We Need Free Trade In Deed As Well As Word; G. M. Galles

Since then, despite the overwhelming em pirical and logical evidence in its favor, free trade has been demoted from a central organizing principle for our society to one that now mostly commands lip service. Free trade, whether it is GATT, NAFTA, or some variant being discussed, still wins all the rhetorical battles. This is understand able because, after all, those countries with freer trade enjoy more personal freedoms and grow faster, and it is at heart nothing Dr. Galles is Associate Professor of Economics at Pepperdine University, Malibu, California. 23 more than the simple, self-evident proposi tion that people who participate in voluntary trades must expect to benefit as a result, regardless of one's trading partner's citizen ship. However, when it comes to actual policy details, even moves touted as toward free trade (e.g., NAFTA) are replete with re strictions (compare the length of NAFTA with how much space it takes to say "All trade barriers between the signatories will be eliminated according to the following schedule.~') Here, free trade is sacrificed to the political power of concentrated pro ducer interests, as politicians claim to favor it in general, but oppose it in each particular case for some other reason, so free trade becomes "fair," "balanced," or "man aged" trade in practice.

Why do politicians and their supporters claim to favor free trade, yet are so easily drawn to "but this, that, and the other" excuses for protectionism? Because virtu ally everyone favors a one-sided, narrow, self-interested commitment to free trade. Each of us supports fewer restrictions on our ability to advance our own welfare. This means we want free trade when it comes to selling our own output, deciding how to produce that output, and for those who 24 THE FREEMAN • JANUARY 1994 would sell their output to us, because such changes benefit us through higher sales prices and lower costs. However, it also leads almost everyone to support restric tions on their competitors, because that also benefits them. The difference is that both parties involved gain from freer trade, but the beneficiaries of restrictions gain at an even greater cost to others, who are forced to make do with inferioralternatives as a result.

Needed: A Commitment to Principle We talk of commitment to free trade, but resort to restrictions in practice because our commitment to narrow self-interest exceeds our commitment to principle. There is al ways something, whether it is the trade deficit, unemployment in a particular indus try, selfsufficiency, or national defense, which ·provides political cover for such self serving actions. Much.of our soaring "free trade" oppo sition to others' restrictions (and free trade rhetoric is one of our leading exports) springs not from commitment to its demon strated social benefits, but because those eased restrictions will line our pockets, and free trade sounds better than "gimme mon ey." But when free trade threatens the wallets of protected interest groups, support for American restrictions to assure "fair" or "balanced" trade or environmental quality suddenly blossoms, because that also sounds better than "gimme money."

Free trade creates wealth. We should favor opening others' markets, because that would benefit both their consumers and more efficient American producers, by breaking the political stranglehold of their protected domestic producers. But free trade is beneficial for Americans just as it is for others, and helping uncompetitive American companies cheat American citi zens by restricting their access to foreign products they prefer convicts us of the same crime we indict others for. UntiI we teach people that free trade creates wealth from otherwise latent human abilities and that the cumulative effects of the myriad of largely obscure restrictions make almost every person worse off (those most wrapped in the government's protec tive cocoon, such as labor unions, which have been given monopolistic power through labor laws, may force stiffer com petition, but to call the reduction of unwar ranted restrictions "unfair" would strain the meaningof the word), we willnever even distantly approach the ideal of free trade.

But, in Richard Weaver's immortal phrase, "Ideas have consequences." It is only by conforming our ideas to the truth, and by defending that truth wherever it is chal lenged, that free trade and liberty in general stand even a small chance of being reinvigorated. 0 Free Trade: The NecessaryFoundationfor World Peace edited by Joan Kennedy Taylor To placefree trade in this largercontextof foreignrelations,we have minedthe backissues of The Freeman and other hard-to-findprimarysources. Here are fifteenshort essaysthat discusssuch thornyissuesas world hunger,industrialsuperiority,industrialunemployment, the AmericanRevolution,foreigninvestment,the fallaciesof economicnationalism,and how free trade protectsour nationalinterests. Order from: The Foundation for Economic Education Irvington-on-Hudson, New York 10533 $9.95 paperback If there's moral validity to free-market economics, why do so many clergy fail to understand it?

A study of theological and seminary faculty conducted by the Roper Center in 1982 revealed that 37% of the respondents felt "the United States would be better off if it moved toward socialism." Nearly half of them favored the redistribution of wealth (as opposed to its creation) as a better way to meet the needs of the poor. These are the people who are teaching our future religious leaders. Is it any wonder so many of our mainstream ministries promote such a disturbing hostility toward the entrepreneur and free enterprise? The Acton Institute, named after Lord Acton, is working to change these attitudes by familiarizing the ecumenical religious community with the moral and ethical dimensions of capitalism in a social arrangement that is both free and virtuous. Send or call for more information and a free copy of our hi-monthly publication: Religion & Liberty. •••••••••••••••••••••••••••• •Yes! Please send me withoutobligationyour descriptivebrochureand a sampleissue of your 12-page publication:Religion& Liberty.

(Priorissueshave featuredinterviewswith such prominentleadersas Lady MargaretThatcher, John Templeton,Wm. F. Buckley,Jr., Jeane Kirkpatrick, and Dr. D. James Kennedy,plus a varietyof contributions from other well-knowncolumnistsand scholars.) Name _ Mailing Address _ City, State, Zip _ Mail this coupon or call us at (616) 454-3080 THE ACTON INSTITUTE For the study ofReligion & Liberty • 161 Ottawa, NW, Suite 405K, Grand Rapids, Michigan 49503 • ••................................. ~ ...........•• THEFREEMAN IDEASON LIBERTY SHIPWRECKED IN NEW JERSEY by Robert A. Peterson I grew up in a town where yacht-making was the chief industry. Indeed, boat building has been a South Jersey specialty for hundreds of years. The first ships were built with cedar from local cedar swamps, then dragged down nearby streams to be launched on the Mullica, Maurice, and Great Egg Harbor Rivers. By 1776, the Delaware Valley, including South Jersey, was the nation's leading shipbuilding area, outstripping even New England. In the 1900s entrepreneurs like Charles Leek started making pleasure crafts and sport fishing yachts for the wealthy. Within a 20-mile radius, four major boat companies emerged: Pacemaker (now Ocean Yachts), Post Marine, Viking Yachts, and Egg Har bor Yacht. Thirty miles distant was another major boat-builder, Silverton Yacht.