Is “Totally Free Trade” On The Horizon?

Service-Verträge-1280x640

Larry Kudlow, the White House chief economic advisor, said in recent interviews (including a June 29 interview with Fox Business) that “free and open trade” is the administration’s ultimate goal.

What is particularly interesting about this interview is that Mr. Kudlow gives credence to Libertarian economics without actually using the term “Libertarian”.  There are discussions of tariffs but the administration’s ultimate goal seems to be having everyone drop their tariffs and trade barriers.

It’s certainly a potentially dangerous game to play.  China is responding to tariffs by building their tariffs.  This could lead to the dreaded “trade war” people talk about.  Certainly, wars do start because one side builds up their arsenal, the other side then builds up their arsenal and ultimately one or both sides decide to stop build and start using.

But wars are also avoided by the build-up.  Both sides keep building their weapons and start spending more and losing more resources as they focus on building.  Other areas of life get ignored because so much energy goes into the build-up.  Until one or both sides yell “Stop!”.  At that point, you hope they not only stop but also start cutting back, or eliminating altogether, the weapons they already built.

Having a world where there are NO tariffs and NO barriers to open trade should be the ultimate goal.  And it does seem to be the goal of many involved in today’s trade negotiations.  Totally free trade, where every country is free to sell their products openly to any other country without obstacles, helps increase demand for workers and allow for freedom in terms of how companies are run and what products they choose to make.

Reports about trade barriers often reach the point of silliness.  We threaten to increase our barriers because of barriers other countries have in place.  We challenge China’s 30% tariffs on electronic products with tariffs of our own.  China then gets angry and threatens more tariffs.  But why did China have tariffs in the first place?  Certain agricultural products shipped into Canada already have high tariffs and now Canada is threatening because we want to meet those tariffs with other tariffs.  But they rarely explain why they had any tariffs in place at all.

Everyone keeps challenging tariffs with more tariffs.  All the while they avoid asking “Who set those tariffs in the first place?”.  There hopefully is an end game on the horizon where everyone just yells “Stop!” and drops every barrier they set in place.

Once again this is an example of how a Libertarian idea is inching forward.  Very few politicians have the courage to call it “Libertarian” outright but that doesn’t change where it comes from.  In the midst of the battle between Democrats and Republicans about which tariffs should and should not in place it will be interesting to see how many opportunities Libertarian politicians will have to shout clearly about the end game “Let’s end the game!!”.

Hopefully this I where all these negotiations are headed.  And it will be interesting to see how often politicians give credit to Libertarians for emphasizing “totally free trade” for decades.

 

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

w

Connecting to %s