Sunday, June 26, 2016

Matt Bailey on Free Trade

I used to believe in free trade. The economists make very good arguments for it. It's so smooth and simple to have no restrictions. It appealed to me on an esthetic level because of its simplicity, like Esperanto or the metric system. 

But that was before I came to realize how outrageously, mind-bogglingly different countries are from each other. The have different standards, and by our standards, some don't seem to have any standards at all. Yeah, that's the real diversity.

Let's make up some examples: Slobbovia produces very good, very cheap furniture. This isn't because they're all that good at it in the way that American furniture manufacturers are. It's because they use literal slave labor. Three-fourths of Slobbovians are slaves, the descendants of prisoners of war from the 19th Century. But, boy, their furniture is cheap, and Americans of course buy it instead of the more expensive American-made furniture. American furniture factories are going out of business, but Dad really likes his new recliner that cost twenty bucks less than the American kind.

San Lorenzo, in the Caribbean, produces remarkably cheap vegetables, and Americans of course buy them instead of their American-grown equivalents. This unfortunately puts American farms out of business, but, hey, a dime cheaper head of lettuce is a dime cheaper. The veggies are cheaper because San Lorenzan farm workers make about a quarter a day, and they save money on fertilizer by using the vegetable gardens as bathrooms. It's cheaper and more efficient. And if we refused to accept bathroomish veggies, it wouldn't be free trade, would it?

Yinyangguo manufactures really, really cheap electronic goods, so cheap that Americans buy them exclusively, and the American government can't resist those great prices either, so a remarkably large percentage of the electronics used by our armed forces are Yinyangguo-made. As a result, our domestic electronics industry is about gone. Some alarmists have pointed out that in case of war with Yinyangguo, we'd have a sudden electronics shortage that might hurt our ability to fight. Other, really crazy alarmists have said that the electronics we've bought for our armed forces just might have sleeper bugs embedded in them that would render them useless or actually dangerous at the push of a button in Yinyangguojing. But that's too science-fictiony to be true, right?

That's my take on pure, ideological free trade, so beloved of libertarians, neocons, and neoliberals. Here's some more sobering facts on the subject from Matt Bailey:


by Matt Bailey

"Free trade" between countries with vastly different standards of living is always a bad idea that functions as a tragedy-of-the-commons. The stages of free trade malaise run thusly:

1. In the first stage, a relatively prosperous working class which can still find employment in manufacturing has, from their point of view, no *incentive* to use up more of their income choosing more expensive domestic products over foreign ones, whose absurdly low labor costs ensure that domestic products can never compete on price. No, patriotic feelings and slogans in the absence of tariffs and trade barriers are NOT enough to trump individual economic self-interest.

2. In the second stage, the one of the decayed working class, people who no longer have a manufacturing base uplifting their prosperity and who now mostly "work at Wal-Mart" figuratively have no money to buy domestic products if they wanted them, and many if not most items are ONLY imported.

3. In the third stage standards of living have to collapse completely as the nation more or less voluntarily accepts Third World status, becoming producers only of agricultural goods. Only the situation is worse than that of Third World countries, because the former industrial nations have a higher population that is less skilled at scraping by/living off the land/etc.

The United States is somewhere between the Second and Third stage. The only leader who seems to know about these facts and care to avert Third Stage collapse is Donald Trump.
Quibcags: The first features Recette Lemongrass, who is a character in a role-playing game, Recettear: An Item Shop’s Tale (RECETTEAR~アイテム屋さんのはじめ方~ Rusettia – Aitemu-ya-san no Hajimekata?, Recettear: How to Start an Item Shop), chosen because she has a habit of periodically shouting "Capitalism, Ho!" I have no idea why, because I haven't gone near a role-playing game in decades, not that there's anything wrong with that. The second is illustrated by Yukko of Nichijou (日常), who evidently has seen something upsetting in the market, there.


  1. It's amazing how many Americans think there is an American hiding in the most alien of foreigners, trying to get out.

    1. It's the "everybody is like me" syndrome. Makes kids think their teddy bears can talk. Maturity changes that, which says a lot about the people you're talking about :)

  2. A more-or-less INTERNAL free market is not a bad thing as long as it is guarded by strong borders, strict immigration control, and some trade protectionism.

  3. The veggies are cheaper because San Lorenzan farm workers make about a quarter a day, and they save money on fertilizer by using the vegetable gardens as bathrooms. It's cheaper and more efficient. And if we refused to accept bathroomish veggies, it wouldn't be free trade, would it?
    How often do you hear [veggie] recalled due to Salmonella (or Listeria, or E. coli) or ''Restaurant plagued with complaints due to patrons getting sick''? Guess why.
    @Lucian Lafayette: Vox Day has written extensively as to why US interstate commerce does not, nor cannot compare to so-called ''free trade'' agreements.
    Short version, US states play 'the trade game' by a universal set of rules that everyone has to abide by, international ''free trade'' is like a poker game with a marked deck, that everyone knows is marked, and one player (the US) is ignoring the advantage and more or less 'playing it straight' while all the other players are taking full advantage of the marked cards.
    Try buying a US made car in Japan, you basically can't - unless you're a buying a collectable/exotic. IOW a Jay Leno would have no real problem there but Satoshi Bento Box? It's domestically made only for him.