It is hard to believe we hate peace and prosperity; however, our actions make it hard to see that we want them. The common attitude toward, and the resulting policies on, international trade is one of life’s paradoxes.
Why do we trade? Because our lives require countless products and services, yet no one can do everything well themselves, so people exchange labor and talent with one another. Thus, both parties in a voluntary trade are better off (or there wouldn’t be a trade). More people trade, more people are better off. Since we need one another in order to trade, we do not want to kill each other, which is good for peace.
We can certainly trade with our neighbor. But if someone from the next town can offer us a better deal than our neighbor, we will trade with the person from out of town. If someone from another state can offer us a better deal than the person from the next town, then we will do business with that person from out of state. Now here is the kicker: If the person with whom we want to trade is from another nation, it becomes a foreign trade and too often our fellow countrymen who are unable to compete with foreign producers for one reason or another want to block that trade or make it more expensive for us via barriers such as quotas, tariffs, currency devaluation, or flat-out importation bans. They even evoke phony patriotism and portray foreigners as our enemies who want to rob us blind. On that note, I wonder who the real enemy is. Is it the foreigner from whom we can benefit through trade, or the person who happens to live in our country, and who won’t let us exercise our free will to pursue the best deal, thus making us captive customers of their inferior offerings?
The more benefits for consumers there are from importation, something tells me, the more desperately those domestic producers want to bar us from reaping these benefits. Governments can intervene in trade via trade barriers such as quotas, tariffs, importation bans, and subsidies for exports by devaluing currency or direct monetary benefits for companies. The net result of each of those measures is always higher costs for its citizens. So a foreign government’s trade barrier is, to various degrees, a gift from their taxpayers to us, but that will really galvanize the our domestic producers, and I don’t mean they are appreciative. It is foolish enough for a foreign government to do so; it is even more foolish of us to quarrel with them and reject a gift, but that is exactly the domestic producers and our own government are doing. Furthermore, these businessmen and their friends in government are not too embarrassed to tell us the childish fallacy that this is “unfair competition,” as if they are still nine years old or expect us to think like a bunch of nine-year-olds, who usually whine “this is not fair” with tears in their eyes. In adults’ world, however, everyone does not get the same amount of candy (or other goodies). Moreover, unlike sports, which are played in a controlled setting for the entertainment value, people in real life act to attain real goals, not just to get a ball to fall through a hoop for score. Therefore, it would be absurd to require all domestic companies to have the same size for “fair competition” like sports teams; it is also ludicrous to expect companies all over the world to operate under the same extent of government intervention. While foreign government’s trade barriers contradict free market principles, it is irrational to retaliate by instituting our own trade barriers. In order to mislead the public, moreover, the protectionists resort to the small-minded “us vs. them” mentality in support of retaliation. Using that notion for the sake of argument, I would say it is rather us vs. protectionists and their friends in government–those fellow countrymen who, for their self-interests, want to use political power to make us miss out on advantages offered by foreigners.
Do we “export jobs” by importing goods? Absolutely not. On the contrary, importing factors of production of higher quality at lower prices than those available at home helps domestic industries become more competitive, thereby creating jobs for domestic workers. At the same time, competition from imports keeps prices low and quality high for consumers, thereby raising living standards for workers. Moreover, those who depend on protectionism to keep their jobs or grow their industries are asking for handouts from their fellow citizens, despite the fact that they already enjoy inherent advantages over foreign competitors such as lower transportation cost and better knowledge of the market in which they operate. Furthermore, trade barriers imposed by the government turn those beggars into robbers who hold their own country hostage while asserting that foreigners are the villains.
Indeed, free trade, whether multilateral, bilateral or unilateral, raises living standards of the societies that practice it. In addition, international trade provides the most effective prevention of war, because it is simply against one’s interest to kill their suppliers or customers or let violence ruin business relations. However, free trade is not what national governments are really promoting. Instead, they engage in those “trade talks” that are invariably complex and lengthy, holding up the trade they claim they are promoting during the process. When governments finally reach an agreement, they claim victory for their respective nations. Actually, the “victory” belongs to none other than the interest groups behind those governments, and the broader society is sacrificed. Here is the irony: The trade retaliations governments self-righteously and/or hypocritically take against other nations if negotiations break down are akin to shooting a second hole in the boat they are both on to get back at the other party for shooting a first hole.
Therefore, the realization that “fair competition” is a bogus concept in the real world, that each nation is able to unilaterally decide whether it wants to benefit from free trade, and that negotiations on trade are conducted for the interest of special groups at the expense of the general public, illuminates the craziness of the world’s established institution of international trade.