MBD responds to David Bahnsen’s reaction to his critique of free trade.
D avid Bahnsen spent an hour of his podcast interacting with my piece, “Why I Will Never Be a Free Trader.” My piece was obviously spoiling for a fight, but I did not get the one I expected, not exactly.
I will try, briefly, to respond to what I take to be the major substantive argument he offered to my piece. David argued that government is not qualified to make protectionist policies — which I will define as setting taxes on imports and fostering native industry with preferments, grants, bounties, public improvements, and regulation — because it does not feel the pain and pleasure of its economic miscalculations the way other economic actors do. They are acting with other people’s money. They lack skin in the game.
That legislators do not feel this pain is true enough. But it’s not conclusive. As I implied throughout my piece, international trade is not just an economic policy, but a political and geopolitical one. Often Alexander Hamilton himself referred to the protective policies of other governments as their “foreign policy.” The argument David offers against allowing government this competence is no different from the military mother’s noting that legislators and presidents are too old to fight, are given more protection by our police and military, and have sons and daughters who typically do not volunteer to fight. No different except that miscalculation in international trade is far less grave than miscalculation in war. Still, government must conduct foreign policy, considering our national interest in diplomacy and military affairs. And still, it must do so in trade policy.
That’s it. What follows from here on out will merely be clarification and self-defense.
The rest of the podcast, while spending a long time characterizing my arguments, inadvertently avoided betraying much of the substance to the audience. For instance, I would challenge a single person who got the gist of my piece from David’s podcast to describe what argument I was making when I said that free trade was, in history, more like a regime imposed by supreme naval powers, and what that meant for us given the rise and fall of the British Empire.
Throughout the podcast we got a definition of “the market” that offers no clarity to the issues I brought up, and no definition of protectionism at all worth interacting with.
Let’s start at the top. I thought it was helpful in my piece to be as clear as possible, and so I summed up my entire argument for protectionism in two sentences.
A global free market is necessarily indifferent to the distribution of goods, skills, technological capacities, and power among nations. Statesman cannot be so indifferent.
I variously restated this throughout the piece and thought David would concentrate on it. David took three brief chances to interact with it.
- Quoting me, he says, “A global free market doesn’t care if America remains the preeminent nation on earth.” He remarks, “Well, that’s certainly true, but an American free market most certainly does” (emphasis added).
- Later, of the first premise, he says, “I think that is untrue, but I think it’s a weird statement.”
- Finally, coming to a more forceful restatement, which imagines America as a soybean farm feeding a Chinese state, he says, “That is untrue, my friend.”
To No. 1, I would say, the American free market is not the subject of my piece, international free trade is, and we will come to that conflation again, briefly. What David never addresses: How is this untrue? The idealist in favor of global free trade believes that production under such a system will go to wherever it is most efficient, where there is a comparative advantage accrued. Or, perhaps a more realist free trader will admit that production of goods will go to where return on capital is highest (a different thing that we should dwell on later) — and that the overall efficiency benefits everyone. The skills and technological capacities that gather around this investment of capital go to those places. There is no reference to geopolitics or nations in it at all. That’s what free trade advocates usually say they like about free trade! It’s fair and doesn’t pick winners and losers, not even among nations.
The second premise, expanded, is that in the realm of geopolitics, a statesman who wants his nation to become or stay preeminent must want for that nation the best technology, the resources to prosecute and win wars over opponents, and the means to protect its own people from predators. To do this it helps to have people with the most valuable skills — presumably in advanced engineering, weapons, industrial design, propulsion technology, shipbuilding, drones, etc. And it must have access to plentiful energy.
I could restate the case for protectionism this way. The protectionist believes that the aggregate goods, skills, and capacities produced by a “global free market” will not automatically be distributed in a way that guarantees or even assists the independence, security, or preeminence of his nation. He resorts to protectionism to remedy this.
Now, I suspect what David had in mind about the “American free market” does factor into our geopolitical strength. That is something I don’t dispute. Having a solid rule of law and open market competition is a good (but not infallible) attraction to investors. And, on the world stage level, we do have that market. But, unfortunately for our long-term power, that market currently says Americans should make potato chips, not microchips. Nothing wrong with potato chips, but they don’t guide missiles or drones.
There is another way out of my argument, which David does not take. He could say that a nation led by statesman could simply opt for free trade and be indifferent to power and preeminence globally. I think it is not a coincidence that, historically, free trade ideology was reimported to America and into the conservative movement from Mittel-Europe after the war, from Austria and Switzerland, both of whom protected themselves thereafter not with tanks and fleets of high-tech fighter jets but a policy of neutrality and armed citizen militias. I admit that a policy of freest possible international trade is probably optimal for such nations that don’t want or need to project power globally, but can satisfy themselves with their friendly neighbors and a much lower level of geopolitical independence. They are relatively well off. Not as much as us, because their power and independence is more circumscribed. They are free and happy. We are free, happy, richer than them, and powerful.
Conceptual Conflation and Rhetorical Protectionism
David began the podcast with a little narration, invoking the dark cloud of opportunism that attends those who have forsaken their former support of free trade for defending Trumpian protectionism. He somewhat spares me from this charge at first and refers to our friendship, which I also value.
However, 13 times he accuses me of using “straw man argumentation.” He began his podcast saying that he knew a straw man was coming when I referred to the post–Cold War globalization consensus, which I defined as the conviction that “government facilitating the ever-freer movement of goods, capital, and people across borders was not just beneficial, but was really something closer to a mandate derived from our understanding of human rights, upon which democratic publics through their governments should be forbidden from trespassing, like the right of free speech or free exercise of religion.”
He says that this is not an argument grounded in any quote or source, that it is a straw man, that I may have run into some advocates who gave an impression of “absolutism,” and that I’m poisoning the well by bringing up immigration. Of course I’m not. I never bring up the immigration issue again as a cudgel. But who are we kidding here? Does David deny that the free movement of people across the EU’s international borders is widely hailed as a giant victory for economic liberalism in the post–Cold War era?
And even though he calls this a straw man, whenever he returns to characterize my arguments, it’s as if he’s dressing up in a straw suit. When I try to justify democratic publics through their governments trespassing upon the free exchange of goods and capital, he says that I am making arguments that “deify the state” and “denigrate the human will and human freedom to a point that is very problematic.” And that he is merely referring to “first principles.” Sounds absolutist to me.
Remember, reader, protectionist policy is merely setting taxes on imports, regulating, and encouraging subsidy for goods that the market doesn’t provide automatically. As I write these very words, NR has an editorial chastising Robert F. Kennedy Jr. for canceling a $500 million grant for mRNA research. We also have a long-standing position of arguing for taxing capital gains at a lower rate than wages. Apparently we think the market isn’t providing enough incentive for mRNA research. Did these subsidies, and setting different tax rates, require “deifying the government?” Of course not.
At one point David offers a definition of the market:
At the heart of the matter, for those who do desire America to remain a preeminent nation and to properly define what it means to be a preeminent nation, it requires us to understand what a market is and pitting the advocacy of free markets against the ultimate aim of a virtuous society, of these conditions for human flourishing. This fundamentally misunderstands the very definition of a market, and therefore allows itself to set rules of debate that are entirely unfair, and in fact, ludicrous, that the free exchange between people does not, in and of itself, speak to what is being exchanged, doesn’t speak to the motives of exchange, doesn’t speak to a number of elements that are important to the well-being of the people involved. Markets are humans acting, and there is an entire ecosystem around it. [Emphasis added.]
I’m not surprised that he adopts Von Mises’s definition of markets as human action. It is a profound one. I’m not surprised that he makes it literally identical to “the virtuous society.” But this definition doesn’t help us solve conceptual problems that protectionists try to address.
Consider (1) the domestic market of the United States, where all the states have broadly similar laws and low rates of corruption, similar patterns of subsidy and investment, moderate environmental regulation, and similar labor laws, operating under one legal currency and governed by a free citizenry.
Now, consider (2) the domestic market of the United States, plus our current level of international trade with China, which has hundreds of millions of unfree workers, a far more aggressive industrial policy, a government-encouraged policy of intellectual-property theft, government control that can enforce a joint domestic venture on most American firms trying to enter it, a government that lies about its environmental standards, and one that is far more aggressive about building infrastructure and delivering energy to sectors of the economy that its geopolitical strategy sees advantage in capturing.
With reference to the definition of markets as “humans acting,” which is the freer market — the first or the second? Which of the two markets is going to be more characterized by capital seeking the most efficient production? Which of the two markets is more likely to be characterized by capital finding a high return on little more than regulatory arbitrage?
It’s that second problem that underlies my theory, that international trade with nations of radically different regulatory regimes, patterns of subsidy, or unfree peoples undermines the virtues by which the market economy justifies itself. It’s also the basis of Dani Rodrik’s globalization trilemma: democracy, national sovereignty, economic integration; you can pick only two.
Instead of interacting with this argument or even presenting it cogently, David’s response diverts into speculation about whether I would apply it to individual states in the United States. I obviously implied “no” by using the word “radically.” And again, no major protectionist has argued this way. Friedrich List argued against German states having trade impediments against each other.
What bothered me most about the accusation that I was using a strawman was David’s consistently raising the rhetorical regulatory standards for my arguments, and then lowering them for Dominic Pino, who wrote the original piece I interacted with, and himself. When I said that Dominic’s definition of protectionism was one no protectionist would endorse or recognize, however, David defends Dominic. I provide it again:
Protectionism is a utopian theory based on the assumptions that individuals and businesses will act contrary to their self-interest, government will act in the national interest, and special interests will stay on the sidelines. Free trade is how you live your everyday life.
David does not provide his audience my offered rebuttal, which I think shows this to be nonsense. Any theory of protectionist policy actually requires everyone to act in their self-interest. Instead he notes I say it is a straw man but defends this definition by saying protectionists “may not be ideologically self-conscious, self-aware.” In other words, we’re incapable of reliably detecting when we are being mischaracterized. So my demand that Dominic substantiate this definition with some or any evidence is dismissed.
When the shoe is on the other foot, however, the demands on my characterizations of free trade ideology rise so high that they can never be met — or even directly discussed. David’s more than a dozen accusations of my straw-manning an argument focus mostly on my contention that free trade ideology grows more naturally out of the classical liberal than conservative tradition, and shares with it the forward-looking, liberal, ideological, historical horizon of fading loyalties to states, religions, and families, as we relate to each other more commercially. David says “no one believes this.”
I want to quote directly. David avers: “When [MBD] goes on to say at the end of that paragraph that free traders are trying to usher in a new kind of life for man defined exclusively by exchange, this is the stuff where again I can forgive him as my friend and colleague, but it’s just a thing no person confident in their own position would say. It is such an absurd straw man argument. Again, I think he knows that.”
In other words, I’m knowingly trying to fool my readers.
David’s method had been going through the piece live on air. I announced my main argument and listed my supporting arguments in advance and then provided substantiation of them in order. He comes upon my attempt to substantiate that contention about free traders believing their policy leads to peace, where I quote something widely attributed to Bastiat and also directly quote Montesquieu and Richard Cobden, whom I correctly characterized as the most famous 19th-century opponent of conservative protectionism. I also said there was evidence of this utopian ideological residue even in Milton Friedman and provided a link.
This, I thought, was the opposite of nutpicking. Cobden is widely called “The Apostle of Free Trade.” Montesquieu is not some crank. Nor is Milton Friedman!
When David comes upon the evidence for my proposition, he waves it off: “I haven’t read it, I haven’t seen it, but if it exists, it’s still a straw man.”
Well, reader, if these are the terms, I certainly cannot win this debate. Again, I was substantiating my view with reference to the most famous advocates of free trade in history.
I could have gone on at much greater length on this point. Norman Angell, the Labour Party MP, wrote a book prophesying the end of major-power war, due to their trading interdependence. It was called The Great Illusion, and it was published in 1909, becoming a famous intellectual embarrassment in just five years. Not that the Great War would disabuse real free trade ideologues. “We make bold to say, ‘Free-Trade has become the only possible peace-maker.’ To those who have a justified horror of an autocratic Pax Germanica, who do not want a Pax Britannica—nor wish for a Pax Americana—there remains one hope, that of the advent of the democratic Pax Economica,” said the social philosopher and entrepreneur Henri Lambert in 1918. Much of this history can be found in a book by that very name, Pax Economica: Left Wing Visions of a Free Trade World. The book tells the stories of “the radical liberals, socialist internationalists, feminists, and Christians who envisioned free traders as the necessary prerequisite for anti-imperialism and peace.” This book also happens to emphasize my point, early in the essay, that historically protectionism was associated with conservatives and nationalists, free traders with liberals and Whigs. Even those free traders who began to identify themselves on the political right, in opposition to socialism, carried on this tradition. “Only strict adherence to free trade and a gold standard would allow prosperity and peace on earth to prevail,” wrote Ludwig von Mises. In an address to a university in the late 1970s, Milton Friedman said, “So in the name of both prosperity and world peace there are few steps that we could take which would contribute more than a complete move toward free trade.” I guess none of this counts as evidence, but my opponents can say literally anything about protectionism — like Dominic’s assertion that protectionism “posits that people need to act contrary to human nature to really thrive and that therefore their desires and preferences must be reformed.” Can we get a quote to substantiate this? No, David says, we don’t have to.
In his original piece, Dominic implied that protectionists, because they aim for their nation to acquire goods sufficient to their needs even if they must do so outside of the operation of the free market’s independent action, in some way are against the “division of labor” — the idea that human beings are cooperative and don’t do every single task for themselves. He spends two paragraphs on this, dwelling on North Korean autarky, which is a doctrine of total national self-sufficiency. North Koreans still practice the division of labor within it. This, of course, has nothing to do with the case for protectionism. I tried to warn against this or demands for “limiting principles” by showing that free trade’s historical critics viewed these as matters of prudence, not principle. The advocates of protection are not for “the most protectionist economy” possible. Many of us, recognizing the efficiency of free trade, are for “the least amount of protectionism” needed to achieve discrete goals. Again, the classical liberal thinks in terms of axioms that follow from his principles. But the conservative views most policy as an expedient, and government as an art. Classical liberals, upon encountering a Tory mind, instinctively view the reasoning as corrupt because it doesn’t refer exclusively back to principles, but reasons from history and experience.
David should have passed over this bit on the division of labor; instead he says on his podcast, “It’s certainly true that not all protectionists are fully against division of labor, but they certainly truncate it. They certainly minimize it and reduce it to something that is far less efficacious.”
But there is not a single piece of evidence that protectionists are against the division of labor. Stating it this way is like saying, “Not all protectionists are against photosynthesis or cellular division.” In what meaningful sense could we be? The error is akin to me saying that I want to erect a shelter, and my opponents huffing that “shelterists oppose the sun, wind, and rain or at least minimize them.” No, by building shelter I’m acting in light of the existence of the elements. By building shelter I’m seeking to redistribute cold, heat, and moisture in a way that is conducive to my comfort and survival. Similarly, a trade protectionist policy can only begin with the recognition that different people and nations have different skills and resources. We intervene to make the distribution more favorable to our nation’s power and survival than would happen under the laws of a market operating freely by its own rules.
Maybe this was said in haste on a podcast rather than considered. But that it comes up from two separate free trade advocates makes me wonder. Do free traders secretly believe that Abraham Lincoln, a self-confessed tariff man, woke up with a barely suppressed panicked anxiety to hunt his own breakfast, felt his own stovepipe hat, shoot for himself every single Confederate soldier, and inspect the ports for contraband with his own eyes? Or if he be the exception, one of the others like Henry Clay, Lord Salisbury, or Disraeli? The idea is silly, no?
With this I resign myself, fully dissuaded from arguing again on this matter with David for a long time. Like Galileo, I bend the knee, but whisper to myself, “Citation still very much needed.”