Thursday, January 28, 2010

Clueless: Sarkozy Calls Free Trade "Immoral"

Perhaps not content to impose his protectionist worldview on only his own people, French President Nicolas Sarkozy yesterday called on the rest of the world to reject"rethink" globalization and free trade:
French President Nicolas Sarkozy has called for a fundamental rethink of capitalism in the aftermath of the financial crisis.

"We need deep profound change," he said in his keynote speech at the World Economic Forum in Davos.

His comments came as bankers and regulators clashed over proposals to break up banks that threaten the whole financial system.

Mr Sarkozy said he wished to restore a "moral dimension" to free trade.

"Were we not to change, we would be showing tremendous irresponsibility," he told the bankers and politicians that gather annually in the Swiss alpine resort....

Mr Sarkozy told the delegation - to scattered applause - that governments and companies in the world economy could not pretend it was business as usual.

"We are not asking ourselves what we will replace capitalism with, but what kind of capitalism we want?" he said.

"We must re-engineer capitalism to restore its moral dimension, its conscience," he said. "By placing free trade above all else, what we have is a weakening of democracy."...
That "scattered applause" line is classic - yes, I'm sure that there were tons of well-educated international financiers who were just psyched to hear the President of France badmouth free trade. But seriously, I normally wouldn't even bother to refute nonsense like this, but I will today because the morality of free trade versus protectionism is a point that I don't think I've addressed here yet, and I actually have some great (if I do say so myself) stock text available on the subject.  So it's only a cut-and-paste away:
The most principled case for free trade is a moral case. It is rooted in some of the very ideals upon which the United States was founded: the pursuit of life, liberty, and happiness, and the rule of law. Every American should be free to transact with whomever he wishes to transact, regardless of the nationality or location of the other party. Voluntary exchange is inherently fair, benefits both parties, and allocates scarce resources more efficiently than a system under which government dictates or limits choices. Individuals deciding for themselves how and with whom to conduct commerce will advance their own well-being, and thus the nation’s, far more efficiently than would some centralized authority that tries to influence private decisions by tipping the scales.

Furthermore, government intervention in voluntary economic exchange on behalf of some citizens at the expense of others is inherently unfair, inefficient, and subverts the rule of law. Instead of individuals seeking to optimize their conditions subject to the rules, they are incentivized to divert resources from productive endeavors to changing the rules to their advantage through politics and backroom dealmaking.

Alas, this very sound and simple justification for free trade has been distorted over the years by groups seeking to tip the scales in their favor. They mischaracterize trade in the ancient but false dichotomy of the haves versus the have-nots. Evil corporations, they say, benefit from trade while regular people suffer its wrath. The public is told that companies like Wal-Mart profit from trade, but that the vast benefits afforded Americans who shop at Wal-Mart—benefits like more-affordable clothing, food, and other everyday products—count for nothing. The public is told that trade enriches the Chinese government, but that the benefits to U.S. manufacturers and their workers from record export sales to Chinese customers over the past few years are meaningless. In the political realm, trade is never about individuals acting in their own best interest by transacting with whom they choose to transact. Instead, trade is a zero-sum game featuring the collective “Us” versus the collective “Them,” and “they” are gunning for “our” jobs and wealth using underhanded tactics.

Of course the prescribed “elixir” of limiting or regulating trade invariably benefits those who speak the loudest against free trade. Trade barriers are no different from earmarks. Trade barriers are like pork projects. Trade barriers are akin to the auto bailout. In all three cases, special interests persuade rulemakers that their circumstances justify expropriation of other people’s resources to subsidize their own endeavors. Each is an affront to the rudimentary concept of fairness, individual liberty, and the rule of law.
Yeah, I think that just about sums it up, don't you?

1 comment:

RickRussellTX said...

Speaking of the moral case for trade, consider this:

The increased involvement of government with economic life has coincided with a marked worsening of economic performance.

It has heightened tensions between different groups of workers, some struggling to keep differentials, others trying to override them; between producers and consumers, landlords and tenants, public services and the public.

To observe these things is not to deny a role to government in economic life; it is not to preach laissez faire. That was preached two centuries back when manufacture and commerce were fighting to free themselves from state monopoly and interference which were holding back their development.

There is much that the state should do, and do much better than it is doing. But there are also proper limits which have long since been passed in this country.

To understand the reason and how these limits can be adduced, we must come back to the nature of man. This is a matter where our understanding and our case, based on religion and commonsense, is so much sounder than that of the socialist doctrine. Yet the socialist travesty has succeeded in gaining wide acceptance by default, even among our own people. I refer to the question of self-interest as against the common good. The socialists have been able to persuade themselves and many others that a free economy based on profit embodies and encourages self-interest, which they see as selfish and bad, whereas they claim socialism is based on and nurtures altruism and selflessness.

This is baseless nonsense in theory and in practice; let me explain why. Let us start from the idea of self. There is not and cannot possibly be any hard and fast antithesis between self-interest and care for others, for man is a social creature, born into family, clan, community, nation, brought up in mutual dependence. The founders of our religion made this a cornerstone of morality. The admonition: love they neighbour as thyself, and do as you would be done by, expresses this. You will note that it does not denigrate self, or elevate love of others above it. On the contrary, it sees concern for self and responsibility for self as something to be expected, and asks only that this be extended to others. This embodies the great truth that self-regard is the root of regard for one's fellows. The child learns to understand others through its own feelings. At first its immediate family, in course of time the circle grows.

Our fellow-feeling develops from self-regard. Because we want warmth, shelter, food, security, respect, and other goods for ourselves, we can understand that others want them too. If we had no desire for these things, would we be likely to understand and further others' desire for them?


That's Margaret Thatcher, 1977.