will elicit comments from libertarian [sic] bleating about the nonexistent “market” ….”
Wait a minute, I’m pretty libertarian and my comments weren’t bleating about that at all. Indeed, quite the opposite I think. Nor even do I quite understand why you apparently think that libertarians would be defending managing trade “for the benefit of transnational corporations,” or indeed for the benefit any individual corporation at all.
I can however understand how some, under the banner of alleged libertarianism, might say that the U.S. ought to do nothing in response to unfair trade practiced against it by other countries if that’s what you are talking about. But I suspect that the great majority of same are in fact merely pursuing some distinctly non-libertarian agenda as the idea is no different from that of saying that libertarians must also utterly renounce the idea of self-defense so as to not interfere with the rights of others to kill you.
I.e., libertarians, being true believers in the maximization of liberty, of course admit not only to the advocacy of liberty where it doesn’t exist, but the defense of it where it does. Anything else isn’t libertarian, it’s suicidal.
Cheers,
Fair enough distinction. And, of course, Dr. Paul, a thorough-going libertarian, is very critical of NAFTA, et al on the grounds that they are managed trade that compromises sovereignty; not free trade, which, in theory, shouldn’t compromise sovereignty at all.
However, I am quite skeptical of the Schumpeterian notion of “creative destruction”; and I think the notion of rationalizing market is a nice theory, but nonexistent in practice. As for Smith, his views are more nuanced than modern libertarianism, on the notion of the nation-state and moral obligation to it–so I won’t lump him in.