TGIF: Individuals, Not America, First

Let's hear no more about America First! It's a fraud, a cover for collectivist nationalism, and a distraction from what matters. (It also looks like camouflage for Trump Family First, but let's take it at face value for now.)

On foreign policy, America First does not exclusively describe the supposed noninterventionist side of the public debate. The openly interventionist side supports meddling because, in its view, that's in "America's interest." That view is wrong and needs to be refuted, as it has been often. But that does not mean the interventionists don't believe it. Doubt their sincerity if you wish. I can't read their minds. The point is this is not a debate between those who want to promote the "national interest" and those who want to promote something else. Rather, it's a debate over what constitutes that interest and whether unilateralism or multilateralism best promotes it.

That's one problem with America First. The deeper problem is the belligerent nationalism of the movement led, but not founded by, Donald Trump. This flows from its anti-individualism. The nation is the irreducible unit, and conflict must happen. See how Trump picks fights with Canada, Mexico, Europe, China, and others with whom we have no reason for conflict. Look at his incoherent, destructive trade policies. For as long as anyone can remember, Trump's shtick has been that America has been "ripped off" and that only he can change this. What's he talking about? Since when is offering desirable goods at affordable prices a rip-off? But seeing trade as it really is would deprive Trump of his cherished trademark grievance politics. Narcissistic demagogues thrive on grievances. They don't gain votes by promising to stop the U.S. government's global bullying of others.

America is an abstraction, which means different things to different people. In one sense, it's a country but not a single organism. It's an association of individuals who have different interests built on their fundamental interest in peace and freedom. Government tampering with freedom always favors some over others. One person's subsidy is another person's burden. Which one represents the real America? Steel tariffs help steel producers (in the short term) but harm steel users, who far outnumber the producers. This is an old story. Does it have to be pointed out?

So, what is America First? It's putty in the hands of a demagogue.

"American interests" are interests as seen by the people who run the government, that is, America's rulers. They are a filter, an interpretation by interested parties. This affords abundant opportunities to pursue narrow and even personal agendas. Rulers need not have any common interest with regular people. They need votes, however, so rulers will strike the required poses, especially in election season.

America First is about power and devotion to the ruler, without whom we cannot prosper. You know the song and dance. When John F. Kennedy said, "Ask not what your country can do for you. Ask what you can do for your country," he was properly rebuked by Ayn Rand, Milton Friedman, and other advocates of individual liberty. Rand called Kennedy's program of self-sacrifice "the Fascist New Frontier." They said that Americans should ask neither question. Nationalism is anti-individualism and antithetical to the ideas that motivated many people at the American founding. Trump doesn't openly ask for self-sacrifice, but it's subtly built into his agenda. He requires self-sacrifice while promising to make us rich. Fat chance.

Where is the individual in a vision of national greatness? The individual is a tool, a servant, and even a hostage—but little more. The everyday lives of regular people are expendable because, it is said, something bigger matters more. Greatness is not really for them.

Nationalist intellectuals—MAGA and otherwise—like to say that America is more than a marketplace. No one denies it, but people live a good part of their lives in the market, and its openness or closeness makes a big difference in their lives. As for the other parts of life, what makes the nationalists so sure that people cannot take care of themselves through voluntary association? Community is a good, but it should be a freely chosen community. People need meaning, but for it to be real, they need to make their own meaning. The last place to find it is in the words of a demagogue who believes his word creates truth.

When nationalists say America is more than a market, they mean the nation is more than a free association of individuals cooperating to pursue their own interests. We should reject that view. "Life, liberty, and the pursuit of happiness" is not a collectivist slogan. It's impeccably individualist. Jefferson didn't write "life, liberty, and the pursuit of American greatness." A contemporary of Jefferson's, Abraham Bishop, understood:

A nation which makes greatness its polestar can never be free; beneath national greatness sink individual greatness, honor, wealth and freedom. But though history, experience and reasoning confirm these ideas; yet all-powerful delusion has been able to make the people of every nation lend a helping hand in putting on their own fetters and rivetting their own chains, and in this service delusion always employs men too great to speak the truth, and yet too powerful to be doubted. Their statements are believed—their projects adopted—their ends answered and the deluded subjects of all this artifice are left to passive obedience through life, and to entail a condition of unqualified non-resistance to a ruined posterity.

Here was a prophet.

TGIF: On the Importance of Undesigned Order

Carl Menger, the founder of the Austrian approach to economics, was not the first or last thinker to see similarities between a society and a living organism, suggesting the existence of undesigned, spontaneous order. The names Adam Ferguson and Adam Smith, before Menger, and Herbert Spencer and F. A. Hayek, after Menger, come to mind.

Ferguson wrote in An Essay on the History of Civil Society (1767), "Every step and every movement of the multitude, even in what are termed enlightened ages, are made with equal blindness to the future; and nations stumble upon establishments, which are indeed the result of human action, but not the execution of any human design." (Emphasis added.) 

The result of human action, but not human design. The importance of this idea cannot be overstated. More than a century after Ferguson's book, Menger elaborated this unappreciated phenomenon in his Investigations into the Method of the Social Sciences (1883). 

Undesigned order may be the most counterintuitive idea around, but it is crucial to understanding how free societies work. Trump and his gang don't get it. Observe that he thinks he knows when the Federal Reserve should cut interest rates or how national trade statistics should look. The price system, of which interest rates are a part, is generated, not by a central plan, but by the countless daily decisions of buyers, sellers, and abstainers acting according to their articulated, unarticulated, and even inarticulable personal information, know-how, preferences, and purposes. That "data" cannot be recorded in a central and accessible place for use by anyone, bureaucrats included. So attempts at conscious government planning will only muck up the price system, along with everything else. A bull in a china shop is an apt image.

If you don't get this, you don't get freedom. Unfortunately, unplanned order is, as noted, counterintuitive. People construct some order in their lives, so it's natural to think that social order must have been designed by the government. That's a mistake.

But it shouldn't take much thought to overcome this incorrect intuition. After all, to use one of Menger's cases, no one thinks everyday languages were consciously designed. (How's Esperanto doing?) It's only a short leap from language to other spontaneous orders: custom, law, markets, and money. Menger made a lasting contribution to this subject. (See Lawrence H. White's Introduction in the Menger volume.)

Menger wrote (pp. 130ff):

The normal function and development of the unit of an organism are thus conditioned by those of its parts; the latter in turn are conditioned by the connection of the parts to form a higher unit; and finally the normal function and development of each single organ are conditioned by those of the remaining organs. 

We can make an observation similar in many respects in reference to a series of social phenomena in general and human economy in particular. Here, too, in numerous instances, phenomena present themselves to us, the parts of which are helpful in the preservation, the normal functioning, and the development of the unit, even conditioning these.... It is obvious that we have here a certain analogy between the nature and the function of natural organisms on the one hand and social structures on the other.

The same is true with respect to the origin of a series of social phenomena. Natural organisms almost without exception exhibit, when closely observed, a really admirable functionality of all parts with respect to the whole, a functionality which is not, however, the result of human calculation, but of a natural process. Similarly we can observe in numerous social institutions a strikingly apparent functionality with respect to the whole. But with closer consideration they still do not prove to be the result of an intention aimed at this purpose, i.e., the result of an agreement of members of society or of positive legislation. They, too, present themselves to us rather as "natural" products (in a certain sense), as unintended results of historical development.

Menger gave an example, for which he is justly famous:

One needs, e.g., only to think of the phenomenon of money, an institution which to so great a measure serves the welfare of society, and yet in most nations, by far, is by no means the result of an agreement directed at its establishment as a social institution, or of positive legislation, but is the unintended product of historical development. One needs only to think of law, of language, of the origin of markets, the origin of communities and of states, etc.

However, Menger warned that the analogy has limits:

Natural organisms are composed of elements which serve the function of the unit in a thoroughly mechanical way. They are the result of purely causal processes, of the mechanical play of natural forces. The so-called social organisms, on the contrary, simply cannot be viewed and interpreted as the product of purely mechanical force effects. They are, rather, the result of human efforts, the efforts of thinking, feeling, acting human beings. Thus, if we can speak at all of an "organic origin" of social structures, or, more correctly, of a part of these, this can merely refer to one circumstance. This is that some social phenomena are the results of a common will directed toward their establishment (agreement, positive legislation, etc.), while others are the unintended result of human efforts aimed at attaining essentially individual goals (the unintended results of these).... In the second case social phenomena come about as the unintended result of individual human efforts (pursuing individual interests) without a common will directed toward their establishment. [Emphasis added.]

Menger was implying that the rough analogy between society and living organisms can in no way be used to justify ideologies that view society as the body (corpus) of an organism, with the state or strongman as the head. Since a society is distinguished from an organism by its separate conscious, acting, choosing human beings, it follows that freedom is indispensable to the “health” of society, which cannot be conceived apart from the “health” of the individuals who comprise it.

Score another point for Carl Menger.

TGIF: On Value and Freedom

To live is to act. To act is to choose. To choose is to prefer. To prefer is to pursue values—that is, to value. That's logic-guided observation. Ego sum, ergo aestimo: I am, therefore I value. (HT: Aristotle, Ayn Rand, and Ludwig von Mises.)

Next: to think is to act. "[T]hinking itself [is] an action," Ludwig von Mises wrote in Human Action, "proceeding step by step from the less satisfactory state of insufficient cognizance to the more satisfactory state of better insight."

Shortcut: to think is to value. (James Ellias of Inductica calls this the "value axiom.") Like it or not, we're immersed in the world of "ought." To assert a proposition is to imply: "This is true, so you ought to pay heed." That's the case even if your proposition is something like, "'Ought' statements have no cognitive content." Hume and his fellow emotivists were and are wrong.

Aristotle noticed that human action in the pursuit of ends that are not sought for their own sake—but rather are sought as means to further ends—must aim at some ultimate end: the good life, happiness, contentment, call it what you will. Otherwise, you'd have an infinite series of means leading nowhere, which would make no sense. As he put it:

If, then, there is some end of the things we do, which we desire for its own sake (everything else being desired for the sake of this), and if we do not choose everything for the sake of something else (for at that rate the process would go on to infinity, so that our desire would be empty and vain), clearly this must be the good and the chief good.... [W]e call final without qualification that which is always desirable in itself and never for the sake of something else.... Now such a thing happiness, above all else, is held to be; for this we choose always for self and never for the sake of something else.... Happiness, then, is something final and self-sufficient, and is the end of action.

Note the irony: morality is associated with choice and free will. But "[f]or Aristotle, this ultimate end or good is not chosen; it is implicit in every desire and every choice, and all our other ends are to be understood as subordinate to it. The end is, as it were, forced on us; and the task of practical reason is simply to identify it," Roderick T. Long writes in Reason and Value: Aristotle versus Rand. (Emphasis added.) The ultimate end, therefore, is not pre-moral. Since we are fallible, we need practical reason to make sure the means we select are suited to the ultimate end.

This brings us to political theory and the objective case for freedom. Spoiler alert: as acting, thinking, choosing, valuing beings, we need liberty. But each person needs more than liberty for himself. He needs it for everyone else. Why? Because value pursuers need facts, knowledge, and truth (oh that word), and no individual can acquire all the relevant information on his own. 

I'm drawing on Frank Van Dun's 1986 paper "Economics and the Limits of Value-Free Science." Van Dun points out that economics is value-free in the sense that economists' values should not shape how they observe market phenomena. For example, even someone who dislikes markets for moral or aesthetic reasons should be able, in principle, to see that tariffs raise prices and shrink supply. However, no science, including economics—no truth-seeking project—can be value-free in a broader sense: its practitioners must value truth seeking and conduct themselves accordingly.

The bridge from there to politics is the fact that all truth seeking, even the mundane, everyday sort we all engage in, is a social process. This is not to deny individualism. It's a recognition that individuals cannot truth-seek alone. We learn from what others say and do. The self-interested truth seeker needs others to check him, for it is too easy to slip into complacency without realizing it. As Van Dun puts it,

There is no way an individual can break out of the prison of "the evident," no way he can even identify, let alone begin to question, his prejudices, unless he has come to understand that what is evident to him may not be evident to another and that his point of view is not the only one. Science is a dialogical undertaking: it requires that we make public what we think and try to refute what we believe we ought not to accept, and try to prove what we believe we ought to believe — it requires that we give our reasons.

...A dialogue is an argumentative, not a persuasive, not a rhetorical exchange: the aim of participation is to understand others in order to make one oneself understood in order to allow others the opportunity to indicate just why their understanding of one's point of view does or does not appear to them sufficient reason to share it.

John Stuart Mill put it nicely in On Liberty: "He who knows only his own side of the case, knows little of that."

This suggests a self-interested "ethics of dialogue," which a truth seeker is committed to by his own search for truth. (This is in the spirit of Aristotle; see Roderick Long's paper linked to above.) It is a code, Van Dun writes, "to allow others to question one's most sincere convictions … to refrain from using rewards or punishments—promises or threats—as means for securing the agreement of others; to refuse to argue against one's better judgment; and to insist that others do likewise. But most of all: to respect the dialogical rights of others—their right to speak or not to speak, to listen or not to listen, to use their own judgment."

That we ought to respect these rights, recognized in the practice of science, follows from the fundamental norm that we ought to be reasonable—that one ought to respect rational nature, both in oneself and in others; that one ought to cultivate one's own reason and ought to allow others to do the same. This requirement of respect for the rational autonomy of every participant turns the dialogue into the primary political institution for preventing prejudice from establishing itself as an impregnable barrier against free and independent thought, and so for making science possible.

Fine, the critic might say, but what has this got to do with the rights of people who are not scientists and philosophers? Van Dun anticipates this objection: "[T]he requirement of reasonableness applies across-the-board to every human endeavor. It applies to action no less than speech. Human action always rests upon and involves judgment. Scientific or theoretical knowledge is not essentially or qualitatively different from 'ordinary' or practical knowledge."

He quotes Ludwig von Mises in this regard: Production "is not something physical, material, and external; it is a spiritual and intellectual phenomenon.... Man produces by dint of his reason...: the theories and poems, the cathedrals and the symphonies, the motor-cars and the airplane."

"There is, then," Van Dun adds, "a glaring inconsistency in the views of those who defend 'free speech' and 'the free market of ideas' but attack freedom of action and the free market in goods and services."

Respecting reason entails respecting persons. But respecting persons requires more than respecting their bodies. In pursuit of their projects in a finite world, people need to transform matter into means to their ends, endowing those things with purpose. They cannot pursue projects or respect others' pursuits if they cannot know what objects they may use by right, that is, without permission. "In order to respect others as rational agents we must know the distinction between 'mine' and 'thine,'" Van Dun writes. "…If we are to respect the person we ought to respect what is his, otherwise we would deny him the right to act on his own judgment, and thereby destroy the dialogical relationship."

This upends a common argument against private property, namely, that a land owner aggresses against others by excluding them; thus, it is said, nonaggression implies collective ownership. But this is wrong. The first to mix his labor with an unowned parcel transforms a mere thing into a means to an end. Further, the homesteader aggresses against no one in the process. If someone else interferes, he is the aggressor by withholding respect from the homesteader. This is not a matter of arbitrary definition. It is a fact—for if the first person to transform the parcel has no right to it, how can the second person to come along have a right? (This is not to deny that property law is complicated and that details would be shaped by local custom. But a coercive monopoly government is unqualified for that job. It takes a competitive market to get it right. See David Friedman's The Machinery of Freedom for details.)

The appeal of Van Dun's argument is palpable. It might look like an additional case for freedom, but it seems more like another demonstration that freedom is an objective condition for the life of man qua rational being. (I commend Rand's case read in conjunction with Roderick Long's Reason and Value. By the way, Van Dun's case is not to be confused with dubious "argumentation ethics," which holds that the very act of making an argument logically commits one to the self-ownership rights of one's interlocutor. That's reality-detached rationalism.)

The upshot is that a truth seeker undercuts his own project when he advocates government interference with other truth seekers, aka everyone else. He thereby relinquishes his truth-seeker credentials.

(I first explored Van Dun's paper years ago at the Foundation for Economic Education website.)

The "Ought" World

To live is to act (because life is conditional).

To act is to choose.

To choose is to prefer.

To prefer is to value or to pursue values. (Being fallible, we can err in thinking something is good when it is in fact bad.)

To think is to act.

Therefore, to think is to value. (James Ellias of Inductica calls this the "value axiom.")

Whether we like it or not, we're immersed in the "ought" world. Hume et al. were wrong. 

Note the irony: "ought" is associated with choice and free will, yet as long as we are alive, we cannot avoid valuing. No pre-moral choices exist. As Aristotle noticed, all action, logically, aims at an ultimate end--the good, happiness, contentment, call it what you will--because an infinite series of means leading nowhere is incoherent. (How would one resolve conflicting subordinate ends?) Aiming at a certain kind of life is intrinsic to action. It's baked in, pre-"chosen" for us by the logic of action. "For Aristotle, this ultimate end or good is not chosen; it is implicit in every desire and every choice, and all our other ends are to be understood as subordinate to it. The end is, as it were, forced on us; and the task of practical reason is simply to identify it," Roderick T. Long writes in Reason and Value: Aristotle versus Rand.

Ludwig von Mises, the praxeologist, understood this too. Yet Roderick Long has shown elsewhere that Mises, who thought reason could not judge ultimate ends, mistook constitutive means to the ultimate end for the ultimate end itself. A constitutive, or internal, means--as opposed to an instrumental, or external, means--is that without which the end cannot be conceived. To use Long's example, wearing a tie is constitutive of traditional dressing up. Buying a tie is instrumental. In other words, every time a man dresses up, he must wear a tie to be considered dressed up, but every time he dresses up, he need not buy a tie.

Paine on War

"It may with reason be said, that in the manner the English nation is represented, it signifies not where this right resides, whether in the Crown, or in the Parliament. War is the common harvest of all those who participate in the division and expenditure of public money, in all countries. It is the art of conquering at home: the object of it is an increase of revenue; and as revenue cannot be increased without taxes, a pretence must be made for expenditures. In reviewing the history of the English government, its wars and its taxes, a by-stander, not blinded by prejudice, nor warped by interest, would declare, that taxes were not raised to carry on wars, but that wars were raised to carry on taxes."

—Thomas Paine

TGIF: More on Menger on Value

Consumer goods are also called finished goods. The products we buy at the supermarket and other retail stores have, in less finished form, passed through many stages (including distribution), reaching back to the original factors of production: land and labor. Land includes anything nature-given and not produced. We think of those things as natural resources, but as Julian Simon taught us, it takes human ingenuity to convert nature-given stuff, which may have no apparent value for human well-being, into a resource that makes our lives better. (See Simon's invaluable The Ultimate Resource 2.)

We consumers want finished, not unfinished goods. Imagine you ordered a car online, and the next day, the dealer dumped a pile of metal, glass, plastic, computer chips, rubber, and so on on your front lawn. You would not be happy. "I don't want this pile of stuff. I want a car!" What's missing? Labor, producer goods (tools and machines), and time. That's also what you paid for. While you paid for the end product, all you received was some of the means.

Supply and demand in competitive markets set the prices of finished products. Sellers ask prices, and consumers ask themselves, "Is Product X important enough to me to justify giving up what I'm being asked to give up in exchange?" If I spend $5 on something, I forgo the good or service on which I might have spent that $5. Saving the money for a rainy day or lending it at interest are two such services I might have chosen instead.

Since the production of useful finished goods is the object of an economic system, it should be obvious that finished goods cannot be valued according to the presumed value of the factors—land, labor, tools, and semifinished goods—that went into producing them. It's got to be the other way around. This insight was not always apparent to economists. The classical economists, starting with Adam Smith, thought the cost of production, especially labor, determined the exchange value (price) of finished goods. One of the great achievements of Carl Menger, founder of the Austrian school, is his insight into why that is wrong.

As Menger wrote in his world-changing book, Principles of Economics (1871), "Among the most egregious of the fundamental errors that have had the most far-reaching consequences in the previous development of our science is the argument that goods attain value for us because goods were employed in their production that had value to us." In other words, people assumed that finished goods fetched money in the marketplace because valuable land, labor, and capital went into making them. They were wrong: "this argument is ... strictly opposed to all experience," Menger wrote. He went on (pp. 149-52):

[The argument] offers an explanation only for the value of goods we may designate as “products” but not for the value of all other goods, which appear as original factors of production. It does not explain the value of goods directly provided by nature, especially the services of land. It does not explain the value of labor services. Nor does it even ... explain the value of the services of capital. For the value of all these goods cannot be explained by the argument that goods derive their value from the value of the goods expended in their production. Indeed, it makes their value completely incomprehensible.

...The value of goods of lower order cannot, therefore, be determined by the value of the goods of higher order that were employed in their production. On the contrary, it is evident that the value of goods of higher order is always and without exception determined by the prospective value of the goods of lower order in whose production they serve. The existence of our requirements for goods of higher order is dependent upon the goods they serve to produce having expected economic character and hence expected value.

Higher-order goods are further from the consumer. Lower-order goods are closer. The lowest order is retail. We value means and ends. The question is: in which direction must the imputation of value run? Do we value the ends because we value the means? Or vice versa?

In securing our requirements for the satisfaction of our needs, we do not need command of goods that are suitable for the production of goods of lower order that have no expected value (since we have no requirements for them). We therefore have the principle that the value of goods of higher order is dependent upon the expected value of the goods of lower order they serve to produce. Hence goods of higher order can attain value, or retain it once they have it, only if, or as long as, they serve to produce goods that we expect to have value for us.

Who would argue with that? Imagine a machine that can produce only widgets, which consumers buy in great numbers. If one day, no one wanted widgets anymore, the machine would be worthless (except perhaps for scrap metal).

If this fact is established, it is clear also that the value of goods of higher order cannot be the determining factor in the prospective value of the corresponding goods of lower order. Nor can the value of the goods of higher order already expended in producing a good of lower order be the determining factor in its present value. On the contrary, the value of goods of higher order is, in all cases, regulated by the prospective value of the goods of lower order to whose production they have been or will be assigned by economizing men.

He wrapped up:

Only the satisfaction of our needs has direct and immediate significance to us. In each concrete instance, this significance is measured by the importance of the various satisfactions for our lives and well-being. We next attribute the exact quantitative magnitude of this importance to the specific goods on which we are conscious of being directly dependent for the satisfactions in question—that is, we attribute it to economic goods of first order.... In cases in which our requirements are not met or are only incompletely met by goods of first order, and in which goods of first order therefore attain value for us, we turn to the corresponding goods of the next higher order in our efforts to satisfy our needs as completely as possible, and attribute the value that we attributed to goods of first order in turn to goods of second, third, and still higher orders whenever these goods of higher order have economic character. The value of goods of higher order is therefore, in the final analysis, nothing but a special form of the importance we attribute to our lives and well-being. Thus, as with goods of first order, the factor that is ultimately responsible for the value of goods of higher order is merely the importance that we attribute to those satisfactions with respect to which we are aware of being dependent on the availability of the goods of higher order whose value is under consideration.

Why does this matter? It matters because the free market is an undesigned institution that serves consumers and their idea of well-being. True, a risk-taking entrepreneur may offer something consumers haven't asked for. (Henry Ford said consumers would have asked for faster horses.) How does that turn out? Sometimes consumers are delighted and make an entrepreneur fabulously wealthy. At other times they tell him to get back to the drawing board or lose control of his assets in favor of someone more competent.

Consumers rule! Power to the consumers! Politicians: out of the way!

The Public-School Chickens Come Home Again

In Mahmoud v. Taylor, the U.S. Supreme Court will decide whether parents of children in government schools have a constitutional right to opt out of programs that "expose" their kids to LGBTQ materials. Once again, the chickens have come home to roost.

By that, I mean that if politicians, bureaucrats, and elected boards did not run schools and force (tax) parents and nonparents to finance them, this problem could not arise. This should not be an issue for the political system, and you need not be an anarchist to see it. Free people are capable of educating or buying education for their children, just as they are competent to obtain other goods and services we take for granted every day. Freedom and social cooperation work when they're allowed to, and parents ought to be free to raise their children according to their values. (Beatings and other forms of aggression are not relevant here.) This has nothing to do with the particular issue in the case (LGBTQ programs).

The question is not: "Do parents have a constitutional right to opt their kids out of this and other school programs they dislike?" Rather, it is: "Do parents have a natural individual right to educate their kids through purely voluntary means?"

The answer is yes! So-called public schooling relies on the initiation of force from financing to curriculum. How dare anyone propose that we be compelled to pay for or to send our or other people's kids to schools we disapprove of? Even if you opt out of the schools or have no kids, you still must pay or lose your home, go to jail, etc. Such a system is unfit to exist.

(See my 1994 book, Separating School and State.)

TGIF: Menger on Trade

Even when a line on a map separates two individuals, trade is still trade—that is, mutually beneficial cooperation. Whether the line separates towns, cities, counties, states, or countries, it does not matter. The transactions are win-win.

We could do quite well without the categories of exports and imports. Adam Smith wisely said almost 250 years ago that the balance-of-trade doctrine was "absurd." In a sense, only two kinds of goods and services exist as far as I'm concerned: those that I produce and those that everyone else produces. That is true for you too. Countries don't trade. Individual people do. Where governments don't permit this, they should get out of the way.

Carl Menger, the founder of the Austrian school of economics, eloquently described trade in his pioneering work, Principles of Economics (1871, pp. 175ff). We need to rediscover his insights in this new and perilous Age of Protectionism. Here is some of what he wrote.

"Whether the propensity of men to truck, barter, and exchange one thing for another be one of the original principles in human nature, or whether it be the necessary consequence of the faculties of reason and speech,” or what other causes induce men to exchange goods, is a question Adam Smith left unanswered. The eminent thinker remarks only that it is certain that the propensity to barter and exchange is common to all men and is found in no other species of animals.

First, in order to clarify the problem, suppose that two neighboring farmers each have a great abundance of the same kind of barley after a good harvest, and that there are no barriers to an actual exchange of quantities of barley between them. In this case, the two farmers could give free rein to their propensity to trade, and could exchange 100 bushels or any other quantity of barley back and forth between themselves. Although there is no reason why they should desist from trading in this case if the exchange of goods, by itself, affords pleasure to the participants, I believe nothing is more certain than that these two individuals will forgo trade altogether. If they should nevertheless engage in this sort of exchange, they would be in danger, precisely because of their enjoyment of trade under such circumstances, of being regarded as insane by other economizing individuals.

You'd think they were crazy too. People don't trade because of some propensity. They do so to make their lives better. Kids know this. Two young baseball fans wouldn't trade identical Mickey Mantle or Aaron Judge cards.

Suppose now that a hunter has a great abundance of furs, and hence of materials for clothing, but only a very small store of foodstuffs. His need for clothing is thus fully provided for but his need for food only inadequately. A nearby farmer is assumed to be in precisely the opposite position. Suppose too that there are no barriers to an exchange of the hunter’s foodstuffs for the farmer’s clothing materials. It is evident that an exchange of goods is still less likely in this case than in the first one. If the hunter should exchange a portion of his scanty store of food for a portion of the farmer’s equally scanty stock of furs, the hunter’s surplus clothing materials and the farmer’s surplus of foodstuffs would both become even greater than before the exchange. Since satisfaction of the hunter’s need for food and satisfaction of the farmer’s need for clothing were already insufficiently provided for, the economic position of the traders would be decidedly worsened. No one can maintain, therefore, that these two economizing individuals would experience pleasure from such an exchange. On the contrary, nothing is more certain than that the hunter and farmer will both most firmly resist offers to engage in a trade that would definitely reduce their well-being, or possibly even endanger their lives. If an exchange of this sort had nevertheless taken place, the two men would have nothing more urgent to do than to revoke it.

Precisely! People don't trade for fun. Each expects to profit. And because people value goods and services differently, the parties to a free exchange can profit without exploitation. (Of course, fallible people make mistakes and may regret the choices they made. These days, refunds are routine.)

Since it has been established that exchange is not an end in itself, and still less itself a pleasure for men, the problem in what follows will be to explain its nature and origin.

Menger discussed the case of two farmers, Farmer A, who has a surplus of grain and a shortage of wine, and Farmer B, whose predicament is the reverse.

The first farmer thirsts and the second starves when both could be relieved by the grain A is permitting to spoil on his fields and by the wine B has resolved to pour out. Farmer A could still satisfy his and his family’s need for food as completely as before and indulge besides in the enjoyment of drinking wine, and farmer B could continue to enjoy as much wine as he pleases but would not need to starve. It is therefore evident that we have encountered a case in which, if command of a certain amount of A’s goods were transferred to B and if command of a certain amount of B’s goods were transferred to A, the needs of both economizing individuals could be better satisfied than would be the case in the absence of this reciprocal transfer. [Emphasis in original.]

Who would dispute that?

The case just presented, in which the needs of two persons could be better satisfied than before by a mutual transfer of goods having no value to either of them prior to the exchange, and hence without economic sacrifice on either side, was especially suitable for impressing upon us in the most enlightening manner the nature of the economic relationship leading to trade. But we would construe this relationship too narrowly if we were to confine our attention to cases in which a person who has command of a quantity of one good larger than even his full requirements suffers a deficiency of a second good, while another person has a comparable surplus of this second good and a deficiency of the first. For the relationship in question can also be observed in less obvious cases in which one person possesses goods of which certain quantities have less value to him than quantities of another good owned by a second person who is in the reverse situation.

And so on. Need I add that a tariff is only one way for governments to interfere with benign market relations?

Menger:

If we summarize what has just been said we obtain the following propositions as the result of our investigation thus far: The principle that leads men to exchange is the same principle that guides them in their economic activity as a whole; it is the endeavor to ensure the fullest possible satisfaction of their needs. The enjoyment men derive from an economic exchange of goods is the general feeling of pleasure they experience when some event permits them to make a better provision for the satisfaction of their needs than would otherwise have been possible. But the benefits of a mutual transfer of goods depend, as we have seen, on three conditions: (a) one economizing individual must have command of quantities of goods which have a smaller value to him than other quantities of goods at the disposal of another economizing individual who evaluates the goods in reverse fashion, (b) the two economizing individuals must have recognized this relationship, and (c) they must have the power actually to perform the exchange of goods. The absence of but one of these conditions means that an essential prerequisite for an economic exchange is missing, and that an exchange of goods between two economizing individuals is economically impossible. [Emphasis added.]

We should recognize that at any given time, people's wants are more plentiful than the available labor and resources. That's why we economize. If we find that our satisfaction for good X is well taken care of by one producer, other, disappointed producers will shift to producing other things we (might) want. New products we never dreamed of might be invented. (Ya think?) Markets work well when the state keeps its hands off.

One more thing: people unfriendly to a great commercial society may be okay with one-on-one barter. What gets their goat are the profit-seeking middlemen: the wholesalers, peddlers, shopkeepers, and moneylenders. For the record, hostility to middlemen, who have often been stigmatized as parasitic aliens, has led to unspeakable violence against Jews in Europe, Chinese in Southeast Asia, Lebanese in west Africa, Indians and Pakistanis in east Africa, Armenians in the Ottoman Empire, Ibos in Nigeria, Parsees in India, and Tamils in Sri Lanka. Why? Because they allegedly produced nothing while becoming relatively affluent. Historically, ignorance bred hate, which bred atrocities. To condemn middlemen as unproductive is to believe falsely that potential traders live near each other and possess full knowledge of their trading opportunities. Middlemen are information brokers—matching buyers with sellers and borrowers with lenders. They earn their profits.

Menger had something to say about that:

Because they [middlemen] do not contribute directly to the physical augmentation of goods, their activity has often been considered unproductive. But an economic exchange contributes, as we have seen, to the better satisfaction of human needs and to the increase of the wealth of the participants just as effectively as a physical increase of economic goods. All persons who mediate exchange are therefore—provided always that the exchange operations are economic—just as productive as the farmer or manufacturer. For the end of economy is not the physical augmentation of goods but always the fullest possible satisfaction of human needs. Trades people contribute no less to the attainment of this end than persons who were, for a long time, and from a very one-sided point of view, exclusively called productive.