One of the most popular arguments among America’s anti-free trade non-economists is this one: free trade destroys American jobs. We need to think through the implications of this argument.
The case for voluntary exchange has nothing to do with the question of the number of jobs that voluntary trade is supposed to create, or not create, or even destroy. The case for voluntary exchange is based on the case for economic liberty. It is based on the idea that two individuals who want to better their condition have a legal right to make an exchange which each of them believes will improve his situation.
When two Americans, or two residents of any nation, get together to make an exchange, neither of them is thinking this: “Is my Real Dissent: A Libert... Best Price: $10.71 Buy New $4.93 (as of 11:30 EDT - Details) decision going to increase the number of jobs in the nation?”
Buyers do not worry about how many people will still be employed by the seller tomorrow, next week, or next year. Buyers want a good deal, and a particular seller offers the best deal available. Buyers do not care that the seller has fired half his workforce and has bought a robot in order to get his costs down, thereby being able to make better offers to buyers. Anyone who thinks that buyers should care about how many workers are employed by the seller does not understand economics, and clearly does not understand human nature.
No seller comes into the marketplace with this sign: “Pay more for my products, so that I can employ more workers.” Well, this is not quite true. There are certain companies that sell imported coffee that attempt to charge higher prices for the coffee because they pay coffee employees in Third World nations higher wages. But you have never heard of these coffee companies. Hardly anybody buys coffee from them. The number of people they employ is so small, because the amount of coffee they sell is so small, that their sales Suicide Pact: The Radi... Best Price: $0.49 Buy New $3.29 (as of 03:30 EDT - Details) offer is not worth considering.
Let’s say that a buyer has a choice between two sellers. One of the sellers has made a manufacturing breakthrough, and has been able to fire half of his workers. He now offers a substantial price reduction to buyers. The buyers are going to pay no attention to the fact that the other seller, who did not make the same breakthrough, and who has to pay twice as many workers, is unable to meet the price of the innovative seller. The buyer is going to buy from the innovative seller who is selling the product at a substantially lower price.
Some of the non-economists who are anti-free trade do not like this, because they are members of labor unions. Labor unions have seen their membership fall, decade after decade, over the last 60 years, as a direct result of innovative manufacturing technology. Conservatives have rejoiced; labor union members have groused.
Why, then, do we find these same conservatives, who were happy to see the unions shrink in numbers and influence, rush to the Progressivism: A Prime... Best Price: $8.50 Buy New $3.99 (as of 02:10 EDT - Details) political barricades alongside of union members, and demand that Congress impose high sales taxes on imported goods? What convinced them to switch sides? What convinced them that saving jobs is the be-all and end-all for voluntary exchange in this unique case?
This is one more sign that the non-economists who hate free trade are not economists. They do not understand economics. They do not understand that the case for free trade is based on two individuals who want to make an exchange. If the two bargainers were on the same side of the national border, the non-economist conservatives would say nothing. But when the two are on opposite sides of the national border, the non-economist conservatives join with trade union members, demanding that Congress do something to stop the exchange.
Conservatives who don’t like labor unions cheer when buyers purchase goods and services from sellers whose companies are not unionized. They recognize that the consumer, meaning the buyer, is better served by a lower price than he is by a large number of The Lone Gladio Best Price: $3.16 Buy New $3.99 (as of 02:40 EDT - Details) labor union workers on the floor, whose above-market salary jobs are protected by the National Labor Relations Board. Yet these same conservatives demand that Congress not permit the same kind of exchange, if one of the buyers is on the other side of the national border. The conservatives now adopt the rhetoric of the labor union movement. They call into question the legality of the exchange, specifically because the exchange will not lead to more jobs on the American side of the border.
This is what Ludwig von Mises called polylogism. This is the intellectual inability to apply the same economic reasoning across an invisible line call a national border. This marks the schizophrenia of the conservative movement. This is one more example of the fact the conservatives cannot think straight. They cannot apply the same logic on two sides of an invisible line called a national border.
The case for free trade should be made in terms of personal liberty. Anyone who raises the issue of the number of jobs lost because of free trade has abandoned economics, has abandoned the case for liberty, and has abandoned the idea that buyers like good deals and should be allowed to negotiate them. The person has demonstrated in full public view that he cannot think straight. He cannot apply the logic of free-market liberty on two sides of an invisible line.
Reprinted with permission from Gary North.