Washington Examiner Blind to US Trade Distortions

The Washington Examiner, a conservative newspaper, agrees with President Trump on China’s “. . . destructive practices of forcing businesses to surrender their technology to the state and forcing them into joint ventures in exchange for market access.” and “. . . massive subsidizing of industries through colossal state-owned enterprises that put private competitors out of business.”

Then the WE proceeds to NAFTA and “Canada’s dairy cartel, but they operate on a similar protectionist principle. . . . Canada’s quasi-Soviet dairy policy is just one of the many thorny issues making agreement more complicated.”

How about the U.S.’s distorting trade policies? Agriculture receives billions in subsidies and regulatory protection. The same arguments WE makes about China and Canada can be made about the U.S.

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The NAFTA Trade Debate

 

In post-round remarks, Lighthizer returned to a theme of his that a major problem with the current version of NAFTA is that it gives too much incentive to U.S. companies to locate production in Mexico.

Not so, judging by direct investment:

In fact, according to the U.S. Bureau of Economic Analysis, from 2011 to 2016, the annual outflow of direct manufacturing investment from the United States to Mexico averaged $3.1 billion. To put that number in perspective, during that same period, annual investment in domestic manufacturing plants and equipment in the United States averaged $217 billion. That means U.S. investment in manufacturing in Mexico has averaged a mere 1.4 percent of what companies invest in our domestic economy.

Jobs:

The number of manufacturing workers in Mexico that are employed by U.S. affiliates has indeed been trending up in recent years, but at a slow and uneven pace. In 2000, the majority-owned affiliates of U.S. multinational companies employed 641,900 manufacturing workers in Mexico. After declining for the next decade, that number rebounded to 706,200 in 2014.

See graph.

Meanwhile, since 2000, the number of manufacturing workers in the United States has declined from 17.2 million to about 12 million — a decline of 5 million net manufacturing jobs. But here too the trend was downward from 2000 to 2010, followed by a modest recovery of jobs since then.

Automation:

President Trump and his trade advisors routinely blame job losses in manufacturing on trade deals such as NAFTA and the outsourcing they supposedly encourage, but objective studies show otherwise. The biggest reason for the decline in manufacturing employment in the United States since 2000 has been dramatic productivity gains fueled by automation.

Here.

Matt Ridley on the Empirical evidence that free markets make people nicer

Matt Ridley writing in the UK Times:

. . . This would not have surprised Montesquieu, who spoke of “sweet commerce”, or Voltaire, who marvelled at the friendly collaboration of “the Jew, the Mahometan and the Christian” on the floor of the London stock exchange, or Adam Smith, David Ricardo and Richard Cobden, the radical champions of free trade in the early years of the industrial revolution.

Cobden said: “Free trade is God’s diplomacy and there is no other certain way of uniting people in the bonds of peace.” He was right. Recent studies have confirmed that commerce is the main cause of peace.

Conclusion:

The Conservatives cannot compete with Labour by offering pale imitations of its patronising paternalism. They should offer the young something more revolutionary, liberating, egalitarian, disruptive, co-operative and democratic than stale statism. It’s called freedom.

Here.

 

 

Venezuela descends into predictable dictatorship

A. Barton Hinkle:

Last weekend, president Nicolas Maduro used a sham election to consolidate power, and by Tuesday armed thugs were rounding up opposition leaders. This is the all but inevitable outcome of the Venezuelan government’s economic policies, which have driven the richest nation in Latin America — a country with more oil than Saudi Arabia — into shocking destitution.

And Darío Paya, former Chilean ambassador to the Organization of American States:

“Populists and socialists destroy their societies in predictable ways. It’s not like one day a populist gets up and says, ‘I’m going to ruin this country.’ Rather, he starts out wanting to spread the wealth and finds that the easiest way to hand out cash is by simply printing lots of it. Which creates a new problem: As the currency weakens, prices rise. But the populist finds there’s an answer for that too. If bread is getting expensive, he can fix its price, and he gets to vilify the baker as a greedy capitalist.

 

“But then the baker stops producing bread because he can’t afford to make it, what with the rising price of flour. And so what does the populist do next? He fixes the prices of flour. When that doesn’t work, the politically expedient thing to do will be to take over the bakery and the farms and hand them to the folks in the party’s local committees, who prove to be rather less apt at farming and baking. …

 

“And if violence does erupt, it can be denounced as the doing of enemies of the state and used as a pretext for renewed crackdowns: ‘We’re going to tell the imperialism and the international right that the people are present, with their farm instruments in one hand and a gun in the other,’ Maduro told a Caracas crowd. And soon, Mr. Populist finds himself with a good reason to suspend the country’s constitution. Thus does a tyrannical attitude toward the shop-owner selling bread lead to a tyranny over a whole nation.”

 

 

 

Economic Freedom of the World, 2014

Global economic freedom increased slightly in this year’s report to 6.85. Hong Kong and Singapore retain the top two positions with a score of 9.03 and 8.71 out of 10, respectively. The rest of this year’s top scores are New Zealand, 8.35; Switzerland, 8.25; Canada, Georgia, Ireland, Mauritius, and the United Arab Emirates at 7.98; and Australia and the United Kingdom at 7.93.

The United States, once considered a bastion of economic freedom, ranks 16th for a second consecutive year with a score of 7.75. Due to a weakening rule of law, increasing regulation, and the ramifications of wars on terrorism and drugs, the United States has seen its economic freedom score plummet in recent years, compared to 2000 when it ranked second globally.

Here.

 

Centrist Classical Liberalism ’round the World

In the US, Libertarian party presidential candidate Gary Johnson and his running mate Bill Weld are hewing to a centrist message of socially liberal and fiscally conservative. Walter Olson has a piece here. Check this for the next section of this post.

In Europe liberal parties, often seen as the nearest analogue of libertarian, are often perceived in just this way as occupying centrist/middle positions between labor or revolutionary parties on the left and blood-and-soil or religious parties on the right. European liberal tendencies vary but often they’re secular, business oriented, pro-trade, modern, internationalist but not militarist, and interested in meliorist reform rather than street politics or national crusades. Sound familiar?

 

In France, Economy Minister Emmanuel Macron is described in the video towards the bottom of this piece as a social and economic liberal (in the classical meaning of the word, not the statist, corrupted meaning in the US.

French Economy Minister Emmanuel Macron has resigned from the government ahead of an expected centrist bid for the presidency in next year’s election.