At Reason, editor Nick Gillespie interviews Dan Griswold of the Mercatus Center (“Donald Trump and the End of Free Trade,” Nov. 21) on Trump’s likely abandonment of TPP and his trade policies in general. Trump’s views on economics, like his views on everything else, are obviously nonsense; but they’re not nonsense because TPP embodies “free trade.” If anything, Gillespie and Griswold illustrate why the right-libertarian understanding of “free trade” is nonsense.
Gillespie himself cites the argument, raised by many libertarians, that agreements like NAFTA, CAFTA and TPP aren’t free trade at all, but rather “managed trade.” Griswold answers that it’s “not fair” to dismiss such agreements as “managed trade” because “they reduce trade barriers.” Ideally, the best free trade policy would be for the United States to simply abolish all its trade barriers unilaterally. But because the world is a messy place, that’s a politically difficult thing to do. Imperfect as they are, the benefit of these multilateral trade agreements is that “we get our barriers down and we get other countries’ barriers down, so “trade is freer” both ways.
Like most right-libertarian defenses of these fake “free trade agreements,” this ignores their most important deviation from actual free trade principles. For Gillespie and Griswold, “trade barriers” equal tariffs and “free trade” equals getting rid of tariffs. It’s as simple as that. Griswold challenges critics of NAFTA: “How do you improve on an agreement that has zero tariffs either way?” And TPP, he says, was a lost opportunity to “get trade barriers down”; it would have “eliminated 18,000 tariffs.”
But agreements like GATT and TPP, far from reducing trade barriers on net, actually increase them. Their central function is not to reduce tariffs, but to increase a different kind of trade barrier: so-called “intellectual property.” The tariff, copyright and trademark provisions of these industry-written and industry-enforced agreements are at their very heart. In fact “intellectual property” IS a trade barrier.
If you simply change “tariffs” to “patents and trademarks” in Griswold’s argument, he makes his own case against protectionist agreements like GATT and TPP.
Free trade, Griswold says, “starts with the freedom of the individual… to spend our hard-earned dollars the way we want, to buy the products that are most attractive to us…” — in price, among other things. And tariffs, he says, are “taxes on consumers for choosing foreign-made goods; they reduce competition, they lead to domestic oligopolies…”
But “intellectual property” is a violation of this “freedom of the individual.” And it reduces competition and consumer choice, and promotes oligopoly, in exactly the same way that tariffs do.
Gillespie raises the populist argument that tariffs and other import restrictions enabled the auto industry to pay high wages, so that everyone benefited from people paying more for cars. Griswold, in response, refers to the poor quality of American-made automobiles back in the days when they had limited foreign competition.
The irony is that the argument for tariffs, which Gillespie and Griswold raise and quickly dispose of, is exactly the same argument used by defenders of so-called “intellectual property”: By making everybody buy music, books and movies at the copyright markup, or buy manufactured goods with their enormously patent- and trademark-inflated prices, we guarantee the profits of the industries in question, guarantee jobs in them, and guarantee high wages for workers in them.
In reality, this means we’re buying electronic goods whose price consists mainly of embedded “intellectual property” rents rather than labor and materials, sneakers that cost several hundred percent more because of the Swoosh markup, and so forth. And the products we buy are designed for planned obsolescence, lock the consumer into buying expensive accessories, or are otherwise of poor quality, because “intellectual property” impedes the competitive pressure to design products for interoperability or durability.
In fact tariffs aren’t even the main concern of the industries drafting such “free trade” [sic] agreements. The main purpose of such agreements is to increase protectionist trade barriers in the form of patents, trademarks and copyrights. Agreements like GATT and TPP are nothing but Smoot-Hawley for “intellectual property.”
The dominant business interests have abandoned tariffs, and embraced “free trade” agreements that increase “intellectual property” barriers, because “intellectual property” has replaced tariffs as the central form of protectionism on which their profits depend. Because the old national industrial corporations have become global, and have largely ceased to actually produce anything themselves, they profit by enforcing protectionist control over supply chains and claiming a legal monopoly on the sale of products outsourced to independent producers. Patents, copyrights and trademarks perform exactly the same protectionist function for global corporations that tariffs did for national industrial corporations a century ago: they give them a monopoly on selling particular goods within particular markets. The difference is that they operate at the boundaries of global corporations, rather than of nation-states.
“Libertarians” who use the language of Ricardo and Cobden to defend the power of corporations that are little more than components of state power, are themselves nothing but apologists for the corporate state.