For years, I’ve had to listen to bilious rhetoric about “anti-Americanism,” “treason” and the like from the Legion and Dittoheads. Now I get to enjoy the same kind of posturing from “Progressives” — with Keith Olbermann, Lawrence O’Donnell and their ilk sounding like a bunch of know-nothing Republicans.
The latest case in point is Ian Fletcher (“LIbertarianism, the new anti-Americanism,” Huffington Post, Jan. 19), writing in criticism of an article by Don Boudreaux.
Fletcher quotes a very short snippet from Boudreaux to the effect that an increase in the economic well-being of a South Korean is as worthy of celebration as an improvement for a South Carolinian (“Another Open Letter to Ian Fletcher,” Cafe Hayek, Jan. 9).
Of course Fletcher eschews any context, like Boudreaux’s remarks on the long-term benefit to American workers from increased productivity and better and cheaper goods. No, he prefers to keep things simple (even at the cost of folding, spindling and mutilating the truth): libertarians “just don’t care” about Americans.
I would contest a couple of Fletcher’s unstated premises:
First — a premise that requires no small amount of selective quotation to read into Boudreaux’s comments — that globalization does, in fact, benefit foreign workers at the expense of American ones. I hear the same meme a lot from the anti-globalization Right: globalization is some sort of altruistic “socialist” movement to dismantle the American economy for the benefit of the Third World.
But it’s arguable that globalization benefits transnational corporations at the expense of both American and Third World workers. The TNCs are in the position of a toll-keeper on a bridge separating two groups of workers, take a cut every time one worker exchanges her labor for another’s. Both Third World and American workers would be better off, in most cases, with relocalized economies in which the goods they consume are produced by small-scale manufacturers close to where they live.
Which leads to Fletcher’s second false premise — one that he shares with Boudreaux to some extent: That globalization is, in fact, something that results from “free market” or “libertarian” policies. Nothing could be further from the truth. Globalization is not something that results spontaneously from the free market, if states do nothing to prevent it. The corporate global economy is the product of massive collusion between big government and big business.
“Free trade” does not, as Fletcher alleges in an earlier column, promote greater income inequality within countries. Corporate globalization may well do so — but corporate globalization is not free trade.
The centerpiece of the neoliberal fake “free trade” agenda, a central provision in every so-called “Free Trade Agreement,” is what’s euphemistically called “strong intellectual property [sic] protections.” IP law plays the same protectionist role for global corporations that tariffs used to play for the old national industrial corporations. IP law is the central means by which transnational corporate headquarters are able to retain control of outsourced manufacturing in job shops all over the world, and charge a brand-name markup of many hundreds of percent — in effect standing as parasitic toll-keepers between Chinese workers and American consumers. So the neoliberal “free trade” agenda is really as protectionist as Smoot-Hawley.
For decades, American foreign policy has protected Third World landed oligarchies against left-wing land reform movements, in effect enforcing the artificial land titles of haciendados and other feudal ruling classes at the expense of the rightful owners actually working the land. It has empowered such landed oligarchies to reenact the Enclosures of early modern Britain, driving peasants off the land and leaving them no choice but to enter the wage labor market on whatever terms are offered by foreign capital.
The World Bank, in collusion with Third World elites, has mainly undertaken projects to create subsidized road and utility infrastructure without which offshored industry would not be profitable — and then used the resulting debt in much the same manner as a company store, to coerce local governments into “structural adjustment” deals by which state property is “privatized” in collusion with crony capitalists.
So corporate globalization, despite all the rhetorical trappings of “free trade,” is statist to the core.
Considering the uncharitability of the motives Fletcher attributes to libertarians — painting the entire movement with a broad brush as “selfish” shills for big business interests — his own agenda might warrant closer examination. Fletcher is an Adjunct Fellow with a hardcore protectionist outfit called the U.S. Business and Industry Council. Despite all the talk about outsourcing and American jobs, the central function of trade barriers is just this: To protect the large American corporation from competition by compelling the American worker to purchase the corporation’s product on its own terms. The tariff used to be called the “Mother of Cartels” for good reason.
So before Fletcher accuses libertarians of carrying water for big business, maybe he should put down those buckets.
We don't have a free market, but claiming globalization couldn't exist in one is a pretense of knowledge. Bryan Caplan has a point when he says, "I have noticed that many left-libertarians act as if the slightest intervention makes standard stories about how markets work completely irrelevant."
Why wouldn't global trade thrive in a free market without trade barriers? Comparative advantage and specialization are major creators of mutual benefit, regardless of what that North Dakota guy growing pineapples part-time in his backyard in a homebrew hothouse to trade with his neighbors tries to persuade us. We don't know what transportation will cost in a free market, but assuming it will be so high as to trump all the benefits of trade defies common sense. And given the amount of international trade that was present starting in the Middle Ages when transportation costs included a considerable risk of death, it is ahistorical. Of course, we didn't have a completely free market then …
With Less's caveat, I applaud this article.
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Yes. The "slight" intervention of 21st C. corporate capitalism.
Please, I welcome the corporate cartels to attempt their wage-arbitrage, protectionist, corporate-state, long distance with super subsidized distribution costs game without my tax dollars, Blackwater and the Marine Corps.
We'll see just how different it is without these "slight" distortions in the "standard" story (at least the last word rings true)…
@Less:
Where does Kevin claim that globalization couldn't exist in a freed market? While Kevin isn't always clear here, the claim, as I understand it, is that globalization of some sort would certainly develop in a freed market, but that it would be qualitatively different from existing corporate globalization. I agree with your caveat concerning transportation costs – another area where Kevin's writing isn't always clear. Some factors resulting from market liberation may drive up transportation costs, while others may counter that trend by reducing said costs. Where costs ultimately end up, with all that said and done, seems beyond our petty predictions.
Oh, and I don't agree that Bryan Caplan makes a valid point, at least in reference to actually existing "left-libertarians." I'd like to see some specific examples.
Caplan has never demonstrated any sort of nuanced, let alone accurate, understanding of left-libertarian concerns, and the quoted remark above complements my view of him. Left-libertarian criticism of existing markets has much to do with the myriad, interlocking interventions that have historically served to distort markets in ways beneficial to those seeking said interventions – what Kevin refers to as the "subsidy of history." Caplan's comment may have some validity if left-libertarians viewed markets in the same faulty context-free manner that leads many libertarians to engage in varying degrees of statist quo apology. If markets were generally free and people freaked out over one slight intervention, claiming that all market theory now goes completely out the window, then Caplan would have a point.
I take this passage as claiming that globalization would not occur without statist intervention:
——
Which leads to Fletcher’s second false premise — one that he shares with Boudreaux to some extent: That globalization is, in fact, something that results from “free market” or “libertarian” policies. Nothing could be further from the truth. Globalization is not something that results spontaneously from the free market, if states do nothing to prevent it.
——
Kevin is free to correct my impression. Based on Sheldon's remark, I'd say that my interpretation is not entirely unwarranted. Kevin?
Just as my quoting Thomas Jefferson is not an endorsement of everything he said and did, my quoting Caplan doesn't mean I don't agree with your point about the lack of nuance in Caplan's criticism of left-libertarians. Caplan loves to be provocative. But I couldn't ethically rewrite Caplan's quote with the nuance I'd add were I to be making the point. Obviously, I wouldn't have quoted it here if I didn't think that passage by Kevin was an example (please note I didn't criticize anything else in his piece).
Economiists of all schools see gains from trade, and expanding gains from expanded trade opportunities.. Absent the state, there are plenty of reasons to hope that "peace, commerce, and honest friendship" (that's my Jefferson quote) will extend around the globe.
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I gave the example of the Middle Ages. They even came up with their own voluntarily enforced Law Merchant because of the refusal of governments to enforce international contracts.
Is it really so hard to see my point that there would probably be global trade without state intervention without now adding me to the list of people supposedly blind to the corruption of today's system?
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While I can't speak for Kevin, I think he's merely referring to actually existing (i.e. corporatist) globalization. I'd be surprised if that's not the case, and your original point would then be entirely warranted.
He meant globalization as is currently understood, not global trade in general.
Less: I don't think there'd be anything like current levels of international trade in physical goods, in a free market. State capitalism artificially inflates the international division of labor through such things as IP law, direct and indirect transporation subsidies, and the like.
Thanks, Kevin. Then I didn't misrepresent your position: you are predicting a collapse in global trade in a free market. Since we're both in favor of the abolition of IP, transportation subsidies, etc., this boils down to your willingness to make a prediction which I believe has Hayek turning over in his grave (although I can't be sure, as I am not local to Hayek in time and place).
Just one counterpoint as to why your expectation seems pretentious to me: health care and higher education costs are both massively subsidized, but none of us would argue they are artificially cheap today. State intervention to subsidize transportation costs doesn't necessarily mean it is artificially cheap today, either. Statism does a lot of things, and it seems quite plausible that the subsidies to existing transportation methods may well be having a sclerotic effect on shipping innovation. Perhaps standardized storage units traveling a couple hundred feet above ground or water and moving at hundreds of miles per hour might make next day delivery of goods from the other side of the planet as simple as it is from my local store today. Who knows?
I'm not sure the Law Merchant is an example of "globalism" so much as "regionalism." The areas involved weren't really that far from each other – the biggest obstacles to travel and shipping tended to be man-made. And don't forget the high prevalence of coastal areas. It's a fact that shipping via sea is generally and historically at least an order of magnitude cheaper than the cheapest viable contemporary land transportation schemes over the same distance. Nonetheless (heh), I'd agree with Less to an extent (although Kevin's exact position isn't completely clear to me) that perhaps Kevin's critique goes too far with respect to coastal (especially deep harbor) commercial centers. There would be a level of "globalism" that would manifest itself in relatively small scale trades over long distances for unique (or perceived to be so) goods in such coastal commercial centers. But even this would quickly fade as one traveled inland from the coast and transportation costs mounted.
Obviously, I agree with Kevin that much of the current status quo of comparative advantage has more to do with things like IP, corporate use of state proxies to dispossess peasants of capital in 3rd world countries, and the subsidy of history than it does with some natural comparison. It's hard to say just how much comparative advantage would exist in a global long term free market, but it's pretty clear to me that there would be significantly less cheap labor available around the globe.
We need to remember that comparative advantage is a ratio, so it can never stop existing, save the ridiculous possibility that everyone in the world will have the same relative ability to produce every possible good and service regardless of their personal characteristics, knowledge, and location. We will always be mutually better off with specialization and exchange.
Also, to the extent 3rd world laborers are producing goods that are protected by IP or other intervention, their marginal productivity is higher in that industry, so it doesn't all go in a good direction, although my betting money is on the same side as yours, that labor value will soar in 3rd world countries in the absence of state intervention to prop up existing structures.
That didn’t happen with that wave of Enclosures, the Tudor one, which left evicted peasants with little choice but to beg. It did happen with the eighteenth(ish) century wave of Enclosures, when industrialisation offered some new roles.
Quasibill wrote:-
Not in those days, apart from in sheltered inland seas with fairly well understood weather conditions and techniques and shipping schedules adapted to those (think of the loss of the White Ship with Henry I’s heir on board, in the English Channel). Anglo-Saxon law reckoned the profits (and so, the risks) of three successful voyages sufficient to set a ship’s captain up with the resources needed to sustain himself as a Thane (i.e., to be able to put an armed man in the field). It was actually worth the Normans’ while to secure the land route through Wales to shorten the sea travel to Ireland. As Norse expertise did not spread, possibly because those methods needed quantities of wood less available further south, safe long range voyages did not become widely practical until the late Middle Ages when Portuguese fishermen developed the predecessors of the caravel.
I completely agree about Fletcher. However, you can spare us third worlders your "leftist land reform movements.' They've been absolutely stinking wrecking disasters in places like India where Marxist state governments have effectively enslaved the common farmer with state control of land, having demagogued private property rights as "colonialist" and dismantled all of them. Now farmers are slaves to the government as they cant sell land to anyone other than agricultural interests and that too with permission of the state, and can only sell to agricultural committees which are composed of state bureacrats who are in the pay of retailers. FUCK LEFTIST "LAND REFORMERS"
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