A libertarian might view much of the regulatory apparatus of the nation-state as superfluous at best and detrimental at worst. For me, the apparatus is what makes capitalism feasible and sustainable at the national level – and problematic at the global level.
Pointer from Tyler Cowen. Read Rodrik’s whole post.
Suppose that A trades voluntarily with B. Then C comes along and says that this trade harms D, so it should be prevented.
The libertarian position is that we know that A and B are better off, or they would not have done the trade in the first place. We doubt that C is such a wise, benevolent individual that we can trust his judgment that the harm to D is larger than the benefit to A and B.
Now it is true that the benefits of specialization and trade require trust, and it is possible that trust in general is higher when people believe that their government is wise and benevolent. However, I would bet that where you find people trusting their government to interfere with cross-border trade you find less overall trust and worse economic outcomes. It will take some demonstration on Rodrik’s part to convince me otherwise. It is one thing to conjure up “models” in which trade restrictions improve outcomes. I want to see examples of broad improvements in well-being arising from real-world trade restrictions.
Not surprisingly, Don Boudreaux has views on this.
What about when the benefit to A and B is counted as harm to D? Isn’t it often the case that C claims harm to D when what they really want is to seek rents for running a toll bridge and extracting some rent on the benefit to A and B and give a bit to D? This may be acceptable to D by the “better than nothing” standard. They get their status raised during the political debate, A and B don’t get to run full speed past them economically, and if C does deliver any help at all that is gravy.
Btw, at the end of listening to all these guys expressing their fetish for telling us about libertarianism do we end up as a political force to be reckoned with? I need to decide if it is worth it.
Your argument is pure liberty axis. The civ/barb projection would go something like – If A and B are benefiting from trade but such trade presents a large enough probability of partial civilizational decay then preventing it may be worth it, even necessary. Dani seems more concerned about oppressive business practices.
They should still have to prove it, which is part of Arnold’s point. It turns out my question above is somewhat generalized: “What about when the benefit to A and B is counted as harm to D?” In the o/o axis case D is some oppressed group being harmed materially. In the c/b axis D is the group that complains about the kids these days.It isn’t enough for D to always complain about the kids these days and the problems never really materializing. It is not enough for the harm to be damage to someone’s psychic nostalgia.
Rodrik criticizes some ‘seen’ transactions, but a decent argument for government (or at least a reliable system of intelligible, predictable transaction rules and uniform protocols) is that it enables transactions that otherwise would be ‘unseen’ and wouldn’t happen without sufficient trust in your counter-parties that can be bolstered by the mere existence of certain government-provided services and assurances.
Should be titled – How could selling nukes to Iran possibly be bad?
Depends on the price.
Obviously the counter-argument here needs refinement, because no one would defend it if A=America, B=Angola, C=Great Britain, and D=Slaves. The first refinement would be to invoke a right of liberty, but that seems to be what Roderick is saying when he claims that many of the conditions that predicate free trade internationally are unlikely to hold in practice.
Sticking to the slavery example, within a country of existing free people, where such people have representation in the government, they are unlikely to be enslaved -and thus a predicate of liberty can be safely assumed. Such cannot be made internationally.
The question then becomes how far can the argument be pushed away from the extremity of the slavery example? Does exploitation of natural resources count? What about states with weak property rights protections?
If you aren’t for free trade then what are you for?
So I was going to write, “Would Rodrik have been a supporter of the Corn Laws?”. So I did a quick search to see what he might have said about them. It turns out his version of the struggle over Corn Laws is this:
“Landlords wanted high tariffs that kept food prices high and raised their incomes. Urban manufacturers, increasingly powerful as the effects of the Industrial Revolution diffused through London, Manchester, and other cities, wanted to abolish the tariffs to reduce the cost of living. That reduction, as Karl Marx among others would argue, would allow capitalists to pay even lower wages to their workers”
And
“Many perceived the reform as a political and economic success in Britain. Economic commentators on the Continent pointed with awe to the large increase in Britain’s commerce and output since the repeal—although of course it was really the Industrial Revolution that deserved the bulk of the credit. Britain’s apparent success…”
https://goo.gl/8S4MV7
So in Rodrik’s view the repeal of the Corn Laws wasn’t a victory for consumers (many of them very poor) over wealthy, rent-seeking landlords — no, it was just a win by an ascendant set of wealthy oppressors over a different set of rich oppressors whose power was waning. Consumers were no better off being exploited by one than the other, and the benefits of freer trade were minimal or perhaps entirely illusory.
Wow. Well, he’s a *consistent* trade skeptic anyway, I guess we’ll have to give him that anyway.
“That reduction, as Karl Marx among others would argue, would allow capitalists to pay even lower wages to their workers”
Maybe he isn’t really putting much stock into this terrible argument. What else is Marx going to say?
I read that as a hedge — a way to put forth an argument that he doesn’t want to own completely. But if he thinks it’s nonsense, why include it all? And, notably, it’s the only rationale he does include in the passage (not just one of several). There’s also no indication that he thinks it’s wrong or that there’s a better, more reasonable explanation.
Well, I tried Dani.
You want to see an example of trade restrictions creating widespread benefits?
Try taking a course in US economic history and see how us industry developed behind restrictive tariffs.
What theory is this? Northern industry allowed to accumulate capital to some tipping point of higher expected efficiency than would be available under competition?