There is an interesting story today about Big B and his son getting into trouble with that great horror, the Customs Department, over stuff they brought in from London.
My question is: Is the Customs Department an “obstacle” or is it doing something “useful”?
Think about it.
And then think of Free Trade Across All Borders.
Recommended reading: The Essential Frederic Bastiat (Liberty Institute, 2007).
Bastiat is the only classical economist who hated the customs department and saw through the “indirect use of force” that this obstacle to trade actually is.
He gave an excellent example: A steel magnate in Paris is unhappy about cheap steel coming into France from Belgium. He can now do two things:
One – he can arm 100 men, send them to the border, with instructions to shoot anyone who brings steel into France from Belgium.
But such a course of action is not feasible.
So he takes the other option.
He goes to the government minister of trade and pays for protection. The minister posts armed men at the border (the customs department) at the taxpayers’ expense, with instructions to shoot anyone who brings in steel from Belgium.
The minister and the steel magnate share the high profits now made possible by this “indirect use of force.”
The taxpayers who paid for the customs men now pay even more for steel.
Away with this Obstacle!
Let trade be free!
Let us presume free trade happens. The steel magnate cannot compete with the foreign steel and closes down. His employees, who had been working in the steel mills, are laid off. They have no other skill and cannot learn anything new at this late stage of their career. They are angry with their government for letting them down and take to the streets. Soon, open revolt breaks loose and country goes under.
ReplyDeleteDon't get me wrong. I am all for free trade. But, it cannot happen in the current global society. Lack of warmongering and better health-care in the second half of the last century have allowed millions of people from the weaker sections of the society to flourish. Free trade will cut them off and restore the natural order. But tell that that to the mass.
arbyk,
ReplyDeletethe fallacy in your thinking has been described very well by Bastiat. you only notice the jobs that will be lost at the steel factory -you are ignoring the jobs that are lost because of the high steel prices . the factoriess that will be unable to hire more people to make stuff out of that expensive steel.
(google for Broken window+bastiat)
free trade is anti war.the current system of WTO and UN is "managed trade" for the special interests.lets not call it free trade. when iraq was attacked, the egyptian sellers of dry fruit were worried about supplies -because their supplies mainly came from the US.
The "natural" order is peaceful because (like sauvik points out in his ahimsa post) free trade is an great example of ahimsa/peace.
the US bombed the hell out of vietnam ,but they have now closer mainly because trade has flourished between them. we should have fre trade with pakistan and china -however bizzare it may sound