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.

TGIF: Happy Halloween, Traders!

It's the Halloween season, the perfect occasion to introduce your young children and grandchildren to the wonders of the market economy. After all, the market is a process in which individuals strive to improve their situations through trade—that is, lucrative peaceful cooperation—with others. (Today we'll ignore all the ways politicians and bureaucrats get in the way.)

As a result of their trick-or-treating, children will bring home a vast quantity and variety of candies. Of course, not all kids (or adults) like the same kind of treats. While that could bring disappointment for some children as they survey their haul, it also brings opportunities.

But before we get to the opportunities, let's note that each child, being an individual, prefers some kinds of candy to others. Every child could rank candies from most to least favorite (including those disliked entirely), with rankings subject to change. No two children's rankings would be identical.

Moreover, value can't be measured like size and weight. Valuation is subjective, internal; thus no unit of value exists. We can say, for example, that one child prefers a Butterfinger to a Twix and another prefers a Twix to a Butterfinger, but we can't measure any of this. Money prices are not measurements, but exchange ratios. Someone prefers, say, a Mars bar to anything else he could spend his $1.99 on at a given moment. We're talking ordinal numbers, grading, here (1st, 2nd, 3rd), not the cardinal numbers required for measurement (1, 2, 3).

Given the randomness of trick-or-treat candy distribution, It's unlikely that any given child's bag will contain only his or her top-ranked candies. He or she may wish the bag had more Almond Joys and fewer Kit Kats, or vice versa. What's to be done?

People long ago discovered the answer: trade. Even kids who have never heard the word economics will quickly, if implicitly, comprehend the idea of gains from trade. Parents will not have to teach this. Even a fairly young child will quickly see opportunities for mutually beneficial exchange. I wouldn't call this a "propensity to truck, barter, and exchange," as Adam Smith did. Rather, like Carl Menger, I think the possibility of gains from trade is so obvious that nearly everyone sees it unassisted.

That doesn't mean parents have no role in the teaching moment that Halloween presents. On the contrary, they can supply simple concepts even to young children, making the implicit explicit. That knowledge will serve children well as they grow into adults because free exchange is pervasive in modern life.

Imagine two children, a sister and a brother. Let's call them Cruz, a 7-year-old girl, and Cass, a 5-year-old boy—by sheer coincidence, those are my grandchildren's names and ages. Full of excitement, they've just brought their candy bags home after a hard night of trick-or-treating. They empty their bags to reveal an impressive variety of sweets. Their eyes shine with delight, but as they look over their inventories, they each see some kinds they like "less" than other kinds. Chances are their preferences differ somewhat.

They see opportunities to trade. Let's say that Cruz has a Hershey's without almonds and Cass has a Hershey's with almonds. Let's also say that Cruz loves almonds, while Cass dislikes them. Being the alert, entrepreneurial kids they are, they realize they would each be better off, in his or her own opinion, if they traded. A simple change of possession and—voila!—they have climbed higher on their personal candy value scales. The number of candy bars did not change, only the ownership. It's a miracle!

That's the simplest example; things could get more complicated. Cass might be willing to trade two Hershey's with almonds for one without or any other arrangement that strikes his and Cruz's fancies. It's up to them. It depends on their values and their candy stocks.

They will realize that when they trade, they each are happy to give up something to get something else because they prefer it to the original something. In their views, the exchange looks worthwhile or they would not trade. Each makes a psychic profit. It's win-win! That's how trade works. (Alas, some early economists labored under the misconception that when people trade, they exchange equal, not unequal, values.)

True, after the trade occurs, one or both might feel regret. We all know that feeling. The world is uncertain, and our knowledge is always incomplete. When we say trade is mutually beneficial or it would not have occurred, we refer to the moment the trade is made. Error is always possible. Hopefully, learning follows.

Parents who want to take the lesson further could point out that what the kids are doing is engaging in barter, candy for candy, in contrast to what we do at a shop, where we trade money for goods. Checks, plastic cards, and apps are other, indirect ways to use money. We use money because barter is inconvenient. It requires a "double coincidence of wants." Two people hoping to trade must each want what the other is willing to trade. If they don't, they're out of luck. Thankfully, society found a way around barter inconvenience long ago:  money, a generally accepted medium of exchange, that is, a thing useful in its own right that everyone is willing to accept in trade, intending to trade it on, because everyone else is willing to accept it too. Kids can't learn about money too early.

When our children and grandchildren grow up, they will spend a good deal of time in the marketplace peacefully and beneficially cooperating, largely with strangers. How many understand that the division of labor and trade made civilization what it is and broadened circles of trust to encompass the entire world? Ludwig von Mises wrote in Human Action:

The fundamental facts that brought about cooperation, society, and civilization and transformed the animal man into a human being are the facts that work performed under the division of labor is more productive than isolated work and that man’s reason is capable of recognizing this truth. But for these facts men would have forever remained deadly foes of one another, irreconcilable rivals in their endeavors to secure a portion of the scarce supply of means of sustenance provided by nature.... No sympathy could possibly develop under such a state of affairs.

Our kids can make a good start in life by learning about trade this Halloween.

TGIF: Khan Controlling Trade

Lina Khan is a Washington, D.C., rock star. She is not only President Joe Biden's celebrated chief of the Federal Trade Commission (FTC); she's also a favorite of J. D. Vance, Donald Trump's pick for vice president.

This Lina Khan must really have something going for her—until you recall that Biden and Vance, and by implication Trump and Kamala Harris, reject individual freedom as an inseparable unity. In other words, personal freedom requires economic freedom and vice versa. What chance does freedom of speech and press have in a society without private property? Individual liberty in the absence of free enterprise—unsupervised by force-wielding bureaucrats—is a delusion.

Let's look at the FTC. It was created in 1914, which immediately should make you squirm. So-called progressive Woodrow Wilson was president in those days. He is a contender for the worst American of the 20th century if not of all time. Leaving aside his incredibly evil involvement of the United States in World War I, which helped make the century a slaughterhouse, he devoutly believed that the national government should be all-powerful.

Quaint ideas like limited government under a fixed constitution may have made sense in the 18th and early 19th centuries, he thought, but not in modern progressive 20th-century America. The national government (forget the several states) and its anointed, dispassionate, above-the-political-fray experts should run society. Americans should go along with whatever directives the experts think best. Any argument against that proposition was surely motivated by selfish, profit-driven, exploitative bad faith. If the untrusted market can't be abolished, then at least it should be guided by a category of person that has always had a sparkling record for trustworthiness: bureaucrats, who, unsullied by the profit motive, have the best intentions and perfect insight into the public interest. The FTC is an example of what Wilson had in mind. The marketplace will always fall short of the progressive ideal, so public-spirited bureaucrats must keep it on the right path.

The FTC's website proclaims: "Our mission is to protect consumers and promote competition." Sounds innocuous. It's not. If you've ever visited the FTC building in Washington, you've seen the two Soviet-style sculptures on the grounds. The sculptures were Michael Lantz's winning entries in a Roosevelt administration New Deal contest, which will surprise no one. (Lantz was the brother of famed Woody the Woodpecker cartoonist Walter Lantz.)

The sculptures depict a muscular human figure struggling heroically to control a wild horse that threatens to break free and run rampant through town, leaving death and destruction in its wake. The title is "Man Controlling Trade."

That's how Franklin Roosevelt and Woodrow Wilson saw trade. It's how the Federal Trade Commission sees it today: a wild animal that needs to be restrained. Today, Lina Khan the chief controller. Khan controls trade.

But the sculptures and mission make no sense. Trade is not a wild animal. It's a peaceful, cooperative activity that individual human beings engage in when they anticipate mutual benefit. Each party exchanges what he or she wants less for what he or she wants more. No exchange takes place otherwise if the parties are free. (Compare that to government eminent domain.) Historically, trade civilized human beings by demonstrating that cooperation through the division of labor is better than conflict. It's how to get rich.

Thus, likening trade to a wild beast is obscene. It's a self-aggrandizing lie by politicians, bureaucrats, and anointed experts.

The FTC says that "for over 100 years, the antitrust laws have had the same basic objective: to protect the process of competition for the benefit of consumers, making sure there are strong incentives for businesses to operate efficiently, keep prices down, and keep quality up." But don't businesses already have "strong incentives ... to operate efficiently, keep prices down, and keep quality up." And don't they have an incentive not to endanger consumers? Unlike the government, businesses face consumers who are free to say, "No, thanks. I'll shop elsewhere" Yes, business people sometimes try to take advantage of consumers or have bad judgment, but that's a feature of people, not business. Who runs the government regulatory agencies, saints? At least businesses face competition. You can't say that for government.

The progressive answer is that businesses have all the power and customers have none. Nonsense. Unless the government helps business by stifling free competition, "market power" means nothing more than the "power" to please consumers better. The FTC (and the Justice Department's antitrust division) claim to serve consumers, but in reality, they just protect inferior companies from superior companies.

Lina Khan has excited attention for breathing new life into government interference with trade, especially in high-tech America. Her dubious innovation is in believing the government can't leave big tech companies, such as Amazon, alone merely because they please customers with great service and low prices. As she wrote in a law journal article in 2017, "Animating these critiques [about tech companies] is not a concern about harms to consumer welfare, but the broader set of ills and hazards that a lack of competition breeds.” (Emphasis added. HT: Saul Zimet of the Foundation for Economic Education.) Khan continued:

To revise antitrust law and competition policy for platform markets, we should be guided by two questions. First, does our legal framework capture the realities of how dominant firms acquire and exercise power in the internet economy? And second, what forms and degrees of power should the law identify as a threat to competition? Without considering these questions, we risk permitting the growth of powers that we oppose but fail to recognize.

Khan, a lawyer not an economist, speaks gobbledegook. It's a blank check for overseeing and quickly overruling free enterprise, as an end in itself—central planning without nationalization. Bureaucrats know better. They need no profit-and-loss test.

As we should know by now, drawing on Ludwig von Mises's critique of socialism, no set of bureaucrats can know what she claims the FTC can know. They can't even define the relevant market in which to "measure" alleged monopoly power because they don't know what consumers will deem as suitable alternatives to a given good when dissatisfied with its price or quality.

Moreover, the bureaucrats ignore how potential competition disciplines a sole firm as much as actual competition does—as long as the government grants no privileges. Abnormally high prices and profits in an industry are engraved invitations to potential competitors. So are perceived abuses of consumers. It's also possible that what the FTC sees as abuse the consumer sees as a good deal. (Ads tailored to one's online buying patterns may be thought superior to random ads.)

Khan is also needlessly concerned about mergers and acquisitions. Many high-tech innovators have developed remarkable new products intending to sell them to an existing tech company for lots of money with which to move on to the next innovation. Venture capitalists earn fortunes by spotting such opportunities. Khan would obstruct if not do away with that process. We'd all lose out. Has she never read Bastiat's "What Is Seen and What Is Unseen"?

Khan says that data gathering and artificial intelligence present new challenges to the marketplace that the government must meet. But the fatal flaw in all market-failure reasoning is that the alleged solution—the state—is subject to far more pervasive government failures. In the market, entrepreneurs earn profit by solving problems. No counterpart exists in the government. On the contrary, bureaucrats can prosper by not solving problems or by creating new ones, justifying larger staffs and budgets.

The basic economic fact the FTC ignores is that competition is an open-ended, dynamic discovery process driven by rivalrous entrepreneurs trying to please consumers. Technology and consumer preferences change all the time, and all businesses must keep up or lose out to better entrepreneurs. No firm—if it has zero access to government coercion—can threaten competition, not even with noncompete agreements, which are contractual terms that will fall by the wayside if they don't ultimately serve consumers. While firms cannot "threaten" competition, they can indeed "threaten" competitors by being better at pleasing consumers. Bureaucrats, who are not market participants risking their own wealth, can only pretend to know what is best from their perch in the government, which, let's remember, is a monopoly. As George Mason University Donald Boudreaux advised, if Khan has such keen insight into market shortcomings, she should become an entrepreneur. She'll make a fortune and actually help society.

(See D. T. Armentano's classic, Antitrust and Monopoly: Anatomy of a Policy Failure and other material here and here.)

What Is Easy and What Is Not Easy

It is easy to oppose Israel's massacre in the Gaza Strip. Just watch a few horrifying videos. What is not easy is understanding the price system, its prerequisites -- private property and free exchange -- and its benefits for mankind, including civil peace.

TGIF: Free Exchange Is Win-Win

With the possible exception of the political class and its cronies, most of us would be healthier, wealthier, happier, and freer if the public knew how to engage in "the economic way of thinking." The late Paul Heyne, who wrote a popular textbook by that name (now in its 13th edition thanks to Peter Boettke and David Prychitko), summarized the economic way of thinking by writing, "All social phenomena emerge from the choices of individuals in response to expected benefits and costs to themselves."

I think of Heyne's title whenever I encounter an example of failing to understand this. Unfortunately, our society is rife with examples and resulting bad government policies, which tells you a lot about why we suffer periodic hardships like the current inflation. The lockdowns during the COVID-19 pandemic were a spectacularly tragic example of the failure to engage in the economic way of thinking.

Other instances of that failure are so thoughtless as to be ludicrous. Take the wealthy business owner who donates a large sum of money to a worthy cause. The fallacy occurs when the donor or someone else inevitably says that the charitable act was motivated by a wish to "give something back," presumably to society or the community.

What's wrong here? It suggests that the donor wants to show gratitude for his fortune by reciprocating. But that makes no sense because the donor's wealth was not the result of people handing over money as a favor and getting nothing in return. Those people were customers, not donors. They bought something they wanted and must have liked the terms of exchange. So there is nothing to pay back. (I have in mind only people operating according to just-market principles: no force, fraud, or favors coercively provided by politicians.)

In the marketplace, profits come from voluntary exchange, which requires that buyers and sellers freely choose to transact business. Why would they do that? They do it because each party expects to benefit -- to be made better off -- by giving up something they own for something that they would rather own. This is clear with barter, but it's equally true when one party trades money. Money, a medium of exchange, expands the opportunity for exchange by enabling people to get what they want even when they don't have the particular items that their available trading partners want.

When Smith trades a sum of money to Jones to acquire shoes, Smith demonstrates that he prefers those shoes to anything else he might have feasibly used the money for, including holding on to it. Jones demonstrates the opposite preference.

Unfortunately, since they are fallible, Smith or Jones (or both) might realize later that he made a mistake. That's life, but it does not change the fact that at the moment of exchange, both sides expected to gain. If they are right, they have a happy win-win, or positive-sum, situation. Both sides profit, not just the one who obtains money because both come out ahead. (The competitive quest for profit has brought us liberal return policies, so the fallibility problem long ago became much less severe. John Stossel likes to point out that at the supermarket, both checkout clerks and customers typically thank each other.)

Free exchange produces mutual gain. If we could quantify the gain (we can't), we would say that after the exchange, the two people have more total value between them than they had before the exchange. This is remarkable, considering no new stuff was created by the transaction. Possession of the product and the money simply changed hands.

To put it qualitatively, we can say that through the exchange, both parties climbed higher on their respective value scales, giving up a subjectively lower-ranking value for a subjectively higher-ranking one. (What counts is how the parties evaluate things.) For this to occur, we need first, two parties with different preferences and, second, freedom, including property rights. Before you can justly trade something, you must own it.

In light of the two-way gain through free exchange, the wealthy seller has no reason to "pay back." He is successful because he provides value to his customers, who are happy to exchange their money. 

It's too bad that people who earn fortunes justly are made to feel guilty about their success. (Ayn Rand and Ludwig von Mises did their best to teach honest producers they had nothing to be ashamed of.) We consumers never feel guilty about the profits we reap. Why should the sellers?

TGIF: Tucker Carlson Needs Love from His Leaders

Fox News host and Trump cheerleader Tucker Carlson is a culturally conservative, big-government, nationalist populist. As such, he’s upset that establishment politicians and their sponsoring elite don’t care enough to promote his and his fellow Americans’ happiness. 

That’s weird. Why would he want them to?

Read TGIF at The Libertarian Institute.

TGIF (The Goal Is Freedom) appears Fridays. Sheldon Richman, author of America's Counter-Revolution: The Constitution Revisited, keeps the blog Free Association and is executive editor of The Libertarian Institute. He is also a senior fellow and chair of the trustees of the Center for a Stateless Society and a contributing editor at Antiwar.com.

Become a Free Association patron today!

Make-Work Is Wasteful

My final column for the American Institute for Economic Research is "Make-Work Is Wasteful."

Consumption Is the Purpose of Production

My column "Consumption Is the Purpose of Production" has been posted at the American Institute for Economic Research.

Understanding Trade

My latest article at the American Institute for Economic Research is "Understanding Trade." Please check it out.

TGIF: NPR Blows a Chance to Teach Sound Economics

This week, thanks to the Independent Institute (which lists me as a research fellow), I was interviewed by NPR's Marketplace for a piece on Donald Trump's threat to impose tariffs on goods that come from China. (It's the first story for the January 3 show here at 2:44.) The interviewer wanted to look back at the effects of the Reagan administration's protectionist policies against Japan. (In 1988 I wrote a paper for the Cato Institute on Reagan's appalling protectionism.)

I've done many media interviews, but this one really drove home the media's lack of interest in informing their listeners and viewers on important economic topics. Of course, the producers of the show would themselves have to understand economics in order separate what's important from what's unimportant. This may be a case of the blind leading the blind. At any rate, what follows is a lightly edited transcript of the interview and what was aired from the interview.

Read the full article at The Libertarian Institute. It's also posted at the Independent Institute.

TGIF (The Goal Is Freedom) appears on Fridays. Sheldon Richman, author of America's Counter-Revolution: The Constitution Revisited, keeps the blog Free Association and is executive editor of The Libertarian Institute. He is also a senior fellow and chair of the trustees of the Center for a Stateless Society and a contributing editor at Antiwar.com. Become a Free Association patron today!

Prof. Wittgenstein, Please Call Your Office

President-elect Trump complains that trade with China is "one-sided." Does he speak English or what? One-sided trade is like one-sided triangle: you can say it, but you can't mean (think) it. Chinese folks deliver goods to Americans (through Walmart, etc.), and we willingly buy them. The Chinese then invest some of their proceeds in the United States. Well, I guess that is one-sided -- but wait! They later reap rewards from their successful investments.

It's two-sided after all, isn't it?

Perhaps Trump means that the United States has fewer barriers to Chinese goods than China has to American goods, i.e., American consumers' freedom to buy is better respected than Chinese consumers' freedom to buy. Since Trump favors tariffs (which would raise prices to Americans and push Chinese goods out of our market), I guess he thinks respect for our freedom is bad and the denial of their freedom is good.

(Cross-posted at The Libertarian Institute. Check it out!)

Econ 101

Big difference -- YUGE -- between delivering bombs and delivering goods.

On Trade, Sanders and Trump Are Peas in a Rotten Pod

Neither Bernie Sanders, the self-described democratic socialist, nor Donald Trump, the self-described terrific businessman, knows squat about economics. If their polices were enacted, regular working people would be harmed.

Trump Loses Debate to Dead Economist

HT: Mark Perry

TGIF: Trump's Trade Snake Oil

Donald Trump may think the media stenographers are out to get him, but if they were really doing their job, his head would be spinning. He doesn't know how good he has it. Or maybe he does.

TGIF: Wrong Lesson from Egypt

Looks like I forgot to post a link to last Friday's TGIF. "Wrong Lesson from Egypt" is here.

Free Trade Imperialism

Here's something left-libertarians need to attend to: Deepak Lal of UCLA is touting a program of unilateral free trade and unabashed U.S. worldwide empire. His book In Praise of Empires: Globalization and Order seems to be his most complete statement on this.

Here are some quotes from his article "Empire and Order" in the March/April issue of Historically Speaking (apparently not online):

[T]oday there is again an imperial power that has an economic and military predominance unseen since the fall of Rome. The United States is indubitably an empire. It is more than a hegemon, as it seeks control over not only foreign but also aspects of domestic policy in other countries. But it an informal and indirect empire.... It is an empire that has taken over from the British the burden of maintaining a Pax to allow free trade and commerce to flourish. This Pax brings mutual gains. The U.S., like the British in the 19th century, has borne much of the costs of providing this global public good, not because of altruism but because the mutual gains from a global, liberal economic order benefit America and foster its economic well being....

But the American imperium faces disorder in two broad regions of the world: first, the vast region spanning the Islamic world in the Middle East and Central Asia, and second, the continent of Africa. September 11 showed how failed states can provide a safe haven for terrorists who can directly threaten life and property in the American homeland. The maintenance of international order thus means ensuring that there is also domestic order in states that, if they fail, could become terrorist havens....

The United States has created the military structures to project its power, but it has failed to build the complementary imperial administrative structure required to run an empire....

Equally disturbing is the desire of all the participants in U.S. foreign policy to wrap themselves in the Wilsonian mantle. It seems that Americans find it difficult to give up their moral self-image of the shining city on the hill....

The major problem for the U.S. imperium is to keep its moralists at home.... But for the near future, despite its faults, the American imperium is here to stay. And it remains our best hope to maintain global order, as the British did in the 19th century.

In other words, if we want order, it's time America took off the gloves. No more Mr. Nice Guy, world.

Cross-posted at Liberty & Power.

That Mercantilist Commerce Clause

The Commerce Clause of the U.S. Constitution has been used to justify a wide expansion of government power, from antidiscrimination laws to drug prohibition to a ban on guns near schools. In objecting to use of the Commerce Clause for such remote purposes, some constitutionalists rely on a particular historical interpretation of both the Clause and the Constitution as a whole. Could that interpretation be wrong?

The rest of this week's TGIF column, "That Mercantilist Commerce Clause," is at the Foundation for Economic Education website.

Cross-posted at Liberty & Power.