Monday, March 30, 2009

The USA: One big free trade zone

Via Carpe Diem I saw that Don Boudreaux recently noted that the US is basically one big free trade zone. While not a new argument it is one that bears repeating:
Practically speaking, there is free trade throughout the United States. My family and I (in VA) routinely buy wine from California and Oregon, oranges and lemons from Florida, computer software from Washington state, maple syrup from Vermont, peaches from South Carolina, television newscasts from New York and Atlanta, lumber from Alabama, spicy sauces from Louisiana, crabs from Maryland. The list is long.

And yet no one, not even Lou Dobbs, insists that the Boudreaux family would be richer if only the government in Richmond could find a successful way around the U.S. Constitution and managed to slap stiff tariffs on California wine, Florida citrus fruits, cajun seasoning from Louisiana, and you name it.

Surely the burden of persuasion is on those who would insist that each American would be more prosperous if only his or her state were better able to restrict trade with citizens of other states. If this burden of persuasion cannot be met, then the case for free international trade is pretty solidly established.

Anyone skeptical of free trade must explain why political borders are economically relevant. With the exception of pointing to (mostly rather vague and poorly considered) national-defense issues, protectionists have never managed -- and I dare say never will manage -- to impart genuine economic relevance to political borders.

Because all reasonably prosperous countries today impose no, or only very few, internal restrictions on trade, two facts stand: (1) free trade is in fact quite common, and (2) free trade is beneficial.
Indeed, and don't for a minute think that companies don't leave for other states just like they leave for other countries because wages are cheaper. Consider the textile industry, which has its U.S. beginnings in New England. Eventually, however, the industry moved to the South to take advantage of cheaper wages. Those jobs are now being transferred to places with even cheaper wages such as Central America and China.

To me the curious thing is why free trade critics such as Lou Dobbs or Pat Buchanan don't criticize the shift in jobs from one state to another, but they become apoplectic when the jobs go to another country. If I live in Massachusetts and lose my job to some place with cheaper wages, it really doesn't make a difference if it is to another state or another country. Just because the person who gets the job shares the same passport as me shouldn't be any consolation. Yet -- as Boudreaux points out -- no one is advocating imposing trade barriers between U.S. states. If trade barriers between states aren't a good idea then why do barriers between countries make any more sense?

Free trade makes sense from not only a utilitarian perspective but from a moral standpoint as well. Protectionism promotes that idea that we are not individuals but members of a collective, whose welfare we should be more concerned with than that of other collectives. This is nonsense. We are primarily individuals. If I choose to buy something from someone in another country it is no one's business other than myself and that person. Just as I shouldn't be prohibited from buying a car from Japan I shouldn't be forced to buy one from the U.S., simply because the people who make it live in the same country as me.

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