Friday, August 14, 2015

Ron Paul versus Donald Trump on International Trade

Donald Trump, who is seeking the Republican Party presidential nomination, has stated a number times that he would raise tariffs if he became president of the United States. He also suggests that he would stop Ford from building a billion dollar auto production facility in Mexico.

He seems to think that trade is some sort of nationalistic game where deals must be cut at the government level versus at the level of the businessman, businessman to businessman.

In short, he has no understanding of comparative advantage.

Contrast this thinking with the thinking of Ron Paul. He writes in his new book, Swords into Plowshares (my emphasis):

It is generally believed that a policy of free trade has to be
multinational and managed by an international government
agency and its bureaucrats. This sounds logical to some. But,
as always, any good intentions of economic planners give way
to the authoritarian opportunists. They end up running the
intergovernmental agencies to serve special interests and particular
nations. This “regulatory capture” is true for international
bureaucracy just as it is for domestic bureaucracy.
Free trade should be instituted for the benefit of the country
that desires it, whether others agree to it or not. The populists
and protectionists argue that free trade would destroy the
domestic economy and that everyone else who does not follow
free trade would take advantage of the free trade country by
selling products to it cheaper due the absence of import tariffs
and other protectionist measures. It is true that the more
countries that engage in free trade and sound monetary policies
the better it would be for the world economy. But legislating
through international governmental bodies will not create
the conditions desired since the matter will become a political
football and the special interests will win.
It is of course better when many nations voluntarily follow
free-trade practices. This more optimal possibility, however,
should not prevent a country from unilaterally following freetrade
principles for its own benefit.
Countries that continue to subsidize their exports, as most
countries competitively do today (including through currency
manipulation), become poorer. A free-trade country would become
richer by importing goods that are cheaper due to foreign
subsidies. The money saved can be spent on other items to improve
the overall wealth in the countr
Though free trade may be entered into solely for its economic
benefits, this environment of trade and friendship with
other countries, with all sides benefiting, encourages peaceful
relations among nations, thus reducing the chance of war.
Trade problems and imbalances of payments significantly
contribute to the resentments that frequently lead to war. 
Free trade is very different from the policies the world
follows today. The so-called free traders in Washington who
preach support for NAFTA, the WTO, the IMF, and various
international “free-trade agreements” are often also the ones
who constantly call for sanctions on countries they want to
dominate for various political and economic reasons. Supporters
of these so-called free-trade agreements are disingenuous
since the agreements are nothing more than rules for managed
trade that benefit large special interests...
A country unilaterally can, to its own advantage, adhere to
free trade, commodity money, and noninterventionism in all
foreign affairs...
When will the American people gain enough
self-confidence, economic knowledge, and common sense to
demand that our political leaders come to their senses for the
sake of ensuring peace and prosperity for the people?...
It is a false assumption that a free-trade system would hurt
workers. Today’s system is what is destroying the middle class
wage earner. Jobs are less available, and the cost of living is
skyrocketing. The welfare-warfare system is destructive to the
prosperity of the poor and middle class. It instead serves the
interests of the powerful and rich who reap the benefits of the
inflation, the military-industrial complex, spending, and bailouts.
A sensible foreign policy of nonintervention should include
the freedom to travel to wherever work is available and
wherever there is a demand. There should never be a promise
of welfare for those people who are unwilling to travel to find
work. For too long we’ve been taught that such a system would
hurt the working class. The opposite is true.


  1. Look. American polytricks is a complete charade. Clinton and Bush are “PR” people for the Wall St. Central Banksters (GOLDMAN SACHS AND JP MORGAN) and the CIA. Donald Trump = Ross Perot (or, for that matter, Ron Paul). Do you REALLY think that Donald Trump is going to upset the apple cart? (ie., the STATUS QUO) in any TRULY MEANINGFUL way? Once Ross Perot reached a high-enough level of support to actually become a serious threat to the PTB (Powers-That-Be) his life was threatened and his campaign for President abruptly ended. Thus shall it be with Trump.

    The FACT of the matter is, the entire U.S. Government, and really, the ENTIRETY OF WESTERN CIVILIZATION has been COMPLETELY HIJACKED by “Jews” (really, Ashkenazi-KHAZARS). Need proof? Ok. Here it is. READ THIS:

    X22 Report: Central Bankers Can’t Stop The Economic Collapse Instead They Will Cover It Up

    Read ALL the comments. Click on ALL the links. Read, view, listen to ALL content.

    TRUTH IS TRUTH. It doesn’t care whether YOU like it, or not. It just is. Avail yourself of it, and align yourself with it – or be forever lost. “And the truth shall set you free”

  2. A number of economic fallacies are burned to the ground in this short passage.

  3. Comparative advantage isn't relevant. Under a gold standard, if you were so productive that it were profitable to build in foreign countries, fine. But under the current system, the US simulates being a productive country through debt. Under the gold standard, if you import more than you export, you have a gold-drain until you are forced to increase your exports. Under the current system, the US simply issues more debt, backed by the fact that the US's Arab clients sell oil in USD to Europe. There is no gold drain, and so the debt just keeps getting bigger. At present, the US doesn't have the productive capacity to produce what would actually be required to import what it imports under a gold standard, and it gets worse and worse. That is, the industrial capacity of the country is being diminished as a result (why produce when you can pay in Arab oil coupons?). So when Trump wants to stop US industry from being depleted, he's right - it's a bad thing. The real question is, can Trump be made to understand that the US has to devalue the USD vis-à-vis gold, which would lead to a rapid re-industrialization and equilibrium. I think the answer is yes - compared to any other candidate, he could be convinced. He's practically there, he just needs a push.

    1. There is only a gold drain from the view of the State. Gold is just a medium of exchange. in a exchange like this say i exchange my gold for a PC made by a dude in China (or anywhere else), i do that because the benefits of having a PC outweigh value keeping the gold which belongs to me, not the State.

    2. Indeed, it is the state (the treasury) that has to handle the gold drain. But the treasury is topped back up through taxation of the public. Ultimately, if the public consumes more than it produces, it pays for that consumption. If it refuses to pay through production, it eats through it's liquid assets, then it's capital assets, and then it produces or dies. The state isn't actually the relevant player here - other than the fact that through it's fiat scheme, it has created a proliferation of economic signals that make individual actors take decisions based on a faulty premise. As a result, industrial capacity on a whole has stagnated for decades. The fact that you make rational decisions based on your current set of inputs is besides that point. Once the economic reality hits, you'll face increased taxes, coupled with austerity, and your consumption will necessarily plummet unless you have significant money reserves. In that case, you will be able to invest intro re-industrialization.

    3. then eliminate the treasury!!