Foreign Trade Revisited

Simon Grey — Mon, 20 Jun 2011 19:30:36 +0000

The current support for free trade is based on the supposition of defending consumers from higher prices. What the higher prices would indicate, if they were allowed to occur, is that American production is being destroyed. The laws of supply and demand would bear this hypothesis out because the cumulative effect of domestic economic regulation is to reduce supply of goods produced. Since demand either stays the same or increases (population trends in America aren’t negative yet), the net effect will be increasing prices.

As noted, foreign trade counterbalances potentially rising prices by increasing the supply of goods offered. Foreign nations do not have the restrictions on labor or environmental effects that plague American businesses, which means that they can produce goods cheaply, enabling them to remain profitable.

Foreign trade, then, redirects consumption away from American producers, who could be competitive if the government allowed them, to foreign producers. Free foreign trade policy coupled with oppressive domestic regulation has the same effect as direct subsidization of foreign business, which begs the question: why is the American government subsidizing foreign business?

The answer is not particularly clear-cut. Most conservatives who support free trade don’t view it as subsidizing foreign producers; they view it as defending consumers. And most leftists don’t view foreign trade as a way of destroying business; some see it as imposing proper regulations on business. Actually, leftists are all over the map on this. Pro-union leftists oppose foreign trade; enviro-leftists either support it as a way to encourage raising foreign environmental standards while some oppose it as a way to encourage raising foreign environmental standards. It might help to note that Bill Clinton signed NAFTA into law, and Paul Krugman has written a book defending free trade.

Additionally, multi-nationalists generally support free trade because it destroys national identity and power, and because it undermines the American economy. Of course, some of the latter is America’s own doing: there’s no need for America to handicap its own business with high taxes and excessive regulation.

At any rate, the current policy of foreign trade is quite damaging to the American economy. This does not require import quotas and high tariffs per se, but it requires that foreign producers be held to the same standard as domestic producers if they wish to sell in America. To have a policy which grants special advantages to foreign producers at the expense of local producers is simply asinine.

Mao Nostalgia in China

D H Smith — Wed, 21 Oct 2009 14:57:44 +0000

On October 1, the People’s Republic of China marked its 60th anniversary with an impressive military parade, musical performances and portraits of Sun Yat-sen, Deng Xaiping, and Mao Zedong.

It’s the occasion for a boomlet for Mao nostalgia in China. This, one can kind of understand. He was the founder of the PRC. After liquidating his rivals, he was the maximum leader of the Chinese Communist Party.

Here’s today’s article on the nostalgia for Mao in China: Mao presides again in China as nostalgia runs high.

In the US, within the Obama administration, Mao Zedong is also enjoying a revival. Communications Director Anita Dunn commends him as a political philosopher to the graduating class of a parochial school. Manufacturing Czar Ron Bloom cites with approval Mao’s saying that “Political power grows out of the barrel of a gun” ["Problems of War and Strategy" (November 6, 1938), Selected Works, Vol. II, p. 224].

The thing is this. In China, it is not Mao’s Communism that is being celebrated; the country has spent the last thirty years correcting the leftist errors of the previous thirty. Mao’s iconic image is a retail opportunity, something to build a business of jokey T-shirts and kitsch snow-globes around. Mao’s real reputation in China is as a nationalist (not a Nationalist, which in China is a different thing):

1 Mao would work with anyone, anywhere to resist Japanese aggression, including the Nationalists or the Americans.

2 Mao unified the war-torn Chinese mainland under Chinese rule for the first time since 1644.

3 In its first five years, the PRC under Mao was drawn into superpower conflict with the US in Korea, and managed to fight the nuclear-armed US to a draw on the peninsula.

4 When Mao fell out with Khruschev, the PRC found itself surrounded by enemies: the USSR to the north, Taiwan with its US backing to the east, India with its designs on Tibet and implicit backing of the UK, US, and USSR to the south. Mao prosecuted a war in the Himalayas and backed them all down, sustaining the country’s independence through a dangerous time.

5 Forty-five years ago this week, the PRC got the bomb; if any of the other powers thought attacking China would be easy, after that it meant mutually assured destruction.

6 When the time came for a new way forward, Mao came to terms with Richard Nixon, and it was easy for the two cold warriors, as if getting reacquainted with old friends. This upset the balance of power in the far east, putting the USSR on the defensive. As much as the US played the China card, China played the America card.

Seek truth from facts, as Deng Xiaoping always said. Mao Zedong’s reputation in his homeland has very little to do with his Communism at this stage, and everything to do with his nationalism. Which is fine — it is his homeland after all.

But like many others, I would like to know just what it is that his highly-placed admirers in the US Obama administration are getting out of Mao Zedong at this time.

Citizen Economists » nationalism

Foreign Trade Revisited

Mao Nostalgia in China