Tag: free trade

Open borders theory failed

Considering how badly mainstream economics has failed with even a partial implementation of the free movement of people, imagine how bad it would be if the globalists ever got their way and established a borderless world:

  • Immigrants make up 13 percent of the US population and 17 percent of the workforce. 
  • The number of Americans not in the labor force last month totaled 94,103,000.

It’s all there in Cuckservative, specifically, the chapter on economics and immigration. Free traders, you are wrong. There is no need to resort to quoting Smith, Ricardo, Hazlitt, or Mises. I know them better than you do.

The fact of the matter is that their theory was put to the test. And it failed. They are every bit as wrong in that particular regard as Marx and Keynes and Friedman were about the Labor Theory of Value, the General Theory, and monetary theory.

For decades, people opined about free trade and the free movement of peoples based solely on theory. Now, we have sufficient data to assess their predictions, and contrary to what many of us expected, (and I include myself in this regard), the free traders turned out to be completely wrong.

That doesn’t mean that autarky is the correct answer or that there are not significant problems with government-limited trade, but free trade has not only impoverished the nation, the free movement of people element has already put a number of nations in risk of extinction.

The benefits of foreign labor are a lie

In Cuckservative, John Red Eagle and I conclusively demonstrated, using official government statistics, that immigrant labor is a net negative to Americans and American workers. Others who are looking into the subject are reliably finding that the importation of foreign labor is harmful:

Last year, thousands of American companies won permission to bring a total of more than 150,000 people into the country as legal guest workers for unskilled jobs, under a federal program that grants them temporary work permits known as H-2 visas. Officially, the guest workers were invited here to fill positions no Americans want: The program is not supposed to deprive any American of a job, and before a company wins approval for a single H-2 visa, it must attest that it has already made every effort to hire domestically. Many companies abide by the law and make good-faith efforts to employ Americans.

Yet a BuzzFeed News investigation, based on Labor Department records, court filings, more than 100 interviews, inspector general reports, and analyses of state and federal data, has found that many businesses go to extraordinary lengths to skirt the law, deliberately denying jobs to American workers so they can hire foreign workers on H-2 visas instead….

At the same time, companies across the country in a variety of industries have made it all but impossible for U.S. workers to learn about job openings that they are supposed to be given first crack at. When workers do find out, they are discouraged from applying. And if, against all odds, Americans actually get hired, they often are treated worse and paid less than foreign workers doing the same job, in order to drive the Americans to quit.

What’s more, companies often do this with the complicity of government officials, records show. State and federal authorities have allowed companies to violate the spirit — and often the letter — of the law with bogus recruitment efforts that are clearly designed to keep Americans off the payroll. And when regulators are alerted to potential problems, the response is often ineffectual.

I know it’s painful for the devotees of free trade, who love nothing better than to compare 21st century analyses to 18th century dogma, to admit, but the increasingly undeniable empirical reality is that free trade, and the free movement of labor, are about as Marxist, globalist, socially destructive, and economically harmful as Communism.

I’ve read every single defense of free trade that I can find. None of them, not a single one of them, holds up. And as for those who babble childishly about a protectionist government picking winners, as if that suffices to make a rational case, what on Earth do they think is happening in the USA and in the EU now?

All that free trade accomplishes is that it allows governments to pick winners from around the world rather than from inside their own borders. And the winners are those who are willing to pay the most for the privilege, which is why the dominant figures in the U.S. media are a) an Australian and b) a Lebanese based in Mexico.

An invitation

A few folks have said that they felt the economic chapter was the weakest part of the book, which I find absolutely fascinating as I have yet to hear anyone even begin to present the first glimmerings of a case against the key concepts in it beyond the usual “free movement of labor is not free trade”, which is observably false.

So, this is an invitation to anyone that wants to take me on; critique the chapter and I’ll post it here and respond to it. Declare your intentions in the comments, and if several of you are interested, you can even join forces and work on it together.

Bring it on. As a former free trader, I would very much like to be proved wrong.

Counter-Currents interview

A transcript of my interview with Greg Johnson of Counter-Currents:

GJ: How would you describe your political philosophy and who are some of the intellectual influences on its formation?

VD: I would describe myself as a Christian Western Civilizationist. I’ve been a libertarian for a long time. I was briefly even a card-carrying libertarian. But I was always more of a small L libertarian rather than a capital L one. Mostly because there were certain amounts of libertarian dogma that didn’t quite work out in the real world. Then as time went on it became readily apparent to me as I traveled around the world, as I lived in different countries, as I learned different languages, it became apparent to me that the abstract ideals that we often tend to follow in America in particular are not really relevant to most of the world.

I was being interviewed by a reporter from Le Monde in Paris about two months ago and he had absolutely no idea how to even describe the concept of libertarian to his readers. That’s in France, which is at least Western civilization and so forth. Trying to have a conversation about that sort of concept in Japan or China is just totally meaningless. So, that’s when I really became more cognizant of the importance of the nationalist element.

I think that just as Stalin found it necessary to modify international socialism for the Russians and just as Mao found it necessary to modify international socialism for the Chinese, it’s necessary for every other ideology to also understand that there are nationalistic, tribalistic limits to the abstract application of those ideologies.

GJ: That’s interesting. I’m an ex-libertarian myself. I was not a card-carrying libertarian, but I subscribed to Reason magazine and read lots of Ayn Rand and Hayek and Mises mostly when I was an undergraduate. There were things that led me away from that.

Two books in particular. First, I read Thomas Sowell’s A Conflict of Visions and the other was Céline’s Journey to the End of the Night, which basically destroyed my liberal optimism about humanity.

What are some of the things that you think don’t work about libertarianism? You said that some of the abstract libertarian dogmas just don’t work, so specifically what are those?

VD: Well, the most important one, as we are now seeing, is the free movement of peoples. What really changed my thinking and it was a process, you know, it wasn’t an immediate thing, although it was a fairly quick process now that I think about it . . . I grew up on Milton Friedman. My father had me reading Free to Choose when I was fairly young, and so I was a big free trade dogmatist and around the time of NAFTA and all that sort of thing I could recognize some of the problems but I bought into the line that the problem is that it’s not real free trade. It’s a free trade agreement, but it’s not real free trade.

Then I read a really good book by Ian Fletcher, and he directly addressed the concept of Ricardo’s comparative advantage, and he really destroyed it. I think he had something like seven major problems with it, and that got me interested, so I started looking into it. I’m very fortunate in that I have a pretty active and intelligent blog readership and they really like to engage and they have absolutely no respect for me so they’re quite happy to argue with me.

Most of them were free-traders as well so we ended up having an on-going two or three week debate about free trade, and it got pretty detailed to the extent that I went through Henry Hazlitt’s entire chapter on free trade just to look at it critically rather than just reading through it and accepting it. Just looking at the arguments. I found that the free trade arguments were just full of holes. Not just Ricardo’s, but also Hazlitt’s. That’s what got me realizing that Ricardo’s argument was totally dependent on the idea that capital could move but labor couldn’t and so what that got me thinking about was the fact that a libertarian society – even if we could convince everyone in the United States that libertarianism was the correct way to approach things – would rapidly be eliminated by the free movement of peoples as people from non-libertarian societies, people from cultures where they have absolutely no ideals that are in common with the Founding Fathers or with libertarian ideals, would rapidly be able to come in and end that libertarian society in much the same way that the Californians have gone into Colorado and completely changed the political climate there.

So, Ian Fletcher’s book is what really triggered that whole shift in thought process. Now I look at the concept of the free movement of peoples, free trade, and those sorts of concepts with a considerable amount of skepticism. Of course, in Europe we’re seeing some of those problems related to the idea of the free movement of peoples just as you see it in the States with the Central Americans coming across the border.

Read the rest of it there. One factual update: the landmark Martin van Creveld essay mentioned will not be appearing in Riding the Red Horse Vol. 2 since I made the mistake of showing it to Jerry Pournelle, who promptly stole it for There Will Be War Vol. X.

The price of free trade

Remember when the idea was that offshoring all the manufacturing jobs would lead to better, higher-paying jobs in technology? Yeah, about that….

The IT workers at Cengage Learning in the company’s Mason, Ohio offices learned of their fates game-show style. First, they were told to gather in a large conference room. There were vague remarks from an IT executive about a “transition.” Slides were shown that listed employee names, directing them to one of three rooms where they would be told specifically what was happening to them. Some employees were cold with worry.

The biggest group, those getting pink slips, were told to remain in the large conference room. Workers directed to go through what we’ll call Door No. 2, were offered employment with IT offshore outsourcing firm Cognizant. That was the smallest group. And those sent through Door No. 3 remained employed in Cengage’s IT department. This happened in mid-October.

“I was so furious,” said one of the IT workers over what happened. It seemed “surreal,” said another. There was disbelief, but little surprise. Cengage, a major producer of educational content and services, had outsourced accounting services earlier in the year. The IT workers rightly believed they were next.

The employees were warned that speaking to the news media meant loss of severance. Despite their fears, they want their story told. They want people to know what’s happening to IT jobs in the heartland. They don’t want the offshoring of their livelihoods to pass in silence.

The Web-based workers that the Cengage employees are training to take over their jobs are believed to be in India. Cognizant applies for thousands of H-1B visas annually, and is one of
the top three users of the visa, according to government data. Cengage
employees reached for comment didn’t know what visa, if any, the
contract workers in their offices were using.

There are four things you need to keep in mind if you are an ardent free trader:

  1. The arguments justifying free trade have always been entirely theoretical, not empirical. In this way, they are no different than the incorrect pre-scientific logical conclusions that were subsequently proven to be false by modern science. At the time they were formulated, inexpensive shipping, the free movement of capital, and the mass movement of labor were unknown.
  2. The USA historically enjoyed its fastest periods of economic growth under protectionist, restricted-immigration periods.
  3. The post-WWII growth was not the result of any trade or economic policies, but a positive application of Broken Window theory. Every other industrial nation had its industrial capacity smashed, so the US benefited from an intrinsic infrastructural advantage for around 25 years.
  4. Free trade levels all prices throughout the market. That’s why a cashier in Miami gets paid about the same amount as a cashier in Portland. Even if free trade increases the overall amount of global economic growth, in doing so, it necessarily reduces wages and standards of living in the wealthier nations to bring them more in line with the wages and standards of living in the poorest nations.

Look, I was an ardent theoretical free trader for decades. I know the pro-free trade arguments better than you do; my father gave me Free to Choose to read when I was ten years old. But the fact is, the theoretical arguments are incorrect; the conclusions their logic predicted have turned out to be observably wrong.

And perhaps you remember what I wrote about how half of all young Americans will have to leave the country in order to find work under a true global free trade regime?  The stage for that is already being set.

Offshore outsourcing is having “a fairly strong impact” on IT employment, said Janulaitis. Students coming out of college are facing trouble starting a career “and a lot of that is driven by jobs that are taken by non-U.S. nationals in our economy, and a lot of that is H-1B [visa holders],” he said.

The illusion of knowledge

Now, I like Clark of PopeHat, but a challenge is a challenge. And one of the lures I find most irresistible is the cocksure breeziness of the man who thinks he knows what I know perfectly well he does not know. The fact is that no one who thinks “David Riccardo” is a reasonable response to a comment about immigration knows anything about economics. Or, for that matter, free trade.

James Thompson @JamesPsychol
Immigrants only benefit locals if they are better than the local average in ability and character, & make greater contributions

ClarkHat ‏@ClarkHat
The jury finds you guilty of economic ignorance and sentences you to read David Riccardo. 

Casher O’Neill @CasherONeill
@ClarkHat Do not invoke the sacred writings of Ricardo, that will get @voxday on your @@@ if he notices. 😀

ClarkHat ‏@ClarkHat
Vox can attack me on economics if he wants; I’ll fight back.

First, however, I will correct Mr. Thompson and observe that immigrants in sufficient numbers present a significant problem if even they are “better than the local average in ability and character”. Consider the British in India, for example. If immigrants are inferior, they drag the invaded nation down. If they are superior, they tend to set themselves up to rule over the natives in their own interest and at the natives’ expense.

Second, David Ricardo IS economic ignorance. Ricardo believed in a) the cost-of-production theory of value, which is a precursor of Marx’s Labor Theory of Value, b) the price-of-corn theory of profit, and c) the theory of comparative advantage, all of which are widely recognized by modern economists to be intrinsically false. His mode of argument was so hopelessly inept that Joseph Schumpeter even mocked it in his epic History of Economic Analysis.

His interest was in the clear-cut result
of direct, practical significance. In order to get this he cut that
general system to pieces, bundled up as large parts of it as
possible, and put them in cold storage – so that as many things as
possible should be frozen and ‘given’. He then piled one simplifying
assumption upon another until, having really settled everything by
these assumptions, he was left with only a few aggregative variables
between which, given these assumptions, he set up simple one-way
relations so that, in the end, the desired results emerged almost as
tautologies…. The habit of applying results of this character to
the solution of practical problems we shall call the Ricardian Vice.

Third, David Ricardo did not take immigration into account when he copied the concept from Robert Torrens, who introduced the theory of comparative advantage in An Essay on the External Corn Trade. As Ambrose Evans-Pritcher noted:

Ricardo described a world where free trade in goods was opening up, but labour markets remained largely closed. This is no longer the case. Globalisation bids up the wages of high-skilled engineers or software analysts towards international levels wherever they live.

Since Ricardo never took immigration into account, we shall do so on his behalf. I direct your attention to his original postulates from On the Principles of Political Economy and Taxation.

Unit Labor Costs

Britain 100 cloth 110 wine
Portugal 90 cloth 80 wine

In the absence of transportation costs, it is efficient for Britain to produce cloth, and Portugal to produce wine, since, assuming that the two goods trade at an equal price (1 unit of cloth for 1 unit of wine) Britain can then obtain wine at a cost of 100 labor units by producing cloth and trading, rather than 110 units by producing the wine itself, and Portugal can obtain cloth at a cost of 80 units by trade rather than 90 by production.

Now we introduce immigration into the equation and the free movement of labor. Obviously both wine and cloth laborers will move to Britain, since they believe they will receive an 11 percent raise and a 38 percent raise respectively. However, once they get there, the doubling of the labor supply in Britain this immigration causes will quickly cause the price of labor to fall. It will fall considerably.

This is great for Britain! It can now produce the same amount of cloth as before for price of only 47.5 units of labor and the same amount of wine for 47.5 labor units as well, thereby obtaining an equal quantity of both wine and cloth for less than what it used to cost to produce the wine alone. This will vastly increase profits in the British cloth and wine industries, as well as creating a windfall for the financial industry investing those profits! Granted, this is because wages have fallen by 50 percent; other consequences include how the newly unemployed British workers go on the dole and turn to crime, the new Portuguese immigrants are heavily inclined to vote for the Labour Party thereby imbalancing the British political system, and British women begin bearing half-Portuguese children and lower the average IQ of the next generation from 100 to 97.5, but those are mostly non-economic factors and therefore don’t count as far as economists are concerned.

They sound suspiciously familiar, though, don’t they?

In conclusion, we can see that open immigration and the free movement of labor is not only economically desirable, but is vastly preferable to comparative advantage by a factor of 105/200 and to autarky by a factor of 105/210. QED. What else can we conclude from this exercise of the Ricardian Vice?

  1. Ricardo implicitly postulated the immobility of labor.
  2. The mobility of labor not only fails to disprove comparative advantage, but actually strengthens the case for even freer trade… at least if you’re in the higher labor cost country and you only look at the labor costs.
  3. The mobility of labor will eliminate international trade since everyone will be living in Britain.
  4. The mobility of labor operates to the detriment of labor.
  5. Ricardo’s logic is remarkably stupid.

But my argument against free trade does not rest on David Ricardo’s intellectual corpse. It is not even, strictly speaking, economic in nature. This is the four-step Vox Day Argument Against Free Trade.

  1. Free trade, in its true, complete, and intellectually coherent
    form, is not limited to the free movement of goods, but includes the
    free movement of capital and labor as well. (The “invisible judicial line” doesn’t magically become visible simply because human bodies are involved.) 
  2. The difference between domestic economies and the global
    international economy is not trivial, but is substantive, material, and
    based on significant genetic, cultural, traditional, and legal
    differences between various self-identified peoples.
  3. Free trade is totally incompatible with national sovereignty,
    democracy, and self-determination, as well as the existence of
    independent nation-states with the right and ability to set their own
    laws according to the preferences of their nationals.
  4. Therefore, free trade must be opposed by every sovereign,
    democratic, or self-determined people, be they American, Chinese,
    German, or Zambian, who wish to preserve themselves as a free and
    distinct nation possessed of its own culture, traditions, and laws.

Rethinking their strategy

The CDC belatedly admits the obvious:

The Centers for Disease Control and Prevention (CDC) on Monday said it is starting to “rethink” its Ebola strategy after the first-ever US transmission of the virus put a “relatively large” number of healthcare workers at risk.

“We’re concerned, and unfortunately would not be surprised if we did see additional [Ebola] cases in healthcare workers who also provided care to the index patient,” CDC Director Tom Frieden said.

A nurse at Texas Presbyterian Hospital in Dallas was diagnosed with Ebola over the weekend, raising questions about the procedures that were followed when treating Thomas Eric Duncan. The nurse’s infection “doesn’t change the fact that it’s possible to take care of Ebola safely, but it does change, substantially, how we approach it,” Frieden said.

Notice that phrase: “it’s possible to take care of Ebola safely”. Possible. You are permitting Ebola victims to freely enter the USA because you MIGHT be able to safely take care of them?

They’ve already been wrong once. Who wants to bet his life that they’ve nailed it this time? They might have, but then again, perhaps not. What they need to rethink is preventing anyone who has been in Africa within the last two months from crossing any Western border.

See how useful borders can be, at least in theory, free traders?

Inequality and Piketty

Yesterday I was asked about Piketty’s argument that free trade reduces income equality. This requires an answer on several levels.

First, income inequality matters. The Keynesians claim that it doesn’t matter if Peter owes Paul or Paul owes Peter. This is observably false, just as it matters if there is a middle class that is economically active versus an economically dominant aristocracy that is primarily interested in conspicuous consumption. This isn’t some sort of new Levellism, merely a logical observation of fact.

Second, this is a literally Marxist perspective. It may surprise some to know that free trade is a Marxist position. Look it up. Free trade is not anticommunist, it is one aspect of communism.

Third, like most Marxist principles, this is wrong. Opening up an economy to additional outside players, most of whom have proved to be the apex predators in their native economies, means that the average individual’s income is going to go down because the outside player is not going to enter the market if it cannot extract sufficient resources to justify their capital expenses in penetrating it.

Now, I haven’t read Piketty and I see no reason to do so in the future. This is because he is attempting to sell a concept that is neither new nor true.

The truth about free trade

Free trade advocates are very often dishonest and attempt to claim that while they support the free movement of capital and goods, they do not support the free movement of people. But this is nonsense, because the free movement of people is intrinsically necessary for free trade in both labor and services. Furthermore, observe that the European Union’s “Four Freedoms” are explicit on this point:

One of the “Four Freedoms” of the Single Market is free movement of persons – along with free movement of capital, goods and services. Having a Single Market means having free movement of products (goods and services) and factors of production (capital and labour). Saying the UK wants to restrict free movement of persons but stay in the Single Market makes precisely as much/little sense (and for precisely the same reasons) as would saying “The UK wants to impose tariffs on imports from Germany and France but remain in the Single Market” or “The UK wants to impose capital controls on investment into Italy but remain in the Single Market”. Restricting free movement would, in substance, be withdrawing from the Single Market and hence in substance withdrawing from the EU. The substantive question is unambiguous. The only thing left to consider is the semantic question – whether withdrawing from free movement would be called “withdrawing from the EU” or not. Since the EU is the zone of EU citizenship and EU citizenship means free movement, the answer must be “Yes – the UK would not be in the EU”, though we might perhaps still be in some other form of “Europe”.

The second reason it is not mere word games is that many schemes for “withdrawing from the European Union” involve continuing to participate in some other form of “Europe” – e.g. the “Norway option” of continuing to be in the European Economic Area. “Out” hasn’t normally meant “no Europe”, merely “exiting the European Union”. But exiting the European Union is precisely what any form of restriction on the free movement of persons entails, by definition.

Past generations can be forgiven for not grasping that free trade meant the end of national sovereignty and the end of the very concept of “the nation”. They did not understand how inexpensive and easy travel would eventually become. But now we know better. And this is the real reason that “nationalism” has been attacked as  an intrinsic and dangerous evil; it is the strong point around which resistance to the universal pillaging of the global elite’s attempt to construct its vision of Eine Welt, Eine Art, Eine Ordnung.

Patient #2?

A possible case of Ebola in Washington DC:

A patient with Ebola-like symptoms is being treated at Howard University Hospital in Washington, D.C., a hospital spokesperson confirmed late Friday morning. The patient had traveled to Nigeria recently. That person has been admitted to the hospital in stable condition, and is being isolated. The medical team is working with the CDC and other authorities to monitor the patient’s condition.

Shut down air travel from Africa. Now. It’s a good thing this possible case is in DC, as perhaps the disease in the near vicinity will sufficiently alarm Congress to force ObolaObama to finally take action.

And if the CDC wants to avoid panicking the public, perhaps they should stop making statements that make them look like completely incompetent idiots.

Tom Frieden, director of the Centers for Disease Control and Prevention,
on Friday said restricting travel between the U.S. and West Africa
would likely “backfire” and put Americans more at risk of contracting
Ebola…. “Even if we tried to close the border, it wouldn’t work,” the top health official added. “People have a right to return. People transiting through could come in. And it would backfire, because by isolating these countries, it’ll make it harder to help them, it will spread more there and we’d be more likely to be exposed here.”

That’s complete horseshit. The moron may as well have painted a target in his back in the event Americans start dying from a disease that he could have, and should have, prevented from entering the country.