The Right Must Stop Apologizing for Free Markets

Massive amounts of gold were discovered in California in January of 1848.  Word of the find quickly spread such that 300,000 people from the U.S. and around the world traveled to what became the 31st U.S. state in search of fortune, and maybe fame.

What’s referred to as the “Gold Rush” came to mind recently while reading commentary by Ethics and Public Policy Center senior fellow Henry Olsen.  Seemingly eager to apologize for the free trade that defines free-market capitalism, Olsen oddly contended that “people in low-growth areas do not get information about good jobs elsewhere,” and because they allegedly don’t, Olsen wants the federal government to enhance its information-spreading capabilities so that “an out-of-work coal miner in West Virginia” can be made aware of job opportunities in far-flung places like Wyoming.  Somewhere David Brooks is nodding in agreement….

Back to reality, the capitalism about which Olsen is situationally in favor has long been creating technological advances that keep the American people quite connected.  More to the point, if the “Gold Rush” went viral in the technologically primitive 19th century, is it realistic for Olsen to presume that faulty information flows have West Virginians unaware of opportunities 1,700 miles away in the 21st? 

To be fair, Olsen’s commentary is increasingly common on the right.  Since a protectionist by the name of Donald Trump narrowly beat a candidate who nearly lost to a raving socialist in the Democratic primaries, members of the right are in pandering mode.  Olsen writes that free trade “doesn’t benefit everyone,” and because it allegedly doesn’t, he wants supporters of individual freedom to get by with less of it so that the federal government has more resources to  “reduce the pain many individuals and communities experience” due to trade. 

Not explained by Olsen is how any individual is harmed by having the whole world compete to serve his needs. Similarly not explained by Olsen is how the division of labor that defines trade, and that enables specialization, “doesn’t benefit everyone.” Olsen’s very own commentary indicates that he’s not much thought about what free trade actually is.  In his defense, Washington is thick with theorists.

In Olsen’s case, he theorizes that people in places like West Virginia would be made better off if “Republicans could sponsor” expanded “vocational education” and “training” for “job-specific skills.” Missed by the surely well-meaning scholar is that if he, the Republicans in Congress, or vocational schools had a clue about what “job-specific skills” will be demanded in the future, then they wouldn’t be toiling at think tanks, in government, or in education.  Can Olsen seriously point to members of the three professions mentioned who predicted the commercial aspects of the internet and GPS, and their profound impact on the nature of work? No doubt Congress could spend money on training for “job-specific skills,” but as evidenced by the Gold Rush, internet and GPS, the jobs that people ultimately adapt to are the product of entrepreneurial surprise.  At best, “expanding vocational education” at great cost would amount to schools training individuals rather poorly for the work of the past.

Olsen contends that “free-trade advocates must recognize the need to ensure that as many people as possible don’t get left behind” by free trade, but in calling for a redesign of what he terms a “haphazard safety net” to protect people from the alleged downside of economic freedom, Olsen is quite simply getting things backwards.  Missed by him is that it’s the people and towns least touched by free trade that are hurt the most given the basic truth that they’re the ones least able to do the work that most elevates their unique skills.  Lest we forget, free trade is all about a division of labor that enables specialization.  Far from leaving people behind, it’s those who aren’t able to divide up work who are forced into what's unsatisfying, and by extension, unproductive. Evidence supporting the previous claim is that America’s biggest, most prosperous, and most populated cities (by rich, middle and poor earners) are the ones with the most globalized businesses. Apparently they got word from non-governmental sources that opportunity is greatest where global interconnectivity is.   

Crucial here is that the above is a statement of the obvious.  Economies are merely collections of individuals, and individuals are always and everywhere rendered better off when they’re free to divide up work with as many people as possible, while at the same time benefiting from as many people as possible competing to serve their needs.

Which brings us to a thought experiment that will close this piece: what if every country in the world slapped tariffs on every single American product? Would we Americans be made better off by the imposition of our own tariffs on others, or through maintenance of our existing openness (the average tariff on foreign goods is 1.4%) to the world’s production?

The answers to the questions posed are simple: without a doubt Americans would be much better off if their markets were kept open amid global closure.  And for obvious reasons.

For one, we work in order to get.  We’re not producing for others as much as we’re producing with an eye on exchanging the fruits of our labor for that produced by others.  Keeping our markets open would ensure feverish global competition for our dollars.  Stated simply, free trade is just another term for “daily raises.” Why should American officials injure U.S. citizens just because the unenlightened around the world are needlessly injuring their people?

For two, the self-defeating actions of the rest of the world don’t erase the genius of work that’s divided up.  It can’t be stressed enough that free trade is nothing more than the beautiful process whereby workers massively increase their productivity thanks to their pursuit of specialized work that uniquely boosts their skills.  Free trade enhances the latter, and that’s true even if the U.S. is the only country open to the world’s plenty.  Even then our workers will benefit mightily from the division of work.  The latter will drive immense increases in productivity that will be doubly rewarded with low-cost imports from around the world. If other countries want to tax work’s purpose while subsidizing the purpose of our work, let them.

As for Olsen and the rest of the half-pregnant crowd, they need to stop apologizing for what is unquestionably good for everyone.  Individuals are once again the economy, and individuals by definition gain when divided up work allows them to showcase their unique talents; all while having the world lined up to serve them.