November 1993

I’m puzzled. I’d like to know why so many free-marketeers, so many free-market think-tanks and pundits, are not simply pro-Nafta, but are fervently, frantically, almost hysterically pro-Nafta. Look, I can understand, though not agree with, mild approval. An old libertarian friend of mine, for example, told me that he was mildly pro-Nafta but not really interested in the entire topic. That seems sensible. So why the furor, the passion, the enormous resources poured into praising Nafta and reviling its critics? Why is there a highly active free-market Nafta Network, when no one has ever bothered forming a Repeal-the-Income Tax Network, or an Abolish-the-Fed Network? And if we want to confine passion to more directly political issues, why was there no Lower-Taxes Network, or Stop-the-Clinton-Budget Network? Why is the entire pack: the Cato crowd, the rest of the Kochtopus or Koch Machine, the majority of Heritage, the Tony Snows and the Steve Chapmans, why are they going all out, playing hardball, in their frenzy to get this thing passed? Why are these gentry acting as if their lives depended on the passage of Nafta? Could it be because if not their lives, at least their fortunes (though scarcely their sacred honor), do in fact depend on it?

Why are the most advertised Gold and Silver coins NOT the best way to invest?

The twists and turns of this crowd have been truly a sight to see. First, they confidently strode forth to represent the “free trade” cause, denouncing their opponents as leftists or ignorant protectionists. But then, when hard-core free marketeers and free traders such as people at Triple R, the Mises Institute, and the Competitive Enterprise Institute weighed in to attack Nafta as a managed trade and international statist scam in “free-trade” clothing, the pro-Nafta gang wheeled around to denounce us as free-trade “purists,” or, as Tony Snow called it in all his tom-fool ignorance, “the Adam Smith objection.” But even if this crowd has no shame, surely their sudden change of front must be causing them some tactical embarrassment. For how can they pose as the champions of free trade while at the same time denouncing genuine free traders as “purists”?

The Irrepressible Roth... Best Price: $21.47 Buy New $21.37 (as of 03:40 UTC - Details) The “free traders” for Nafta confront their biggest problem when we point out that, under Nafta, super-governmental commissions, unaccountable to any taxpayers, will be able to enforce and “upwardly harmonize” ever greater environmental and labor regulation standards against the wishes of the citizens of each country. The reply of the pro-Nafta people is that these are scare tactics, that these enforcement provisions are really petty and minor – nothing to worry about. Well, let’s consider the crucial enforcement provisions that Nafta and its side agreements hand over to these supra-national commissions. Tony Snow and Steve Chapman assure us that these provisions are petty and meaningless. But on the other hand, Kathleen Rogers, counsel to the savvy environmentalist Audubon Society, supports Nafta precisely because of these enforcement provisions. Most important, Clinton’s own Trade Czar, Mickey Kantor, assures one and all that under Nafta, “no country in the agreement can lower its environmental standards – ever,” and he applies that assurances of all-out enforcement to labor regulations (e.g., labor laws, workplace standards, minimum wages) as well.

So, if there’s a difference of opinion on the strength of enforcement between Snow and Chapman on the one hand, and Mickey Kantor of the Clinton administration on the other, whose interpretation do you think will win out?

There is only one sensible interpretation of these “free marketeers”: that they are serving as a rather feeble figleaf for the naked seizure of power by international statism. To return to the $64 question: why are they investing so much passion in this effort?

Here is a possible clue to this puzzle. Take this seeming anomaly. On the one hand, in Annex 602.3 to Nafta, the allegedly “free-market” Salinas government of Mexico “reserves to itself,” in no uncertain terms, all possible provision of and investment in every aspect of the exploration, production, or refining of crude oil and natural gas. And yet, despite that grim fact, the heads of both the Natural Gas Supply Association and the American Gas Association, express their great enthusiasm for Nafta. As President Michael Baly of the American Gas Association puts it: “The AGA supports Nafta because it would benefit natural gas energy, equipment, technology, and services trade with Mexico and Canada.”

Oh? How can this be, if the Mexican government insists on socializing all aspects of oil and natural gas? Methinks we can smell a rat. It is not generally known that the most enthusiastic advocates of socialized energy production in the case of electricity, in the 1930s – of Boulder Dam, TVA, etc. – were the private electric utility companies. For the government built the dams, provided the electricity at cheap rates subsidized by the hapless taxpayers, and then resold that electricity to the private utility companies, who benefited from government-subsidized primary electricity. The private energy middlemen reaped the profits.

There is a vital lesson here: much of Big Government, much of the welfare-interventionist State, is pushed by private businesses in order to force the taxpayers to subsidize their own costs. (Just as in the even more flagrant case of military industries, the government provides contracts at whatever cost plus a guaranteed profit.) In short, business groups don’t mind socialism at all when the government is socializing their cost.

So may it not be true that American natural gas companies expect to benefit by purchasing gas, whose cheap production will be subsidized by the unfortunate Mexican taxpayer? And doesn’t this provide a lesson about our own “free-market” institutes and pundits, many of whom are subsidized heavily, past, present or hopefully in the future, by Wichita, Kansas, oil billionaires Charles and David Koch, whose mammoth privately held Koch Industries concentrates on the transportation of oil and natural gas? Query: Does Koch Industries – which in November 1992 purchased 9,271 miles of natural gas pipelines to Mexico for $1.1 billion – expect to benefit heavily from Nafta? And so such expectations account for the passion, for the fervor, of those persons and institutions who form part, in reality or in hope, of the giant Koch Machine?

As for those free marketeers not in the Koch network, how much of the massive Mexican government lobbying in Washington is funneling moolah into these institutions? Let us not forget that part of “free-market” Nafta involves an estimated $20 billion of foreign aid which the conned U.S. taxpayers will be pouring into the coffers of the Mexican government. How much Mexican lobbying, and how many of the possible bribes, are a down payment on this promised boodle?

If we really had a press and a media responsive to the American people not to the malignant power elite, these questions would be investigated, and fast. In the meanwhile, we should follow our noses, and apply to the “free-market” and “free-trade” protestations of these worthies a liberal dose of salt. How many times will we be fooled until we realize that it is concrete policies, not cheap and cloudy rhetoric, that counts?

The Best of Murray N. Rothbard