Is the "F" for "Free Trade"?

This little note was inspired by the UFC (well, actually it by Rob’s comments regarding the sport). He raised an excellent point. It is one truth among a litany of veritable economic laws that the Obama administration chooses to ignore.

Rob bashfully admitted that he would rather support Georges St-Pierre—a French Canadian—over the American fighter B. J. Penn. Why? The reason was simple. Despite being foreign (French and Canadian at that), he is the better man. He “represents all that is right with the sport of MMA”. My dear friend, you should not be ashamed. Choosing the best regardless of national origin is what fuels international trade and makes us rich.

It is a timeless principle of economics. Two people can produce more than just one; but not just twice as much, a greater amount than that. As each specializes in his art, he becomes better and more efficient than if left to produce many things. We all agree, it’s easier to be a master of one thing than of many. Elementary as it is, that principle makes trade work. The Chinese excel at manufacturing. The Swiss make excellent watches. Germans engineer spine-tingling automobiles. We trade our best for theirs, so literally we get the best of both worlds.

However, the boys on the Hill have a favorite card to play when conditions are right: protectionism. It’s a perennial favorite of presidents and legislators. Of course, they love trade; well they love trading our economic growth to get votes from the auto industry, steel makers, (insert domestic producer here), etc. “Stimulus Pt. Deux” contains some “buy American” provisions that will only keep prices high and make matters worse. There is a litany of problems with this government binge-spending and this is one of them.

Tariffs, protectionism, and over-regulation in general are a net loss for the United States. History quite clearly shows that it wasn’t the stock market crash that sent the entire economy into violent contraction and The Great Depression. It was the Smoot-Hawley Tariff. The Obama administration and his ghastly counterpart in the House, Comrade Nancy Pelosi, have decided to ignore the facts they may find disagreeable to their social agenda. Bush was no hero for the international market either. Any gains made in Free Trade were mitigated by his shameful support of steel, softwood lumber, and even shrimp tariffs.

One can make the argument for tariffs, but not on economic grounds. It becomes a value-based issue. If you can convince the court of public opinion that American steel is so superior to Europe’s that paying a premium is worth it, I’d say more power to you. Then there would be no need for tariffs. But this is impossible. It can’t be done. So instead of letting open and fair competition deliver the best products, the government intervenes and literally forces you to pay higher costs to suit a value judgment rather than free choice.

So Rob, I encourage you to pick the best. And don’t let anyone force you to pay a premium to do it.