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Robert Henderson on Free Trade

PoliticsPosted by Lee Waaks Sun, February 26, 2017 17:11:57

The following is a response by David McDonagh to blog post by Robert Henderson on the Libertarian Alliance (not to be confused with this blog of the same name). Because Mr. McDonagh's response strictly follows the outline of Mr. Henderson's post, there is some repitition. The context of the reply can usually be gleaned from the comment, but it may be useful to read Mr. Henderson's post first. (Mr. McDonagh's response was casually edited by Lee Waaks.)
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The politically correct [PC] ideal of equality and democracy, like politics and the state itself, has never been popular with the masses; and they haply never will be either.

Free trade boosts all incomes by boosting greater output than we would otherwise have.

The Navigation Acts held progress back, as politics and the state always does.

Liberal ideas are hardly unquestioned but then Henderson seems to get nearly everything wrong about liberalism.

While the state exists, the market will never quite be free. The state needs to tax the market just to exist.

Adam Smith hardly needed his metaphor of the invisible hand for the division of labour, as, clearly, it gears self-interest to serve others by specialisation, or by learning a trade. Almost any job requires some expertise.

Socialists are just statist Tories. Fascists are also Tories. Bolsheviks are Russian Tories. Collectivists are Tories. Liberalism is anti-politics, so it is against democracy and the state.
The state is anti-social. Its aims usually tend to mess up society.

Henderson is not wise to call the liberals dishonest. I think he is very ignorant and thoughtless, but he is most likely not dishonest. He loves the state so much that he cannot credit that it is sincerely rejected by the liberals.

Monopoly is almost impossible to obtain, as it is not easy to stop new firms from entering any market. But the idea that the market ends in a monopoly is a long-standing folk dogma, and the main hope of Marxism, but the idea is way older than Karl Marx. However, monopoly did not increase in Marx’s lifetime, nor has it increased since his death.

Liberalism is about repealing laws not passing them; not on monopoly or on anything else.

Free markets are what emerge when the state has been totally rolled back to non-existence, or to anarchy. Liberals are against the state, not monopoly per se. Henderson loves the state so much that he doubts that there are some that hate it. But, yes, the state is the only institution that can enforce a monopoly, but that is not why the liberals reject it.

The market is not natural, but it is anarchic. It does not need the state.

The liberal idea of no state is not empty-headed. Politics is anti-social and negative sum, i.e. wasteful. It is what looks like support for what is wasteful that is nearer to being empty-headed but, presumably, it is down to mere ignorance.

The market fits humans as they are, though they prefer to be consumers rather than producers. But the state is at odds with humanity, as people do not like being bossed bout.

Protectionism is no more natural than is smuggling (black markets) that, nearly always, flout it.

No one owns markets. It is just where people freely trade with each other.

Lower prices are clearly better for the customer.

The mass urban society gives rise to potential jobs being infinite. A village often lacks jobs, but never does a big city. Employment becomes a function of pricing ourselves into work rather than there being a lack of jobs in the big city.
Society is polycentric, and it is never a whole. If you hear the bell toll, then it tolls for another person. Economic interest groups related to the factors of production are as mythical as the supposed inexorable movement of free trade to monopoly theorized by Marxism, and both are clearly bogus. The idea of the class struggle is about as unrealistically Romantic as one can get. There never was anything like it in the past, which is why E.P.Thompson's 1963 book, The Making of the English Working Class, mentioned not even one example of it in more than 900 pages of his book.

Liberals claim that any trader gains, in his own estimation, from trade. The liberals do not postulate society, as a person, or as a quasi-person, who gains from trade. Both the consumer and producer surplus resulting from any trade is subjective to each trader. Trade is a positive sum transaction.

Liberalism is anti-politics, not a recipe for a type of politics. The anarcho-liberals that make up most of the active Libertarian Alliance [LA] are never happy with any state activity; none whatsoever. But the alliance in the LA is with minimal statists, who do accept a vital need for the state.

Liability is going to be limited in any case. The 1862 Act just spared a bit to settle for what traders chose to risk. Having all at risk would not be much more actual liability, in most cases. Limiting what is put at risk, to what we freely want to put at risk is not, somehow, unfree in some way. To say that only a claim to all a person owns must be involved if ever one is to invest is not more free, or more honest, but just a sheer stupidity.

A free market is the market free of the state. Yes, that means no taxation, no state money, indeed, no politics whatsoever.

Henderson seems not to know that the LA is against the state. The active LA members hold that the state has no business at all but, indeed, that it is immoral. The LA most of all opposes taxation, which the LA has often called theft. But Henderson imagines the LA endorses taxation and that it is only really against monopoly (or something else). Liberals do not care much about monopoly as such, for most of them hold that the market can sort it out by new firms starting up to exploit the monopoly price that the big firms might charge. Liberals only essentially hate the state and taxation -- taxation because it aids the illiberal state activity.
Liberalism is not particularly fussed about monopoly, but we might still note that the daft dogma that competition leads to it is clearly false. It is clear that it is not easy to keep new firms out of most trades, especially if the big firms are charging high prices. Henderson believes roads are an exception, but they have substitutes like air, rail and sea travel. In any case, there can be efforts to buy up particular roads on the market.

No, there is haply not fewer firms in the car industry than there were 40 years ago. British firms have declined but Japanese firms have emerged since then. Chinese firms are now emerging.

No, free-trade liberals do not want a single market but only no states. The market will never be a whole and there will never be “a level playing field” (to cite a statist metaphor from sport), but liberals, as such, do not seem to care much about that. The economists recommended the statists to allow free trade to exploit comparative advantage, which thrives on inequality and any unequal advantage that we might find. However, the state cannot completely indulge free trade, as freedom needs to be trade free of the state, ipso facto.

The EU aims at being a super-state, not a free-trade area. It seeks power and influence in the world. It aims to be the number one state no less.
What classical liberal ever complains about dumping? I have seen no pristine liberal complain against cheap goods.

Henderson says free trade does not mean free immigration, as, logically speaking, trade is made for humans, rather than humans for trade. But free trade usually does tend to mean a free flow of immigration too.

Henderson claims we can exchange goods and services without allowing free immigration if society does not want to, but there is no such person called society. However, in a liberal society no one needs to accept immigrants, to give them jobs, lodgings, etc. if they do not wish to do so, as social liberty is liberty on both sides. Society cannot decide but any person can decide for himself.

Yes, taxation scotches free trade, as does any state.

Democracy is not liberal but an attempt to govern: voting is illiberal, gratuitous, coercion against others.

Henderson says that comparative advantage has little reality to it. But it is very clear that some parts of the world (e.g., South America) grow bananas, say, way more easily and more cheaply than can be grown at other places, say, Northern Europe. They expoit the uneven playing field. He believes that as this may change, so it does not matter, but that is not germane, not even one iota. Every person does what he does best at any one time. That the comparative advantage can change, in some cases, hardly means it is not important at any one time.

Higher tax regimes and higher welfare provision tend to lower real wages, but Henderson writes as if he thinks they can boost them. Only greater output can do that and the state hampers output by taxing it to pay for services that no one wants but the rulers think is vital to civilisation. So, for example, we have the spectacle of subsidised, often empty, buses circulating around UK towns and cities to maintain an alleged social service on a regular timetable.

As we have had the modern state since the rise of the modern market, we have never had completely free trade. Henderson believes it was reckless to go in for freer trade in the nineteenth century. He believes industrial dominance, primitive transport
levels, and the slow industrialisation of the USA and other European lands, allowed the UK to dodge the hazards. But after 1870, that was not the case any longer and the British market was then flooded with food and wool. Many states then went protectionist, but Britain failed to do so. It paid the price for this folly of freer trade, he argues, as the industrial predominance it had once enjoyed was soon lost. The UK's agricultural markets were destroyed and new industries (e.g., chemicals) soon arose that left the UK behind. In contrast, Henderson argues, the protectionist policy of the USA and Germany enabled both states to exceed the UK’s GNP. But there was no need for the UK to retain the lead in any industry. The fact that other places were catching up and then overtaking the UK boosted wages even in the UK. Henderson seems to think the object is for the UK to forever lead the world in this or that sector, but the objective of economic activity is to boost the standard of living, not to dominate the world. He overlooks that state protectionism is very wasteful and seems to think that there is a clash of interests on the world division of labour, but very little of the market is in competition. Firms compete for customers but most of the market, as Alfred Marshall pointed out in 1890, is the result of cooperation. Even the competition, he noted, was within a cooperative framework.
Bismarck seemed to overlook the wastefulness of protectionism and of politics in general.
What he thought was wrong is hardly anything to do with the truth. Trade is to do with firms, not nations; still less to do with the wasteful state. Trade aids both a producer and a consumer surplus, so both sides gain by trade but taxation is negative sum, so we all lose out, on the whole, from any political action; and maybe both sides do too; though the
politicians act as if they gain from what they do.

It was not protectionism that made the first industrial “revolution” but the flourishing of science, technology and business. Henderson overestimates bias to home trade and he writes as if the EU and the WTO aid free trade rather than hindering it, ipso facto, by their very existence. The idea that free trade needs to be mitigated is on par with the idea that economic growth or increased income needs to be mitigated. Henderson also overrates the British Empire in trade, even though he is explicitly cautious about that. He believes free trade was a risk in 1850 for Britain, and that it is for all nations now, but he
overlooks that it is the best way that firms can do well. Politics is wasteful, by contrast, but Henderson believes that the state is a boon. He tells of free trade as idiocy, but it is clearly politics that is perversely negative sum and thereby clearly wasteful idiocy.

It is not clear that Henderson fully understands free trade, let alone the history of it, but he loves the state and the state-imposed wasteful problem of defence, that he believes the nineteenth century liberals were careful about, but the truth is that the liberals hated warmongering. Liberals, like Richard Cobden, were out to stop the backward state courting war. But it is true that the pristine liberals of the LA are more against the state than the Manchester School ever was.

Henderson postulates that complete free trade today would be dangerous for the West. He believes no firm can compete with low wages around the world. But this wage gap with what they call the "Third World" was caused by the backward rejection of free trade after 1914 and after the war that ended in 1918. Why would the wage rates on the other side of the world affect most of the trade in Britain? Could it affect local plumbers, carpenters and the like? Most trade will remain local but given free trade, then international wages will soon even up around the world anyway owing to the export of capital.

We are told by Henderson that experience tells us that industrialisation is best achieved by protection but that is wasteful, ipso facto, as all politics is. He overlooks that, or, more likely, he has never yet quite realised it.

Henderson tells us “the most lethal ammunition to discharge at free traders is the fact that no country in the history of the world has industrialised successfully without very strong protectionist measures being in place”, but this is a mere fallacy of post hoc; ergo propter hoc and it overlooks the cost of such protectionism in every case. The point is a brutum fulmen. However, it haply is about the best any protectionist can do.
The spread of British capital overseas would have haply stopped the "Third World” from arising, thereby dodging the current problem of mass immigration to where the capital, and thus the higher wages, are to be had. Nationalist measures “distort” the world division of labour. Free trade (or freer trade) did/does aid economic development everywhere, including in pre-1913 Germany. Henderson should note that the protectionism imposed after 1914 created the main problem that seems to concern him today, viz. the existence of lower wages in the Third World that threaten to pull down wages in the First World. Athough an increase in world production would likely lead to higher real wages for the First World, his protectionist “solution” would not remove this problem, but rather prolong it. As previously mentioned, freer trade was evening up wages around the world before 1914.

Protectionism did not aid the UK to recover after 1931. Henderson fails to explain this beyond his aforementioned post hoc fallacy, as there is nothing to aid economic development in protectionism. It simply allows firms to be free from competition from abroad. As free trade is basic economics, there is no need to call it a "secular religion", as there is nothing whatsoever religious about it. Firms need to keep up to date with all other firms under free trade, but they can become stagnant with protectionism. There is always free trade within a nation, and as the EU was attempting to become a super-state (or a new nation), then there would be free trade within the nations it was attempting to make mere provinces.

Protectionism always taxes the economy. Henderson argues that free trade is not necessary for rapid economic growth; that state regulation of the domestic market and international trade is not a recipe for disaster; and that being a “free trader” when the rest of the world is not reciprocating is a mug’s game. But some liberty is vital to economic growth and politics taxes the public, so even when it dodges being a total disaster, the state never dodges imposing extra costs. Anyway, one-way free trade is fine as there is no need at all to respond to tariffs of others with those of your own, as that will only increase the dysfunctional politics. Contrary to Henderson, it is politics that is the mug’s game, as it is always negative sum. Trade, by contrast, is always economic, so it is always positive sum. Henderson imagines we do not know whether protectionism is dysfunctional or not, but it always costs extra taxation; thus, it is always uneconomic or negative sum. So we do know that it is wasteful.

Free trade is the same as the free market. In the colleges since about 1900, they have attempted to define laissez-faire as trade within the state's domain and free trade as between states, but this distinction is not very realistic because states do not trade, only firms and customers.

Governments are not the natural suppliers of health care; or, indeed, of any good.

Trade results in gains to the customer and producer immediately, not later. The gains may not be uniform but they are immediate surpluses to both traders. In what way do the later generations thereby lose out? As for politicians, they live off taxation, thus they make the public poorer to the extent that they tax them.

The fact that many lands are poor today is the result of the interruption of free trade by the 1914 war, which Henderson argues was a distortion of domestic trade. But this idea that domestic trade should be separate from the worldwide division of labour is an arbitrary idea. Free trade would soon iron out the Third World, such that there would be soon no longer a massive advantage in mass immigration to seek jobs elsewhere, though some competition in a more even world would continue. The capital would go to the workers rather than the workers emmigrating for better pay.

Most of the jobs out there need no skills. Former Prime Minister Tony Blair was utterly deluded with his “education, education, education” idea, viz. the popular idea that education was investment rather than being just sheer consumption, as it usually is. But increased output from successful new capital investment (including human capital -- but that is usually mustered by on the job learing rather than at college) means all wages are higher as a result of extra innovation that, if successful, increases total output.

Henderson believes that nitpicking over how exact are measurements of wealth might aid his case against liberalism. But the fact that the "poor" today are rich in absolute terms is clear no matter how useless the means of wealth measurement are.

Why does Henderson call council housing “social housing” when it is clear enough that it is very anti-social and, indeed, that it is a recipe for thugs? The popular press in the UK calls council housing "CHAVs", i.e. council house and violence.

What is called the welfare state is a public menace. That it has been rolled back a little bit since the 1960s is a social boon.
Why was unemployment so low till about 1970? It was obviously owing to the cleared labour market, but the media, falsely, held that to be a thing of the past in the 1970s and since. But we can always clear the labour market whenever the price, or the wage levels, are right. In the 1960s, the dole was taboo, as only a few workers, when exchanging jobs, would ever go there; it was a sign that a worker did not really want a job. By the
1970s, however, many thought that full-employment and the cleared labour market had naturally broken down, so from then on many accepted the need for the dole. The story put out by the media obfuscated the fact that only the dole allowed mass unemployment to ever be mustered in the mass urban society.

In absolute terms, it is easier than ever to support a family on a single wage today. But people want to do all the other things too. It is false that the mother does better for the family by taking a job. It is also false to say there is no choice involved. We do not need to conform to social norms.

A bigger state clearly needs to tax more.

Most people never did think much of state provision, falsely called social provision, although Henderson ignores the fact that it is anti-social. It is very clear that most in the UK are better off than in 1960, especially the poorest third, who are today fairly rich, with all the modern conveniences. In 1960, most households did not have running hot water, phones, or most other modern conveniences. The market, which needs to be free to some extent, and was so even within the late USSR, is alone responsible for progress since 1750. At no time has the state done other than impose a cost. Henderson does not seem to grasp that fact; he thinks it is something to do with elite ideology.

If people buy things then they usually want them more than they want the money they need to pay to obtain them.

People often fail to provide many things in computers and elsewhere.

Few things are truly necessities.

Brainwashing is a mere myth.

Henderson absurdly says people do not really want computers, but then he tells us why they want them. He says we all need computers today; so we want them as a means. As Thomas Hobbes said, we choose to do all we do, either as a means to an end, or as an end in itself.

Free trade ebbs power, so all lose power whenever trade gets freer. But then power is a certain evil and, as Lord Acton famously said, it tends to corrupt.

The poor are not subordinated to the rich on the market. The market lacks any power as, qua market, it is free.

I have never met anyone who loves equality and I tend to think that no one does. It is a silly, unexamined, school teacher dogma, worthy only of contempt.

The gains of trade are immediate; they do not trickle down.

No society is truly more than economic relationships. That is a mere misunderstanding of economics. Any desire for certainty will be for an aspect of the standard of living.
There has never been a working class. That is a myth of college sociology and politics departments. The Labour Party would win every election, hands down, if there were a UK working class interest, but rather than see the plain truth of very diverse economic interests, the backward academics hold those who voteTory are fooled in some way. But the workers are not the only ones who cannot see this purely imaginary proletarian economic class interests, for the sociologists cannot see it either.
People rarely notice where things are made.

It is no absurdity that free trade tends to crowd out war. Firms cannot afford to fight wars and the state can only afford to fight them owing to taxation.

Yes, the illiberal coercion of crass democracy is hostile to free trade, as it is an attempt at government, thus it is against liberty.

Henderson imagines democracy is a boon to the masses, but it never was. Nor was it ever popular. Protectionism is credited with this and that, but no explanation of how it does what he imagines it to do is attempted. Similarly, he gives no detailed charge against free trade apart from his fallacy of post hoc.

Similarly, he assumes a movement towards monopoly but he seems not to know this dogma was around before Marx was born in 1818 and it is not greater today than it was, say, in 1800.

The actual reality of things is that total output determines what wages can buy and, thus, their value.
Immigrants may destroy a nation by destroying the idea that it is a large family, thereby making many natives no longer feel they have a homeland. Nevertheless, immigrants do, boost output, which leads to rising real wages. The same is true for “exporting jobs”, which also boosts real wages. But Henderson thinks the value of wages are lowered thereby and he adds:

“Those whose jobs opportunities have been degraded have suffered a form of theft. Had mass immigration and the export of jobs been prevented, the wages for the jobs taken by immigrants would have been higher than they are when subjected to the additional competition of immigrant labour and the exported jobs would not have been exported, which in itself would have tightened the labour market. In societies of rising aspiration, this could result in jobs considered menial being better rewarded than those which enjoy high status under 'free trade' circumstances. It might be necessary to pay a sewage worker as much as a doctor. Doubtless many would throw their hands up at this. But there is no logic to such a response, because in a society with a large private enterprise component a wage is simply a response to the value the market puts on a job. Unskilled workers may not earn as much as the average doctor or lawyer at present, but skilled tradesmen such as plumbers and builders often do.”

But workers can only be paid from total output and that would be way lower in the set-up that Henderson imagines here. But it is true that supply and demand (i.e. free trade) tends to equalize wages and salaries. Free trade would end aristocracy rather than fostering it, as Henderson imagines. “Class” is just a bogus idea of the PC religion of Sociology. Anyone who talks class thereby talks crass stupidity. Democracy never did give the masses any control and the masses hate voting anyway. Participation is a waste of their time. It is boring at best and they want to be free of it. As the saying goes: “Committees take minutes but waste hours”.

Henderson repeatedly imagines that there is something social about the state, but the plain fact is that the state is intrinsically anti-social.

Democracy was an elite fashion, not something the masses ever wanted or needed; it thrived only on elite thoughtlessness. But Henderson tells us that, in fact, it was originally oligarchy, not true democracy. But then he absurdly adds that it nevertheless brought with it a lot of control by the masses. His contradiction is self-refuting. The true half of the contradiction is that it was oligarchy; the false half is the claim that democracy brought any real control by the masses.

The urge towards the EU was one for a successful warmongering super-state not a stand against democracy. It was for power and influence in the world. There is no effective democracy to oppose. Nor is it going to be more popular in the future, and ditto politics and religion. They never were popular but the acme of what little popularity they
ever had is, now, well in the past.

Henderson imagines this class interest of the elite is unconscious! It all arises from psychological and sociological forces; forces arising from PC religion, or from the anti-social sciences or the unnatural sciences.
A lot of wastage in any nation is owing to measures taken just in case of war, and the whole lot tend to foster war rather than to deter it. Free trade tends to crowd war out. But Henderson seems to welcome war. It is silly to call free trade a religion, but a bit less silly to call liberalism one, as it is a creed rather than mere phenomena. But state worship seems to have something nearer to the God worship of many religions, so religion is more to do with the immoral state.

Henderson is a fine one to write about the ignorance of others.

Smith was not quite right to say that the state was needed to do certain things. As the economist Milton Friedman said, anything the state can do the market can do better, but he overlooked that war was an exception.





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