There are many adages in politics that operate like this: say it often. Repeat it often. Eventually, it becomes common knowledge. Humans operate in a world of free markets and within that, free trade. Almost every human grows up hearing this. It just comes into being and simply is. People may debate whether a free trade deal is good or bad, but few debate the premise itself. Possibly, fearing dismissal as anti-capitalist if they ever question free market policy. A common work-around is not to directly challenge the premise of free trade, but rather to propose fair trade alternatives.
Before delving into why free trade is a big heaping pile of bovine manure, it may help to consider its root, free markets. In a free market, at its core, you own your own labor and are free to engage in contracts with others, either selling your labor to them or buying their labor. From there, you can buy or trade whatever, with whomever, so long as the parties involved agree to the terms. An individual, or company, has the most invested in whatever it is they are doing, and are the experts in their own affairs. A government cannot be that expert. Thus, any regulation (rule) from a removed party will introduce inefficiencies and other complications in the market. If government would just get out of the way, all will be fine in the world.
This is all fine on paper, and you can build economic models, in a vacuum, that supports it. Unfortunately, it is not how reality operates. Part of the reason for why is simply because few actually would want a real, true, free market. This is one of the reasons government has such a hard time butting out. People say they want government to get out of the way, until it does.
When you poison the base of a tree, the whole tree is poisoned.
There are so many Big Government regulations at the heart of the entire concept of free markets, that there just cannot be one. Because the free market does not actually exist beyond a political buzzword, then there can be no actual free trade. As a point to highlight this, you cannot freely engage other actors and buy or sell labor. I could mention something like child labor – a huge fight in the nineteenth and early twentieth century, and a continuing issue in some developing nations – where Big Government regulations prevent you from buying the labor of a particular group of humans (children). That is too easy. Those in the West have grown up under a seemingly universal Western value that child labor is abhorrent. People accept this particular Big Government regulation, up to and including the line of demarcation on when a child is a child and when they become employable, and would likely take issue with any who would propose repealing such laws in an effort to achieve a freer market.
Rather, I will highlight another Big Government regulation people almost universally take for granted, immigration laws. I prefer this one because often those who promote the free market buzzword also tend to be most protectionist when it comes to immigrant labor. Yet, in a free market, you should be able to negotiate with any other party to buy their labor. Legal status, by its very nature, is a government regulation, and citizenship is an entirely different, wholly unrelated concept from labor. We do see how and why in globalization. Companies that become multinational often will offshore work that does not physically need doing wherever their domestic operations are, such as a call center. Problems arise mostly when employers look toward importing labor. I should also note that this Big Government regulation at the heart of the concept of free markets is not something ancient. If you have seen the film Titanic, you surely recall the character Jack Dawson (Leonardo DiCaprio) was in the steerage class, a cheap area of the ship full of immigrants to the United States. All one had to do was give a name, be deloused, and off they went to Kansas to open a general store! Standardized immigration laws are a twentieth century Big Government regulation on the erstwhile free market.
Still another example is licensing, or certifications. You cannot practice medicine without a license, or be a law enforcement officer without certification. These too are Big Government regulations on the free market. In an actual free market, anyone would be able to open a clinic and practice medicine if they so choose. We can all hope that the invisible hand of the free market will correct, and only those who graduated medical school and are competent would remain in business, but this is a pipe dream.
We can play this example game all year. The takeaway is that there is no such thing as a free market. It is a myth. For some, it is an ideal, only in so far as those who idealize it generally take for granted all the established and accepted ways it is not a free market. Where individuals choose to draw that arbitrary and subjective line of what is established and accepted is the point where debates on free markets begin. With all of this in mind, it becomes easier to highlight why its offshoot, free trade, is bulls#!t.
Negotiations produce free trade deals.
How can trade be free if it is a negotiated deal? That should be an obvious oxymoron, but somehow people keep stringing these words together: free trade deal. I concede I spend a fair amount of my time here at the Ministry with a glazed look on my face, in a state of near-constant stunned disbelief that this combination of words is being spoken, often by otherwise smart and well educated humans. We are negotiating the terms for what the rules will be, and how we are going to govern a trade deal. How can you say to me or anyone else that this is free trade?
When a person says they want a free market, what they are actually saying is that they want the market they operate in to be freer for them.
When a person says they want a free market, what they are actually saying is that they want the market they operate in to be freer for them. Either that or they are just an idiot. Unfortunately, there are not many options available in this game. This is similar in free trade. A free trade deal begins with those who are party to the deal, typically nations. They are perhaps then seeking to make the areas of those markets for which their industries are involved a wee bit freer for those firms, at the exclusion of everyone else. With an environment dominated by a select group of multinational firms, it should come as no surprise when such deals most benefit these actors, at the exclusion of even domestic competition. Just as with those promoting a free market, when those who promote a free trade deal are waxing on about its virtues, you should be hearing only that they want the market they operate in to be freer for them, and therefore less free for everyone else.
None should view these points as a critique of capitalism.
Free markets and free trade are not synonymous with capitalism. One easy way you can tell is that we have different terms for those ideas. Rather than a critique, my point may help to highlight why there is so much crony-capitalism. You allow for crony-capitalism every time you accept anything framed around free markets. A simple solution is to recognize there is no free market, and therefore no free trade. Once you accept that reality, you can stop supporting public officials who base their economic politics on such a foundation. Once elected, they will likely be making crony-capitalism deals, benefiting some, and excluding others. Period. There is no way around it. Each time a person says you should support a policy because it is free trade, or is a free market whatever, the speaker has very likely bought the bull, or are willfully lying to you – or, as noted earlier, they are an idiot. Either of the latter should be enough to earn a no vote the next time. If they have bought the bull, then they may be promoting crony-capitalism, all while possibly being blissfully ignorant they are doing so.
Are free trade deals are always bad?
Benefiting some while excluding others is not always a bad thing. We can tell because it has always been this way! The European Union and the United States benefit by excluding others from their day-to-day economies in many ways. A deal between two countries, just as a deal between you and I, can benefit both. It is basic economics. The issue is not the merits of all deals; the issue is how promoters sell it. With this issue begins all sorts of problems that result from humans blindly accepting a fundamentally flawed premise. You become far more susceptible to supporting the kinds of crony-capitalism that hurts you, and your support most benefits those who need the special privileges least.
If you accept that free markets and free trade do not actually exists, and as noted, few people actually want them, you can start referring to trades deals as simply that, just another trade deal. Furthermore, you may be more inclined to support some deals referred to as fair trade. If you can acknowledge no deal is genuinely free trade, no matter how framed, with each governed by a litany of regulations, then perhaps you may begin accepting regulations to ensure deals are at least fair, or perhaps equitable to the most interests. Though always there are complications to any such deal, and with complication comes risk, by paying more attention to how such policy sells, rooted entirely in a flawed yet blindly accepted premise, you will begin responding rationally and in reality, and so increase the likelihood of greater prosperity.
That is it. I would like to think this is straightforward. If you find this interesting, I encourage you to consider sharing it. I would also love to read what your thoughts are on this. Please comment below or via social media. I thank you for taking this time to read my thoughts on free trade.