Monday, March 22, 2010

Scoring the Great Trade Debate, Ctd.

Yesterday's blog entry on the "Great Trade Debate" and the immorality of protectionism elicited an email response from the subject of the post, Mr. Ian Fletcher of the US Business and Industry Council.  Below is my unedited response to Mr. Fletcher.  Out of respect for Mr. Fletcher's privacy, I will not publish his email.  However, I think you can get a pretty good idea of the discussion without it.  After implicitly impugning my intentions re: not posting his email, Mr. Fletcher consented last night to my republishing it here, so here you go.  My reply follows his message. 

From: Ian Fletcher
Sent: Monday, March 22, 2010 12:35 AM
To: Scott  Lincicome
Subject: Our Debate


I saw your “scoring” of my debate with Dan Griswold.

Your comments are interesting, so let me reply to some of them.

First, two elementary mechanical points:

1) Both of us made unsubstantiated assertions because we were writing under a word limit.

2) We talked past each other because we did not have access to each other’s comments for the same round, only for prior rounds.

Your assertion that protectionism is necessarily a racket to benefit organized special interests is refuted at length in my book, though I cannot possibly refute it here. I can, however, start by noting that:

1) Your claim that trade liberalization necessarily benefits the average citizen more in terms of lower consumer prices than it costs in wages does not, contrary to myth, have any backing in economic theory. Please refer to the Stolper-Samuelson theorem.

2) We have seen no end of the corruption of our political and economic institutions thanks to special interests benefitting from freer trade.

Your claim that free trade should be analyzed primarily as a “moral” issue suffers this problem: morality concerns the good and how to attain it. As economics is an empirical art aiming at the good of prosperity, it would seem to follow that economic policies should be judged by whether they attain this good, not by whether they implement various abstract principles.

Your claim as to where the burden of proof lies is purely dogmatic. Granted, it’s dogmatic for me to turn it around, but this just means that neither of us can appeal to this argument. (I am, however, entitled in the context of a debate to question the basis of assertions made by the other side, which is what I did.)

If you would like to debate free trade vs. protectionism yourself, I would be happy to do so in any reputable forum. The format would be your choice.

Best Regards,

Ian Fletcher
From: Scott Lincicome
Sent: Monday, March 22, 2010 8:40 PM
To: Ian Fletcher
Subject: Re: Our Debate

Dear Mr. Fletcher,

Thanks for your message. Regarding your "mechanical points," please note that I never said that Dan didn't make unsubstantiated assertions. However, a quick comparison of his original post and yours reveals a dramatic data discrepancy. I'm not sure if that was an intentional rhetorical ploy or merely a product of the debate's word limit, but it certainly is evident (and even noted by a random commenter). Moreover it makes judging the totality of your arguments impossible, as you spent an overwhelming majority of your subsequent posts just refuting Dan's data.

Regarding your substantive responses, I'm sorry but your two points are irrelevant to my thoughts on the inherent immorality of protectionism. Free trade's morality actually has very little to do with whether trade liberalization "necessarily benefits the average citizen more in terms of lower consumer prices than it does in wages." I certainly believe that those price benefits (and other welfare gains beyond mere "cheap t-shirts") outweigh any mythical wage gains that you mention, and I've read a ton of studies confirming my views. However, that is wholly beside the point. Each American has the inalienable right to engage in any voluntary transaction that does not harm his fellow man. Whether that transaction benefits him (in the short- or long-term) is utterly inconsequential - it is his choice and no man or government has the authority to deny this right without, at the very least, ample justification for doing so.

Your protectionism, however, is just such a denial. It seeks to thwart said voluntary transactions and to forcibly take the private property of the American goods consumer and give it to the American goods producer (through higher prices). That property is not yours (or the government's), and you have no lawful or natural right to it. As such, you must bear the burden of proving why such theft and coercion is justified. In most policy areas, government justifies its taxation, regulation and wealth redistribution (yes, even where the Constitution expressly warrants the authority to tax/regulate). Indeed, our current President spent a year trying to convince the American public of the rightness of his healthcare plans. Regardless of whether you think he made that case successfully (I and 60% of the public do not), President Obama did not simply submit legislation and immediately begin taxing/subsidizing/mandating/etc. He tried to prove his case. Yet, as public choice theory teaches us, because of protectionism's diffused costs and concentrated benefits, government and its protectionist minions routinely fail to provide sound economic justification for the forcible theft from the American consumer that is trade protectionism. Government does not deserve that free pass, and I believe that free traders need to do a better job explaining not only why protectionism's economic justifications are unsound, but also why the government must bear the burden of proving without question that such justifications are absolutely necessary. Maybe your book does that, but I have my doubts, and I certainly believe that your blog debate with Dan Griswold did not measure up.

As to your point 2, about the immorality of "freer trade," that's also a non-sequitur. "Freer trade" is nothing other than protectionism in "FTA" guise. I support unilateral trade liberalization, with limited (and justified!) exceptions for national security or to maintain the rules-based international trading system. (Indeed, I argued as much in a 2009 Cato Institute paper.) However, I will say that when "pure" liberalization is impossible (for political reasons or otherwise), I think there's a quite reasonable and moral argument to begrudgingly accept the sweetheart deals (e.g., tariff carve-outs) in past FTAs or other preferential trading arrangements: it's better to have 2% forcible theft and 98% free exchange versus 100% forcible theft.

Finally, about "morality" and economics, such a dichotomy might apply if we were theorizing about purely voluntary, private transactions (for example, which system of corporate compensation is best for shareholders and management). But it is inapposite where a gun and natural rights are involved. Where one man is asking government to take, by force (or threat of force) the earned property of another man, morality demands that such a request be justified. And this argument is even stronger where such confiscation benefits a well-connected few at the expense of the very many. Of course, economics is the means by which said justification is achieved, but it cannot be the starting point. To give but one extreme example, it would arguably be "economic" (i.e., assisting with American prosperity) in the context of the current healthcare debate to advocate the government euthanization of the mentally disabled, the very old, or the very sick, but we do not do this (although some Americans frighteningly did in the eugenics movement). We do not do this because it is absolutely immoral for the government to terminate a human life in order to help stabilize an overburdened healthcare system or for any other "economic" reason.

Perhaps you see my views as "dogmatic," but the alternative is amoral, statist nonsense - the idea that government has the unlimited right to forcibly confiscate a man's property (or infringe upon his other rights), unless one can prove it to be "uneconomical" to spare him that misery. If my view - that such statist coercion must be stringently limited to only those instances of proven economic value - is "dogmatic," then so be it. But fortunately for me and anonymous "men" everywhere in America, it also happens to be one of the founding principles of our fragile republic.

Best regards,

p.s. Unfortunately, I am unable to accept your offer to debate in a reputable forum. While I enjoy the discourse, my day job would prevent my giving such a show the attention it deserves. Unless, of course, you'd like to pay my hourly billing rate!


Tim Worstall said...

My 2 cents worth.

1) As Adam Smith pointed out, the sole purpose of all production is consumption. Thus the economy is run for the benefit of consumers not producers.

2) To be slightly scatalogical: imports are going shopping. Exports are just the boring shite we do in order to be able to go shopping.

Innovation rules said...

As far as economics go, the statistical correlation between trade and standard of living is indisputable.

The more nuanced the research gets, the more issues with the statistics; complex systems wreak havoc on economics and statistically valid regressions in general.