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Mute applause for free-trade deals

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Tuesday, July 9, 2013, 9:00 p.m.
 

Uncle Sam is negotiating a free-trade agreement with several European countries and another with various Pacific Rim countries. Such agreements deserve applause because they generally make trade freer — and, hence, make the people in countries party to these agreements richer. This applause, however, should be muted.

In an ideal world, there would be no free-trade agreements because governments would never have grabbed the power to obstruct trade in the first place. Americans would be just as free to trade with non-Americans as with fellow Americans. Ditto for citizens of other countries. In that ideal world, the notion that voluntary exchanges across national borders are somehow less beneficial or more economically risky than are voluntary exchanges within national borders would be seen as the preposterous superstition that it is.

But our world isn't ideal; it is infected with too much political direction of people's lives. So it's an unfortunate fact that the baseline against which free-trade agreements should be evaluated isn't a world where people are free to trade as they judge best, but rather a world where people seeking to trade peacefully with foreigners are laden with all manner of high taxes and heavy burdens.

In short, although all free-trade agreements are stuffed full of provisions that keep trade from being fully free, most such agreements make trade freer than it would be otherwise — a feature deserving some applause.

Think of gangs of young men who routinely kill and maim each other in street fights. No benefit comes from such fights — save the fleeting glory that gang culture bestows on two-bit street warriors.

Now suppose that some members of these rival gangs wise up a bit and agree to rules that will reduce but not eliminate the fighting. Gang leaders might meet in a neutral neighborhood and bargain for hours toward an elaborate agreement in which each gang agrees never to fight on Mondays, Wednesdays and Fridays, and also to never use switchblade knives longer than 6 inches. The gangs, though, reserve the privilege of fighting each other on Tuesdays, Thursdays, Saturdays and Sundays, and with any weapons other than long switchblades.

Most people would applaud the above agreement between gangs to diminish their fighting. This accord might be called a “no-fighting agreement” — even though a great deal of fighting is permitted by the agreement. Yet even the most sincere applause for this “no-fighting agreement” would in no way imply that it is ideal.

Everyone of good sense and common decency understands that the ideal agreement would be one that stops the fighting altogether, an agreement far less wordy than the so-called “no-fighting agreement” that admits many exceptions.

The analogy of street gangs that fight to governments that impose trade restrictions isn't perfect. But it does serve well to highlight the reality that our standards for government behavior aren't much higher than are our standards for the behavior of violent street gangs.

Donald J. Boudreaux is a professor of economics at George Mason University in Fairfax, Va. His column appears twice monthly.

 

 
 


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