by Barry A. Liebling
Free trade has traditionally been supported by people who endorse individual liberty. This would include some (not all) of those who regard themselves as radical individualists, classical liberals, libertarians, pro capitalists, and Republicans. By contrast free trade policies have been viewed with unsympathetic suspicion by interventionists who identify as leftists, socialists, authoritarians, populists, and many Democrats.
But the political world has changed. President Trump and his administration is advocating tariffs as a method for increasing prosperity and helping Americans (in some favored businesses) compete more effectively against international concerns. Of course, tariffs are incompatible with free trade, and boosters of the Trump coterie are claiming that “so-called free trade” is not really free, is an old-fashioned obsolete notion, and has to be replaced by “fair trade” policies. https://www.wsj.com/opinion/the-new-rights-zombienomics-trade-tariff-trump-bessent-f396f318?mod=opinion_lead_pos9
And largely because Trump is for tariffs many of his adversaries on the left (and the right) have reflexively become fans of free trade. Their rationale is – if he is for it, we are against it. Of course if the Trump team were to abandon tariffs, members of “the resistance” would reverse course again.
Pull back and consider the fundamental distinctions between free trade and fair trade. They are not compatible.
Free trade occurs when two entities consider doing business with one another. There is a seller of goods and services, and there is a buyer. The encounter is legitimate providing there is no force, threat of force, or fraud involved. Perhaps they come to an agreement by mutual consent. Then the transaction occurs. Alternatively, they may not see an arrangement that is acceptable to each of them, so there is no sale.
The philosophical basis for free trade is that individuals have natural rights to manage their own lives and to deal (or not deal) with one another according to their own judgment. Of course some people have excellent judgment, many are average, and a few are chronically poor at thinking effectively. But everyone has a right to self sovereignty.
Enthusiastic boosters of free trade point out that it leads to an abundance of wealth. Free trade societies, countries, and geographic zones become richer than places where free trade is not permitted. While this is an accurate observation the essential basis for free trade is not economics. It is ethics. Humans have inalienable natural rights and ought to be free to pursue their rational self interest.
Now let us consider fair trade. Instead of two entities, the buyer and the seller, there are now three. The third player is the judge, who decides what the terms of the trade will be and if the trade will occur. Usually the third party is a government agency, and this means the judge has the power to use force.
What is the rationale for fair trade? Its supporters are disturbed that with free trade the outcomes are not what the busybodies prefer. The price of the product or service is too high, so the meddler rushes in to fix it. Or the price is too low, so the nanny insists that it be increased. (That is the excuse used for tariffs.). Often the terms of the business arrangement strike the interventionist as unfair, so the problem needs to be fixed.
Note that government-based fair trade policies directly contradict the principle of the rights of individuals to direct their own lives. A fair trade advocate asserts that people are not intelligent enough to come to the “correct agreements” on their own. The state has to supervise and direct commerce to assure that the “official experts” obtain the result that they want.
Can there be a fair trade agreement that does not violate natural rights? Yes, two parties can invite a third party non-government arbitrator to help them reach a mutually acceptable agreement. And notice that a private arbitrator does not have the power of using force – and is a freely selected option, not a legal requirement. So in these cases the “fair trade” result occurs because the buyer and seller voluntarily agree to bring in a consultant to help them decide on the terms.
Some advocates for government-run fair trade policies assert that there is a middle ground. Let people engage in free trade most of the time. But when the result of a commercial activity seems “really unjust” to the state official it is appropriate to swoop in and make things right. Of course, this boils down to a forced fair trade policy. Once you open the door, the meddler has a license to step in any time.
Here is the take away. If you appreciate and endorse individual liberty you will understand that free trade is the natural consequence of making policy consistent with ethics. Alternatively, if you yearn to boss people around and control the lives of others, government-directed fair trade is for you. Make up you mind.
*** See other entries at AlertMindPublishing.com in “Monthly Columns.” ***