The Corner

Educating Derb

Many, many thanks to all those readers who have attempted to improve my

understanding of economics. If I am ever again invited to compare

Portuguese productivity of wine with British productivity of wheat, I shall

run screaming from the room.

I am sorry to say, though, that I am now more skeptical of Free Trade than I

was when we started.

I do see the point of comparative advantage, and the force of the large

general argument. However, it seems to me that the virtue of the thing is

so smothered in secondary factors as to render it wellnigh meaningless.

If country A has labor unions and country B doesn’t, can their trade be

“free”? If country A has a huge, avaricious and unscrupulous trial-lawyer

industry sucking the blood from its industries and country B doesn’t, can

they have “free trade”? If country A has a vast welfare state, minimum-wage

provisions, and generous unemployment benefits, and country B has none of

the above, only extended-family mutual support, is “free trade” really free?

How about a country like China, that makes extensive use of unpaid slave

labor (i.e. in prisons and labor camps) to supplement its manufacturing

prowess? Can we have “free trade” with them? Can we have truly “free

trade” with a nation like Mexico, where a racial elite maintains its wealth

and privileges via institutionalized corruption and illegality? I am

unconvinced. Applying free trade to the actual world looks to me a lot like

applying Newtonian mechanics-in-a-vacuum to the movement of objects


These negative impressions were reinforced when I consulted a friend whose

intellect I mightily respect. He:

“The theory of free trade has never been contradicted by history. As we all

know, the tremendous growth of the American economy in the 19th Century was


to Alexander Hamilton’s insistence that free trade be the absolute

cornerstone of our economic policy. Similarly, Bismarck’s insistence on zero

tariffs led

to outnumbered Germany almost conquering Europe in WWI with its free

trade-nourished industrial might.

“In contrast, Britain’s sad, slow economic decline after 1846 was due to its

rejection of its traditional free trade policy in that year and institution



“Oh, wait a minute… Those were the policies of America, Germany, and

Britain in the Bizarro reverse world. Never mind…”