Many westerners still believe that free trade is what we need, and all of our economic problems come today from not having real free trade. Just as the communists say, “True communism has never been tried.” They will cry, “true and absolute free trade has never been tried.” Putting aside that an absolute version of either of these things is an impossible utopia, and therefore there is no place where you can hope to institute them fully. The great portion of them we have experienced is enough to show us that having either of these things in their full purity would do incredible damage to the economy of many nations, and seriously harm many people. One would lead to complete anarchy and the oligarchic rule of the rich (wait isn’t that where we are?), the other to utter collapse, and the rule of the corrupt wealthy (wait, they lead to the same result on different paths? Interesting!).
But the idea
that free trade is better than communism for a time at least is not hard to
make. But is it better than protectionism? The answer on this is not so
resounding in the positive. P.J. O’Rourke makes this interesting note in one of
this books,
“In The Wealth of Nations the accused were all the world's
potentates, politicians, and wealthy merchants. But these were also the
veniremen, judges, and officers of the court. Surprisingly, acquittal of the
mercantilists wasn't immediate. William Pitt the Younger, prime minister during
Smith's last years, accepted the evidence and instituted some reforms suggested
by Wealth. Alexander Hamilton, architect of American protectionism, did not.
More than two and a quarter centuries after Wealth's publication—what with the
neomercantilists running China, the opposition to globalization being voiced
around the globe, and the occasional rock getting thrown through the window of
a Starbucks because it doesn't foster "sustainable development" among
coffee bean growers—the jury is still out.”[i]
O’Rourke
wrote this in 2007, when the rise of China was starting to become incredibly
clear, but the vibrancy of the Wealth of the West was still on show for many in the world to see. However,
now things are different. The protectionism of China, and the forced protectionism
of Russia via sanctions, is now showing the weaknesses of the relatively free
trade societies of the West. The nations that focused on protecting their
economies from outsourcing, and which focus on ensuring production is properly
subsidized in their own countries, are now quickly overshadowing the Western
nations, before which they were once forced to bow.
So why is
China's economy is overtaking the world?
China's
economic philosophy is that your economic self-interest must serve the national
interest.
The West's
economic philosophy is that economic self-interest does serve the national interest.
Despite how
similar these sentences sound, they are a world apart in application. The
latter results in the destruction of national production and the outsourcing of
many production jobs overseas, so that the wealthy benefit and everyone else is
pushed onto welfare or low paying service jobs. The former leads to the exact
opposite, the collection of national production and the growth of local
production jobs, and the rapid industrialisation and growing prosperity of
your nation.
This is why
China is beating us. Ironically, this is also how America beat Britain and the
European powers in the late 19th century and early 20th century (two
wars in Europe supercharged this process). That is, through Protectionism.
The jury may
have been out at one point, but I do not think we can say that any more. Trade
between nations is good and necessary to some degree. Abundant trade can lead
to prosperity and wealth and then sets up the conditions for degradation.Free trade accelerates how much
money you can make in the short term, before the fracturing of every social
institution brings this all to a grinding halt. Time to rethink things.
References.
[i] P.J.
O’Rourke, 2007, On The Wealth of Nations, Grove Press.
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