Free Trade

Congratulations to the Free Traders of the 112th Congress

Written by K. William Watson, trade policy analyst with the Cato Institute’s Herbert A Stiefel Center for Trade Policy Studies. Posted with permission from Cato @ Liberty.

Do you remember the 112th Congress—the one that repeatedly almost shut down the government while still managing to raise taxes and spending? It turns out they did some interesting things with trade policy. The votes recorded in Cato’s congressional trade votes database have been counted, tabulated, and analyzed, and the results are mixed. The predictable legislative outcome was that with a Republican House and Democratic Senate, the 112th Congress furthered the bipartisan establishment trade policy of reciprocal tariff reduction and unilateral subsidy expansion.

The more interesting revelations come from looking at the voting records of individual members. Rather than simply noting whether a policy would promote or diminish free trade or would increase or decrease America’s engagement in the global economy, Cato’s Free Trade, Free Markets methodology distinguishes between barriers (like tariffs and quotas) and subsidies (like loan guarantees, tax credits, and price supports). This distinction enables us to place members within a two-dimensional matrix.

The Case Against Saxby Chambliss

Taxby

Over the last six years, I’ve been watching Sen. Saxby Chambliss (R-GA) very closely. Back in 2008, Chambliss faced a tough challenge in a three-way, finding himself in a runoff against Jim Martin, a liberal Democrat.

Part of the problem was campaign organization. Insider Advantage quoted an unidentified Republican who said that Chambliss and company had the organization of a “bad state House race,” calling it a “embarrassing campaign.” There was also the perception of Chambliss among Georgia Republicans. Insider Advantage again quoted a unidentified Republican who said, “Saxby’s reputation is that he’s spent six years in Washington playing golf. He’s gone on lots of trips. He hasn’t done the down-and-dirty constituent work.”

“Saxby bragged about it his first four years – how much golf he was getting in. It was a real problem and it irked a lot of people,” said the unnamed Republican source. Many Republicans in the state were less than thrilled with Chambliss, who hadn’t been able to endear himself to the state party the way Sen. Johnny Isakson had.

Another issue that hurt Chambliss was that he had lost the support of many fiscal conservatives in Georgia because of his votes that put taxpayers at risk.

Romney’s Economic Advisers Pretend to Support Free Trade

Written by Simon Lester, Trade Policy Analyst for the Herbert A. Stiefel Center for Trade Policy Studies at the Cato Institute. Posted with permission from Cato @ Liberty.

Governor Romney’s economic advisers (Glenn Hubbard, Greg Mankiw, John Taylor, Kevin Hassett) have a short post about his economic plan.  In it, they sort of talk about trade issues:

Advancing international trade is another part of the plan. A recent study by the International Trade Commission concluded that reducing intellectual property violations [in] China could produce about 2 million jobs in the United States.  While that is, of course, an estimate, Governor Romney has made reducing barriers to trade with China []  a primary focus of his trade opening policy, and this advancement of trade clearly would be a large net positive for the successful idea-intensive firms that drive economic growth.

What’s important to note here is that these prominent, well-respected economists are not talking about free trade, despite their best efforts to make it seem like they are.  Free trade means reducing protectionism, both at home and abroad.  That means removing protectionist barriers to imports and exports, resulting in specialization of production and greater efficiency, among other things.  But that’s not what they are saying here.  Instead, they want to “advance” international trade by increasing exports to China, mainly through forcing China to strengthen intellectual property laws and enforcement.

What the Candidates Won’t Explain about Outsourcing

Written by Daniel Ikenson, director of the Herbert A. Stiefel Center for Trade Policy Studies at the Cato Institute. Posted with permission from Cato @ Liberty.

Like almost everything about the 2012 presidential campaigns, the bickering between the major party candidates over who is most responsible for shipping jobs overseas has been banal and utterly uninformative. While politicians have scared many Americans with hyperbolized sales pitches about the costs of foreign outsourcing, most people remain in the dark about the causes and benefits of outsourcing. What is foreign outsourcing anyway? Why do some businesses invest in sales operations, research and development, production and assembly operations, or the provision of services abroad? Are low wages and lax environmental and safety standards in poor countries really the magnets attracting U.S. investment? If so, why is 75% of U.S. direct investment abroad in rich countries? What explains the fact that the United States (high-standard, rich country that it is) is the number one destination in the world for foreign direct investment? Doesn’t the fact that businesses have options in our globalized economy serve to discipline some of the worst government policies?

As I suggested in this recent post:

In a globalized economy, outsourcing is a natural consequence of competition. And policy competition is the natural consequence of outsourcing. Let’s encourage this process.

Decline of American Power – Is that a bad thing?

A lot of conservatives lament the decline of “American Power” around the World. Just this week Bill O’Reilly had a rant about that. But to those who love Liberty, American Power is just another phrase for Government Power, and the less Government there is at home and abroad the better the lives of all individuals around the world will be.

Thoreau had a great quote about that:

“I heartily accept the motto,—“That government is best which governs least;” and I should like to see it acted up to more rapidly and systematically. Carried out, it finally amounts to this, which I also believe,—“That government is best which governs not at all;” and when men are prepared for it, that will be the kind of government which they will have”.

I look forward to the day when men are prepared for a government that governs none at all. But until then the Leviathan that is the State with its Coercive Power will be with us. Our job for those who love liberty is to educate ourselves and others about the True Nature of the State and the Blessings of Liberty.

Franz Oppenheimer made it crystal clear the difference between how the State acquires what it desires and the way free individuals voluntarily trade to gain what they desire:

Heritage Foundations releases 2012 Index of Economic Freedom

On Thursday, the Heritage Foundation and the Wall Street Journal released the 2012 Index of Economic Freedom, an annual report on economic freedom across the globe that measures interventionist government policies and ranks countries accordingly.

Ed Feulner, president of the Heritage Foundation, gives us an idea of what we’ll find in this year’s report, and it’s not pretty:

As Friedrich A. Hayek foresaw decades ago, “The guiding principle in any attempt to create a world of free men must be this: a policy of freedom for the individual is the only truly progressive policy.” Thus, the battle of ideas must also be a battle for the meaning of the very words with which we debate. Is it “progressive” to utilize the coercive power of the state to redistribute and level incomes within a society? Is it “liberal” to build a massive state apparatus to regulate conditions of employment, usage of energy, and access to capital? The answers to such questions will determine how we live as individuals in the 21st century.

The 2012 Index of Economic Freedom documents a global economy that is engaged in this evolving battle between the forces of government and free markets. Today’s troubles have been neither accidental nor inevitable. The problems we face are the outcomes of politically driven and economically self-defeating policy decisions that have turned an economic slowdown into an accelerating decline.

Unfortunately, the report shows that the United States has, once again, lost more economic freedoms as corruption, cronyism, government spending, and a poor monetary policy continue to drag us down. While we are still ranked as “mostly free,” we can no longer say our economy is the ambition of the world.

Biggest lies of ‘11?

Well reading Foreign Policy for that North Korean blog entry, I came across “The 14 Biggest Lies of 2011,” by David J. Rothkopf. I like list articles a lot; lots of information, in a very short time span, and gets you to focus on them. Sometimes, lists are completely, totally wrong; other times they are spot on; and in this case, it’s quite mixed. I want to offer some rebuttals to a few of his items, because they seem, to me, to be wildly inaccurate. Perhaps they are lies, but his own answers to them are not exactly encouraging. I will only focus on that we disagree on, to save space, but do read the entire list. I actually find it rather humorous…in a morbid sort of way.

I will start out by agreeing 100% with his introduction, however, that in DC, that lying is not an art form, but rather “is more reflexive, like breathing or taking cash from fat cats.” It is nothing but a pit of lies, and the Great Obamessiah himself is one of the best of them. All for civil liberties and ending the wars while running for president, not so much when he actually got into office. What a shame.

But onto Mr. Rothkopf’s list:

6 - “America is unthreatened by China’s growth.”

Occupy Wall Street frustrations are understood, “solutions” are dead wrong

For the last few weeks, protesters have camped out in New York City to express their grievances with Wall Street. The complaints are somewhat familiar and to some extent, I can understand where they’re coming from. They are upset with what they see as government colluding with corporations for taxpayer-funded bailouts during very tough economics times.

The frustration with corporatism is understandable, libertarians and free market conservatives have expressed the same sentiment for years only to take a back seat to the idea that what’s “good for business” is good policy. But as we’ve come to learn, so-called “pro-business” policies aren’t always a good deal for taxpayers. And by that I mean that we truly want a level playing field, but not through excessive taxation or regulation. Rather, keeping government out of the business of picking winners and losers.

But some members of the nascent “Occupy Wall Street” have expressed demands (note that these demands are unofficial), which for all of their supposed distrust of government, these guys have a very utopian idea of what government should be — likely enough to make Karl Marx and Che Guevara proud. Nevermind that they would be economic suicide.

Among the suggested demands for the movement are (with my comments next to them):

Protectionist Tries Redefining Free Trade

Knowing there is no legitimate case for protectionism, its proponents are now attempting to define free trade as something that it is not. Writing for Salon, David Sirota says:

Trade policy, as I’ve previously noted, often has nothing to do with what we conventionally define as “trade” — that is, it has nothing to do with the exchange of goods and services, and everything to do with using state power to solidify corporations’ supremacy over individual citizens. In that sense, the modern era’s ongoing debates over “free trade” are a corporate public relations coup — by tricking the public and the media into believing we’re debating one thing (commerce) when we’re debating something entirely different (power), the “free trade” brand casts those who raise questions about these pacts as know-nothing Luddites (who could be against commerce, right?).

Oddly, Sirota offers no further support for his claim that free trade uses “state power to slidify coporations’ suppremacy over individual citizens” nor does he even clarify precisely what it is he means. It appears as though he is content to level that charge and move on to a different subject:

…In creating direct unprotected competition between Americans and foreign workers who have no labor, wage or human rights protections, the most celebrated trade pacts of the last two decades have — quite predictably — resulted in widespread layoffs and the hollowing out of America’s middle class job base.

SOTU: Obama wants to cut deficit while “investing”

If you were looking for a substantive discussion of the problems facing the United States, last night’s State of the Union address was a let down.

President Barack Obama spent 62 minutes speaking in mostly generalities and explaining to us how great government spending is, but also warning the Congress that he will veto bills containing earmarks – special projects that are inserted into legislation that go bypass the normal budget process. President Obama also pledged to take measures to cut spending by enacting a five-year freeze on non-defense discretionary spending. While he may consider this to be some great feat, Obama’s proposal will only save $400 billion during that time. This is a drop in the bucket compared to the $6 trillion in budget deficits projected by the Congressional Budget Office.

Obama noted in his speech that non-defense discretionary spending represents a relatively small portion of the budget – around 12 percent, using his numbers, and added that “we have to stop pretending that cutting this kind of spending alone will be enough.”

 
 


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