Free Trade Means Free Trade
by Jacob G. Hornberger
There is a lot of controversy over the Trans-Pacific Partnership, a big trade agreement that is being negotiated between the United States, Canada, and a number of Asia-Pacific countries. What is most amusing about the controversy is how the mainstream press, as well as D.C. politicians and bureaucrats, describe the agreement. They call it a “free trade” agreement. That’s funny.
For example, last Sunday the Washington Post carried an editorial entitled “Free Trade Advances,” in which the Post’s editorial board praised the Senate for voting to give President Obama’s negotiators “trade-promotion authority” to complete the deal. The Post said that the Senate’s actions “returned U.S. negotiators to the bargaining table to cut their best deal on behalf of the American people.”
Let’s be clear about terminology.
Free trade is not a government-negotiated trade agreement and it’s also not government-managed or government-controlled trade. It is not a reduction in tariffs. It is not less government interference with trade.
Free trade is free trade. Free in the sense that trade is free from government control, regulation, taxation, and interference.
The problem is really one of indoctrination. From the first grade on up, American schoolchildren are inculcated with the notion that the United States is a “free enterprise” country. By the time kids graduate high school, they have no doubt that what they’ve been taught is true, and the last thing they ever think is that they have been indoctrinated. Unless they encounter libertarianism, they end up carrying their mindsets with him through adulthood, sometimes until the day they die.
We see this phenomenon most especially with the term “free enterprise.” I’ll bet that if you did a survey of Americans and asked them what type of economic system the United States has, the overwhelming majority would answer “free enterprise.”
And if you then asked them why they believe they live in a free-enterprise country, most of them would undoubtedly reply with some variation of the following, “Because we have an economic system that includes Social Security, Medicare, Medicaid, public schooling, income taxation, tariffs, minimum-wage laws, price controls, insider-trading laws, economic regulations, government-business partnerships, and corporate bailouts.”
It would never occur to them that it’s precisely those things that are contrary to the principles of free enterprise. Genuine free enterprise means that enterprise is free from government control, regulation, and plunder.
Are there examples of genuine free trade in the world? Yes! Right here in the United States! Notice that there are no trade restrictions between the respective states, thanks to the Framers who used the Constitution to bar such restrictions. People are free to trade their goods and services across state lines without any government interference, regulation, or tariffs. It’s the biggest free-trade zone in history (also the biggest free-movement of people zone in history).
Notice something important here: No one, as far as I know, is pacing the floor over whether there is a trade “imbalance” between his state and other states. For example, I don’t know of anyone here in Virginia who paces the floor worrying about the trade imbalance between Virginia and Florida. Everyone just operates on the assumption that it will all work out, even if the people of Virginia are spending more in Florida than Floridians are spending here, or vice versa.
That principle of free trade applies internationally as well, only you’d never know it from the managed trade crowd. How many of them live their lives in anxiety or depression over a “trade imbalance” that exists between the United States and other countries? (Or they live in exultation when the balance of trade is “favorable,” while people in the other nation live in anxiety and depression for being on the losing end of the balance of trade.)
That’s undoubtedly why the Post editorial board feels good about giving U.S. negotiators additional power to “cut their best deal on behalf of the American people.” They’re counting on their government officials to make sure that Americans come out a “winner” in the trade negotiations. Of course, the negotiators for foreign countries are doing the same thing.
This is all just statist nonsense and tripe. A government that is genuinely committed to the principles of free trade doesn’t need to negotiate anything with foreign regimes. All it has to do is unilaterally drop all restrictions on trade and all tariffs (including sanctions and embargoes) on its own citizens.
In other words, the U.S. government should just liberate the American people to trade with whomever they wish to trade. People’s trading decisions are no business of government. Nothing needs to be negotiated.
Does this mean that foreign regimes will drop their trading restrictions? Of course not. They might but they might not. But that’s a problem for citizens in those countries. If foreign regimes place restrictions on the ability of Americans to trade with their citizens, that’s something that American business people have to deal with. It’s none of the federal government’s business.
The U.S. government’s role with respect to trade is: Butt out of people’s business. Leave them alone. Or as the French once put it, Laissez faire, laissez passer. Let it be. Let it pass. That’s what free trade really means.