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Thursday, September 28, 2017

There is no free trade. But there is a free lunch.

Along the lines of "let no crisis go to waste", the neo-libs are attacking the Jones act, which protects American shipping, as the enemy no. one that has sunk Puerto Rico. Lefties who are "anti-trade" are of course assistants to the undertakers of Puerto Rico. 
This discovery has the additional hedonistic weight that it makes neo-libs the champions of people of color, and the lefties the opponents. 
Now being one of those "anti-trade" lefties, I have to ask myself what I think about the Jones act, of which I was not aware until a week ago. And my response is: the Jones act is suspended in emergencies. And the whole basis of the "anti-trade" lefty opinion is that economic policy should respond to place and circumstances instead of to economic "laws" laid down in Econ 101 books. Ceteris paribus is the equivalent to: how things really are. 

It is interesting that neo-libs have adopted "free trade" as their slogan, and regional trade pacts as their real policy. Thus, discussions of Nafta or the TPP are caught up in the discourse of free trade, when they are exactly the opposite of classical free trade, privileging nation partners. I guess "regional trade pact" sounds a little too much like Warsaw Pact or Axis to make a good slogan.

Freedom has an interesting connotative weight in the popular discourse of economics. If you go to a blog site about economics, you will find that any long comment thread will eventually reveal to you the amazing truth that there "is no free lunch." This old chestnut was often used by Milton Friedman to explain why the government can't do things. On the other hand, everything "free trade" is wonderful. 

Myself, I think Friedman and his ilk got it backasswards. In fact, not only are there free lunches, but all those full faced white econ professors profited enormously from them when they went from their nappies to the first year in college. Yes, Virginia, there is a free lunch. As for free trade, it is far from free - its costs to laborers, and ultimately to society itself (including consumers) as it eats away at the industrial and technical base, is enormous. What it gives to consumers, that lovely group, is conditioned on where those consumers live and what the state of the economy is at that time. Chinese consumers have long "suffered' from the tariffs the Chinese put on foreign goods, and what have they got in exchange? An economy that has grown faster than any economy in history. Poor guys!


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