Economy & Business

Trade Is Practical

Container ships at a port in Qindao, China, in 2014. (Reuters photo)
It is perfectly just for the U.S. to make sure that everyone is playing by the rules.

Recently, at one of the off-the-record gatherings of globalists I sometimes attend, the head of a major policy think tank was telling the room that the election of Trump was so repulsive to decent Americans that recent polls showed record American support “for trade.” He told us that “trade” has never been more popular, and concluded that no one should be fearful about defending TPP or NAFTA. I wasn’t sure how useful this information really was. “What good is a poll about trade in itself?” I asked. He reassured me the American people are for it. I told him he should do a poll on motherhood. How do Americans feel about moms? Then do another poll: How do you feel about mothers-in-law? There might be a difference.

This illustrates why I’m unmoved by rhetoric about “anti-trade” politicians or “anti-trade politics.” How many people would qualify as “anti-trade,” in history, if the term were applied with anything like rigor? A handful I admit. Justus Möser, the 17th-century Saxon jurist whose existence had almost been forgotten until Professor Jerry Mueller featured him in an excellent book. He might qualify. And one or two libertarian cranks have questioned whether the division of labor is an impingement on individual freedom. But simply supporting tariffs in some circumstances, for example, does not make one “anti-trade.”

Perhaps it is just the case that certain people are offended by certain types of taxes in a way that strikes others as disproportionate. If you ever corner me in private and ask for my opinion on property taxes levied against unproductive domiciles, I start gibbering about how a home is a castle, and that such a tax amounts to making the government everybody’s landlord — one who doesn’t fix the pipes. It particularly oppresses widows and the elderly, while mocking the plain language in deeds of property ownership. Maybe by the time I got to the phrase “lower than serfs,” you would begin backing away or calling for a stiff drink. This is roughly my reaction when reading my colleagues on tariffs.

Like Kevin Williamson, I detest the recent ubiquity of the word “elite” in conservative tub-thumping. He deplores it as an anti-intellectual, perhaps anti-Semitic, conspiracy theory that stops thought and cultivates popular disgust with the great humanitarian project of free trade, potentially putting us in danger of national socialism. I’m just a sniffy pseud who winces whenever right-wing radio jocks remind me that we lost that word’s correct pronunciation the moment we dropped the French accent mark in élite.

For certain free-traders, support for tariffs is something like a moral failing. They are offended by it in the way I am offended by taxes on the home you own. But even if you grant almost all their arguments for liberal trade arrangements and the economic derangement that can result from trade wars, they press even further. They whirl on you: So you admit they are a constant temptation toward cronyism? (Yes, like every tax policy.) So you admit that trade wars have a dangerous logic of escalation, one that is capable of doing far more damage economically than the rates of taxation itself, given the attendant uncertainty, and the derangement of supply chains? (Yes, I do!) So drop the idea of war, and embrace peace, they implore. To hold out the right to trade war is to endorse the immiseration of the human race, probably because you are a racist.

No, to my mind this is a practical measure. Like the officer who resorts to violence to keep the peace, sometimes you have to resort to trade actions to keep trade arrangements liberal on the whole. The trade actions that Trump recently took are anticipated and authorized by the very agreement that free-traders are purporting to defend. Using this authority in this instance may be unwise, but the actions do not inherently violate our agreements, or even the high ideals behind them.

And here it might be useful to explain why I think trade policy is a matter of prudential judgment, informed by our ideals, rather than a matter of incontestable principle.

First, my priors as a conservative. I have no problem with political intervention in markets to secure other common goods. If Poland finds it suitable for fostering the life of families, religious faith, and civic life to discourage shopping on the Sabbath, that’s fine by me. We also should regulate markets with larger political concerns in mind. For instance, we should regulate them to maintain their general liberality. We should not fool ourselves that somehow some authority out there called “the market” wants no limits on the supply of labor and then open our borders in response. Doing so against the consent of the people would jeopardize the democratic character of our society and doom what’s left of the egalitarian ethic that makes democracy possible.

I similarly don’t believe the premises often used to describe and denigrate tariffs. “If I want a Samsung dishwasher, and Samsung wants to sell it to me, why should the government get in between us?” they ask. Well, friendo, the government is already there between you. The trade agreements that facilitate the exchange between people in two polities are negotiated by governments. Governments have a right and sometimes a duty to inspect what comes into their ports, not only for security reasons but to enforce the rules of the market that entrepreneurs depend on.

Unlike more doctrinaire libertarians — I’m looking at you, Ron Paul — I also take seriously the moral hazard of a free-trade policy that mercantilist countries can easily exploit. Paul thinks that if Japan’s government subsidizes the manufacture of a car to the tune of $4,000, then American consumers should just rake in the free gift from Japanese taxpayers. I do not. I think mercantilists can erode the support for worthwhile trading arrangements in both countries at once. I similarly fear it will be deleterious to a liberal system if these nations succeed in creating monopoly pricing power for their firms.

There are military realities underlying the matter of trade as well.

As loath as this occasional critic of U.S. foreign policy is to admit it, there are military realities underlying the matter of trade as well. Most free traders will concede the big ones. Williamson does not mock the policy goals achieved by sanctions on Iran, which get in the way of consumers and Iranian goods. I also take the point made in favor of outright protectionism by Pat Buchanan when George H. W. Bush expressed his famous indifference as to whether Americans produced computer chips or potato chips: You can’t guide a smart missile with potato chips. Adam Smith conceded such realities as well.

But then there’s the largest military reality of all between you and your Samsung appliance: The system of somewhat liberal global trade depends on U.S. naval power, just as it once depended on Her Majesty’s naval power and Britain’s consequent interest in liberal trade. I hope no one will accuse me of too much heresy when I note the presence of Carrier Strike Group Five near Yokosuka, Japan, and then turn to our Korean manufacturer and say, “You didn’t build that.” The USS Antietam and USS Shiloh are paid for with U.S. tax receipts, and they do indeed keep the price of washing machines a bit lower than they would be otherwise.

If a land empire such as Russia or China were the global hegemon, things might work differently. They may see it to their advantage that pirates around the horn of Africa, or Midway Island, or the Florida Keys extract a tax on the global market in goods. In the meantime, while the U.S. is bearing the burden of global security, I think it is perfectly fine and just for the U.S. to make sure that everyone is playing by the rules to which they agreed, and occasionally remind them of what was agreed.

Trade is a practical thing, and that’s why it should be generally, but not ideologically, liberal.


NR Editorial: Against the Tariffs

Trump’s Tariffs Are Statism on the March

The Perils of Protectionism