The Corner

Trade, The State, and Lady T

Just received the following, re free trade, from a reader:

“…until you address my argument (and Derb’s) that free trade will lead to the demise of the nation-state, you will have a next to impossible time winning over skeptics like us. Free trade between U.S. states works because we all live under a common Federal government. Truly free trade between nation-states requires meshing the governments, as we are seeing in Europe. There can be no doubt that the establishment of a “one world government,” or even the advent of a world ruled by only two or three governments, would be a catastrophe for liberty, freedom, and human rights.”

Since I’ve gotten a few of these, let me attempt an answer:

Yup, world government would indeed prove a catastrophe–on that we’re agreed. But the demise-of-the-nation-state argument strikes me as a complete nonstarter. To wit:

Take a big nation, the United States: Free trade has been our policy since the end of the Second World War. We haven’t adhered to it perfectly, but we have adhered to it. Far from finding our sovereignty challenged, we are now utterly dominant.

Take a little nation, Hong Kong: Far from meshing its policies with those of its trading partners, Hong Kong insisted on limited government, explicit property rights, and the rule of law when these were rare in Asia–and vehemently rejected by Hong Kong’s giant trading partner, China. (The final incorporation of Hong Kong into China had nothing to do with trade policies.)

And take a medium-sized nation, Britain: For several decades now, Britain has demonstrated a) the deepest attachment to free trade of any nation in Europe, b) the deepest skepticism toward the European project of any nation participating in same, and c) the healthiest economy of any European nation of its size. As Lady Thatcher never tired of pointing out, free trade is in Britain’s interest, ever-closer integration with Europe is not, and the two are quite definitely distinct and separable.

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