Friday, April 8, 2016

Donald Trump on Trade vs. Bernie Sanders on Trade

How can you tell the two apart?

They are both against free trade, though they say they are not. Neither appears to have any understanding of the law of comparative advantage.

From a recent interview of Bernie Sanders conducted by the New York Daily News:

 I believe that we can and should move to what Pope Francis calls a moral economy...

General Electric, good example. General Electric was created in this country by American workers and American consumers. What we have seen over the many years is shutting down of many major plants in this country. Sending jobs to low-wage countries....

et's just give an example of a corporation that's making money in America, today, but desiring to move to China or to Mexico to make even more money. That is destroying the moral fabric of this country....

by the way, I'm not anti-trade. We live in a global economy, we need trade. But the trade policies that we have allowed to occur, that were written by corporate America have been disastrous for American workers...

 I will stop it by renegotiating all of the trade agreements that we have...

Yeah. Look, these trade agreements, let's be frank. Now, people may disagree with me, all right. My understanding, talking to many economists is, NAFTA, PNTR with China, other trade agreements have cost this country millions of jobs.

It's remarkable how similar on trade Trump and Sanders are. But when Bernie Sanders, the self-proclaimed socialist says it, it becomes much clearer as to how much of a central planning view this type of managed trade. It is a view with no fundamental understanding of the basic tenets of economics that explain why free trade is most beneficial.

But, Sanders is correct in holding his view out as a socialist central planning view because that is exactly what it is.



  1. Robert, since you refuse to actually read well-reasoned arguments against free trade (I have specifically mentioned Chapter 7 of Cuckservative by Vox Day and John Red Eagle, and the so called Law of Comparative Advantage is addressed directly and completely knocked down), how anyone can take your pontifications on the subject seriously at this point is beyond me. Vox has written multiple Amazon best sellers in political philosophy as well a highly-regarded book on economics (Return of the Great Depression). His arguments have changed many minds on the subject. You can ignore him all you want, but that then gives you the appearance of an SJW yourself.

    Free trade is not without serious negative consequences, which you simply refuse to recognize. Cognitive dissonance, anyone?

    I'm going to drop in what I wrote you in a post of yours from almost a month ago:

    Robert, I was with you for decades on the idea of free trade, but the practical reality is that wealthy western countries opening the doors to unfettered trade with countries whose per-capita GDP is a fraction thereof is a bad deal for the western countries. I know you don't believe me. But someone has done the math and logical analysis and proven the point quite cogently. Read chapter 7 (Immigration and Economics) of Vox Day's and John Red Eagle's Cuckservative: How "Conservatives" Betrayed America. Trump's positions on the issue, such as they can be understood, are closer to the truth.

    How does it feel to be on the same side as Karl Marx?

    If the free-traders cannot understand how one nation can grow rich at the expense of another, we need not wonder, since these same gentlemen also refuse to understand how within one country one class can enrich itself at the expense of another…. But, in general, the protective system of our day is conservative, while the free trade system is destructive. It breaks up old nationalities and pushes the antagonism of the proletariat and the bourgeoisie to the extreme point. In a word, the free trade system hastens the social revolution. It is in this revolutionary sense alone, gentlemen, that I vote in favor of free trade.
    —On the Question of Free Trade, Karl Marx, 1848

    1. Even Karl Marx could see free trade benefits the poor in all countries. Is your house adorned with anachronisms?

      Here's the top and bottom 10 countries from the Global Enabling Trade Report, which measures barriers to international trade.

      Top 10 (least trade barriers)

      Singapore, Hong Kong, Netherlands, New Zealand, Finland, United Kingdom, Switzerland, Chile, Sweden, Germany, Luxembourg

      Bottom 10 (10-last)

      Yemen, Mauritania, Mongolia, Iran, Burundi, Burkina Faso, Zimbabwe, Angola,Venezuela, Chad

      Does your capital even lift, bro?

    2. @Shimshon,

      ─ [...] the practical reality is that wealthy western countries opening the doors to unfettered trade with countries whose per-capita GDP is a fraction thereof is a bad deal for the western countries. ─

      Indeed, just like Walmart opening its doors to trade people whose income and worth are a minuscule fraction of Walmart's yearly income has to be terrible for the retail giant.

      ─ [...] the so called Law of Comparative Advantage is addressed directly and completely knocked down [by Vox Day and John Red Eagle] ─

      And it should be my understanding that you accept the arguments from Day and Red Eagle without question, despite the fact that the law is based entirely on sound logical reasoning. But even so, I would imagine that if you are really sincere about accepting their argument, that you are now practicing total economic autarky and are now growing your own food, making your own garments and working the generator that powers your computer, all at the same time, since as you it is not possible for other folk to produce those things more productively than you, obviating the need for trade between you and them.

      But let's suppose I'm being too hard on you and messrs. Day and Red Falcon or whatever and neither they nor you mean there's no such thing as comparative advantage among individuals but among nations, which in that case you will have to explain to me how is it that a person in one nation is precluded from producing a good at a higher profit that you can produce in this nation, while at the same time you are precluded from producing a different good that would yield for you a higher profit than the other person in the other nation. How is it that messrs. Day and Red Meat or whatever were able to argue this?

  2. Robert, existing trade pacts are in fact not "free." You yourself have described how true free trade agreements would look. I for one support both Trump and Sanders'stance against crony capitalist agreements which do little to help American workers and move our productive capacity off shore.

    1. If the existing trade pacts changed to genuine free trade, I expect that the offshoring of American jobs would continue or speed up.

  3. The managed trade that is promoted as free trade is every bit as centrally planned as what Sanders or Trump wants. And yes I realize you are for real free trade but we cannot overlook that option is not on the table. Here in the USA a huge and costly regulatory burden with an uncertain result is put in front of anyone who wants to make stuff without buying numerous politicians and bureaucrats. And that's before taxes. Meanwhile China's market is growing, they have domestic content laws, and from what I understand have a political system that is easier to deal with so long as one chooses a good partner in China or your corporation is large enough to do it on its own. Then Obama and crew decide the USA has to cut CO2 while China will think about it 20 or so years from now. The US government allows goods from China into the US market freely. In a few years you could find your made in the USA products taxed for the energy to create them in the USA but not in China. Where to put your factory to meet global demand for your products becomes glaringly obvious.

    The question is why aren't these incentives, nudges or whatever one wishes to call them not central planning? Trump and Sanders are playing with sledge hammers but fine jewelers' tools the establishment is playing with are doing the same thing, central planning the global economy. The choice is two flavors of central planning, not central planning or free trade.

    1. I really like your post and would also like to add an even more basic form of planning, which is the currency unit itself-is making even more difficult to define what this concept of "free trade" actually is.

      The distortions are so deep and rampant, it's seems almost impossible to know what free trade is and I don't think anyone (here anyway) makes the argument that the distortions of capital markets(and hence trade) aren't occurring, for which we are suffering.

      To have free trade, you must have freedom- freedom from regulations both on business and even on the currency a business uses. Currency manipulation is very difficult without government legal tender laws.

      I can't help but wonder what the make up of our economy would be under a system of truly and totally complete free markets.

      My belief is that when Peter Schiff bemoans the loss of "productive jobs", that he's referring to this distortion...but I don't know that for sure because he just bitches about it without explaining the details from his viewpoint.

      Sure, I can guess based on my own reading and understanding of currency driven capital allocation distortion theory posed by Austrians- but I'd really like to hear it in more detail from him and any counter arguments.

      I was kinda hoping this might have been hashed out between Schiff & RW in a discussion on one of their shows, but it seems their conversations have always devolved into who called who "what" and arguments over whether we are in recession or not- the latter has some value, but there's so much more for these two to discuss even if they don't agree on that issue.

      For instance, I'd like to know if Schiff tracks monetary base- if so, what metrics, if not- why?

      Anyway, back to your point- I like it. Thank you for the post.

  4. Robert, I'd love to see you debate Vox Day on this subject. He will debate anyone anytime on topics like this (I say this without having actually proposed such a debate to him first). You're a smart guy. Are you up for the challenge? If the argument for free trade is so cut and dried as you keep insisting it is (I doubt you've even bothered to read the arguments against as I suggested, short as they are), you would have no problem cutting them down.

    Vox is far more intellectually rigorous than lightweights like Peter Schiff.

    He even published a debate he had with someone last year on the subject of atheism. The fireworks of a debate between you and him on free trade would be massively entertaining. This too would make for a wonderful book.

    If you aren't actually going to debate a worthy opponent, then perhaps you will stop the charade of post after post dismantling straw men of your own construction on the topic?

  5. Well Robert, it looks like someone else beat you to it. Personally, I'd still like to you see you engage in a debate with Vox too.

    Challenge Accepted

    A professor of economics with a PhD from the ultimate monetarist school throws down a gauntlet, albeit in a considerably more civil manner than I've come to expect from my critics:

    I've recently started a podcast called Future Strategist and I would love to interview you by Skype audio. We could discuss political correctness and debate free trade. While I do not support open borders for people, I do support free trade in goods and while I doubt I could get you to change your opinion I hopefully wouldn't underwhelm you as have other economists.

    James Miller
    Associate Professor of Economics, Smith College
    Phd University of Chicago

    I have accepted Dr. Miller's challenge to debate free trade. More details to come.