‘Nations stumble upon establishments, which are indeed the result of human action,
but not the execution of any human design.’
Adam Ferguson, An Essay on the History of Civil Society (1767)
Showing posts with label Protectionism. Show all posts
Showing posts with label Protectionism. Show all posts

02 February 2017

On the Record | Making a Case for Trump’s Entrepreneurial Inaugural Address

Please see my latest wire for The American Spectator, ‘Making a Case for Trump’s Entrepreneurial Inaugural Address’:

PRESS RELEASE

Hell’s Justice Department issues forth this “Devil’s Advocate” brief…

We are compelled to respond to the Institute of Economic Affairs’ policy head Ryan Bourne’s excellent analysis of President Donald Trump’s paean to protectionism in his first Inaugural Address. (See how we devils like to taunt our colleagues in the #NeverTrump department?) In response to the President’s admonition to “Buy American and Hire American,” Bourne replies that “If Trump goes down the protectionist route, he’ll be hurting American consumers and the growth potential of the US economy.”

In general, we agree with Bourne on the benefits of free trade: lower prices, greater and more diverse availability of goods and services, specialization as a facet of the division of labor, greater productivity, and overall more wealth for all. Yet it also behooves us to mention drawbacks to free trade, for those who lose their jobs to foreign competition and who must either take up new employment with lower emoluments, re-train, or relocate to more financially promising communities. Some, sadly, will find all these alternatives unpalatable or impossible to fulfill. In the larger scheme of things, these are short-term drawbacks, but for the individuals and families involved, they are no small matter and the negative impact can be great.

Nevertheless, we Devil’s Advocates can point to two elements of President Trump’s Inaugural that may give free traders consolation.

Read more . . .

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My thanks to editor Wlady Pleszczynski of The American Spectator.

19 January 2017

On the Record | May Takes a Step Forward to British Independence with an Eye Out for Trump

Please see my latest wire for The New York Sun, ‘May Takes a Step Forward to British Independence with an Eye Out for Trump’:

Prime Minister May’s Lancaster House speech outlining the British government’s Brexit agenda takes an impressive step forward in Britain’s withdrawal from the European Union — and keeps a weather eye out for the man who is about to become President Trump. Brexit was “a vote to restore . . . our parliamentary democracy, national self-determination, and to become even more global and internationalist in action and in spirit.”

The Prime Minister opened with an apologia, setting out the reasons for Britons’ June decision to leave the EU and set out once more on their historic path of international engagement. “The decision to leave the EU represents no desire to become more distant to you, our friends and neighbours,” Mrs. May assured. “It was no attempt to do harm to the EU itself or to any of its remaining member states.” The lovelorn will recognize the “it’s not you, it’s us.”

Mrs. May detailed a dozen markers that will guide her Brexit strategy, from negotiating a new free trade agreement with the Union (maintaining and revising those current provisions that work for both parties) to normalizing relations for EU citizens living and working in the UK (and vice-versa), while assuring member countries of Britain’s continuing commitment to mutually beneficial co-operation in matters of continental security, defence, and cultural engagement.

Europe was not Mrs. May’s only audience. While England is the dominant “kingdom” in the Union, the Prime Minister assured the administrations of Scotland, Wales, and Northern Ireland that their concerns and suggestions will be heard at Westminster. Strengthening “the precious union between the four nations of the United Kingdom” is also part of the Brexit framework, as the referendum vote demonstrated the urban-rural divide and the tensions between England and the periphery regions.

Read more . . .

One point raised in the wire, to counter both prime minister Theresa May’s ‘modern industrial strategy’ and President-elect Donald Trump’s ‘America First’ protectionist policy, I believe needs to be especially emphasised: ‘Far better to look to future prospects than past accomplishment and base economic policy on the pillars of property, competition, innovation, and entrepreneurship.’ It is the basis of classical liberal economics and, as the French say, la théorie des débouchés (‘law of markets’).

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My thanks to editor Seth Lipsky of The New York Sun.

18 November 2016

On the Record | Britain Itches for Freedom and a Trade Accord with Trump’s America

Please see my latest wire for The New York Sun, ‘Britain Itches for Freedom and a Trade Accord with Trump’s America’:

President-elect Trump is in like Flynn with America’s most enduring “special relationship.” For though his electoral victory is the cause of protests at home and unease at European capitals, “Mr. Brexit” basks in favorable reviews from the British government. Small wonder. Both nascent administrations swept to office on a wave of anti-establishment populism.

Leading the welcoming party are Brexiteers who spearheaded efforts to take the United Kingdom out of the European Union and regain the sovereign powers it had ceded to the continent. UKIP’s former leader, Nigel Farage, calls Mr. Trump “instinctively Anglophile;” Britain’s foreign secretary Boris Johnson is urging EU colleagues to cease their “collective whinge-o-rama” and accept the incoming American administration. Mr. Johnson, himself New-York born, betrayed affinities for across the pond when he christened the June 23 vote for Brexit Britain’s “Independence Day.”

Prime Minister May, in an address earlier this week at the Lord Mayor’s Banquet, echoed an openness to Trump. Mrs. May, who became premier when her pro-EU predecessor David Cameron resigned following the vote for British independence, began by noting their joint brash rise to high office: she, to “forge a bold, new confident future for ourselves in the world;” Mr. Trump, “who defied the polls and the pundits all the way up to election day itself.”

So 2016 is the year of change politics and “when people demand change, it is the job of politicians to respond.” Mrs. May has reason to sympathize with Mr. Trump, as both will be contending with obstructionists.

Read more . . .

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My thanks to editor Seth Lipsky of The New York Sun.

05 November 2016

On the Record | Trump Awakens the Entrepreneurial Spirit

Please see my latest post for the Quarterly Review, ‘Trump Awakens the Entrepreneurial Spirit’:

Businessmen don’t understand politics. Success in the marketplace doesn’t necessarily follow in the political arena. Early criticism of Donald Trump’s presidential campaign were variations on this theme, from the first day he rode down the escalator at Trump Tower to announce his candidacy. How that tune has changed. Trump’s business acumen may prove his greatest political asset to an America that elects him president.

He may be learning on the fly the science of politics, but Trump instinctively comprehends the craft of intuiting the people’s discontent and offering them an alternative to the Capitol Hill duopoly. Whether on illegal immigration, terrorist threats, endless wars, or disappearing jobs, Trump reads the American mood like the practised pols of old. What he lacks in sophistication he more than compensates with gut instinct.

His outsider status is Trump’s self-proclaimed ace card — he’s not a politician but he understands how they operate, since he’s been negotiating with them all his life as a mega-developer. It’s these transformative skills that he exploits in his White House bid. ‘I’ve been very lucky. I’ve led a great life,’ he told an audience Sunday in Greeley, Colorado. ‘Now I want to give back to the country which has been so good to me.’

Read more . . .

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It may surprise that a student of the political careers of Benjamin Disraeli, Earl of Beaconsfield, and Sir John A. Macdonald would take such a dim view of protectionism. I simply refer you to 19thcentury French economic journalist Frédéric Bastiat’s Economic Sophisms and his rigorous deconstruction of the protectionist argument.

With respect to Donald Trump and his policy of border tariffs, as I suggest in this article (and my two columns to which I link), Trump has offered two alternative methods of addressing American business decline: an end to global currency manipulation and entrepreneurial innovation.

And it is Trump’s appeal to the entrepreneur and to the ‘law of markets’ in which ‘demand is constituted by supply’ where great opportunity lies.

So my approach has been much like Kennedy’s attitude to Khrushchev’s conflicting messages during the Cuban Missile Crisis: ignore the one full of bluster and bellicosity, and focus instead on the note promising hope and a way forward. Take Trump’s protectionist threat as a negotiating bid with other nations (and U.S. industries) while defending and encouraging his call to entrepreneurs.

Conservative essayist Joseph Sobran limned the political divide between nomocracy with its simple plan to enforce the ‘rule of law’ and teleocracy with its vision of the perfect society to foist upon an unsuspecting public.

Donald Trump is, in my view, a nomocrat, as evidenced by his ‘America First’ presidential campaign. As such, he should be criticised when he errs and, if elected President, be subject to the checks and balances of American constitutional federalism; but Trump should also be praised when in the right and given all the support and assistance of the American people.

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My thanks to editor Dr Leslie Jones of the Quarterly Review.

29 October 2016

On the Record | Trump’s Off-Hand Aside on State Competition Opens a Door on Policy

Please see my latest wire for The New York Sun, ‘Trump’s Off-Hand Aside on State Competition Opens a Door on Policy’:

Give The Donald his due: rarely is there a dull moment at a Trump rally. Last night at Geneva, Ohio, he ruminated on his “America First” economic policy. Mr. Trump returned to his protectionist message that companies moving manufacturing jobs out of country would be subject to a 35% tariff at the border. The he added a twist with the potential to reshape American enterprise.

“Our good jobs are going to other countries. So we’re going to stop it. It’s not even hard to stop it. And when they know there is that kind of a consequence, they’re not leaving, they’re staying,” Trump reiterated. Then, almost nonchalantly, he added: “They may go to a different State, and that’s different. Right? But they’re staying, they’re staying in our country.”

In a stroke of ostensibly unconscious genius, he recast a problematic policy into the promise of voluntary interstate competition, shorn of federal coercion. Free marketeers have always chafed at Mr. Trump’s protectionist program, which goes against every laisser-faire tenet of free trade, comparative advantage, and consumer choice. Yet they were faced with the fact that jobs were fleeing to foreign jurisdictions, leaving displaced American workers with few alternatives.

Mr. Trump assuaged these misgivings by focusing on currency manipulation, promising to bring forward legislation against Communist China and marking the Federal Reserve’s own easy money policies for contributing to what he calls in America a “false economy.” The limits of this demarche in enthusing voters were evident. Something more, to capture the imagination and spirit of American initiative, is needed.

Read more . . .

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My thanks to editor Seth Lipsky of The New York Sun.

03 October 2016

On the Record | British Tribune of Trade Could Steal the March on Trump’s Protectionism

Please see my latest wire for The New York Sun, ‘British Tribune of Trade Could Steal the March on Trump’s Protectionism’:

Britain after Brexit is wasting no time announcing to the trading world it is open for business. Minister of International Trade Liam Fox speaks of free trade with an optimism that must inspire envy in America’s market conservatives. Who can imagine government praising the virtues of free trade?

Economic growth, Mr. Fox asserts, is supported by three pillars of market freedom. One is liberty of trade, unshackled from state interference, since “the idea that governments should restrict the right of individuals to exchange their hard work for goods and services at an agreed price in an open market is one of the gravest infringements of personal liberty.”

Two is entrepreneurship, where “competition leads to innovation” that in turn “powers progress.” Three is competitive advantage, whereby markets “specialise in the production of goods where they have the greatest efficiency.”

Read more . . .

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My thanks to editor Seth Lipsky of The New York Sun whose encouragement acts as a necessary inducement to write.

06 February 2012

Mapping the Dangers of Competitive Harm

Last week a Cato Institute report caught my eye, about a French commercial court awarding damages to a map-maker for losses incurred through potential customers’ use of Google Maps.

Serendipitously, at the time I was reading Richard Epstein’s Free Markets Under Siege, where he examines ‘competitive markets and compensation for competitive harms’. In the free market system, sellers compete for buyers, who base their purchases on such qualities as price and quality. If the seller can meet consumer demands, free exchange will occur; if not, consumers will go elsewhere and the seller must either improve his business model or close up shop.

Yet the practice of competitive harm means that successful businesses must compensate businesses that are unable to attract trade — a practice that, if followed to its logical conclusion, means that the dynamic free market must ultimately succumb to the deadened economics of socialism.

Click here for my full argument at the Institute of Economic Affairs.

11 January 2011

The Conflicting Legacy of Sir John A. Macdonald


To-day, 11th January, conservatives in Canada celebrate the birthday of Sir John Alexander Macdonald (1815): principal author of the British North America Act, first Dominion prime minister, and enduring role model of Anglo-Canadian Toryism.

Yet while the general outlines of Macdonald’s legacy is clear, specific beliefs are less certain in the popular mind, particularly when it comes to charting a contemporary course. Thus he has been made the exemplar for every ideological and mutually exclusive position. Poor Sir John A! If he could find his way to a bar—or a bottle—in his present capacity, surely no angelic observer (I refuse to countenance the alternative!) would begrudge him.

With the merger of the Reform-Alliance and the Progressive Conservative parties in 2003, the dominance of the former has resulted in a Macdonald who is portrayed as a proponent of ‘provincial rights’ on the American states’ rights model and of an elected Senate, just to name two offences of the right.

On the left, too, Macdonald has been claimed as the guiding spirit of active government and the social and economic interventions of the welfare state.

Macdonald, his advocates notwithstanding, was by no means a supporter of greater provincial autonomy; every school child knows (or should!) that a unitary government was his first choice for Canada—indeed, his hope was that the provinces would shrink to little more than municipal entities, with the Dominion government eventually assuming the preponderance of authority. Sir George-Étienne Cartier and French delegates at the Quebec conference were instrumental in convincing him that without local guarantees of French religious, language, and cultural rights, there would be no Confederation.

Likewise, while Macdonald may have harboured early favour for an elected upper chamber, the experiences of the united Province of Canada in the 1850s soon soured his sympathies. As his colleague and biographer Joseph Pope remarked in his Memoirs of Macdonald,

It is true that, at an early period of his career, he favoured an elective Upper House, but eight years’ experience of this system was sufficient to change his views, and to convert him into a firm upholder of the nominative principle. Every year since Confederation strengthened the conviction of his matured judgment, and showed him more and more clearly the advantages of the nominative over the elective system. To his mind the chief among the objections to a Senate chosen by the popular vote, was the ever-present danger of its members claiming the right to deal with money Bills, and the consequent possibility of disputes with the House of Commons. The proposal that the provincial legislatures, whose members are elected for purely local purposes, should choose the senators to legislate on matters of general concern, was also objectionable, being opposed to the spirit of the constitution, which confined the local assemblies to a strictly limited sphere of action. He held that the system unanimously agreed to at the Quebec Conference had worked well, and should be undisturbed. A senatorship, in his opinion, was an important and dignified office, and a worthy object of ambition to any Canadian. [1]

The left is guilty of a similar story of dissimulation. The Liberal-Conservative party which Macdonald led in its formative years of existence and in the House of Commons as premier was not the social democratic party that is often betrayed by the sobriquet Red Tory. It was a merger of moderate Liberals and moderate Conservatives who were not, respectively, either Grits or ultra Tories. And, although Macdonald did speak of himself as a progressive conservative, he spoke much as did Sir Robert Peel in his famous Tamworth Manifesto:

...if the spirit of the Reform Bill implies a careful review of institutions [...] undertaken in a friendly temper combining, with the firm maintenance of established rights, the correction of proved abuses and the redress of real grievances,—in that case, I can for myself and colleagues undertake to act in such a spirit and with such intentions.

Indeed, the Liberal-Conservative label did not denote Progressive Conservatism per se, as contemporaneously understood, but simply the merger of like-minded Liberals and Conservatives. Think rather of the Waldorf-Astoria Hotel, or the Cunard-White Star line.

As such, the Liberal-Conservative party may best be considered a mix between Liberals of the ‘night-watchman state’ with the latter appropriating pis aller responsibilities—i.e., in addition to law and order oversight, welfare prerogatives as a last resort, when individual and voluntary associations are overwhelmed—and Tories who still have faith in the ability of the State to foster the Common Good: the ‘National Policy’ and the Canadian Pacific Railway were nation-building exercises undertaken in co-operation between government and the business community.

‘Free Trade’, then, was a fine principle in the abstract, and no doubt true, but the young Dominion—with fledgling business interests, her trade competing with powerful countries with varying degrees of protection and with strong robust industries of their own—was at a distinct disadvantage. Moreover, Macdonald had a nation to build on the North American continent, its very existence an irritant to the American behemoth to the south, whose siren call of wealth and opportunity was siphoning off Canada’s youth and future promise.

And so, in the economic depression of the mid-1870s that struck during the Reform ministry of Alexander Mackenzie, Macdonald raised a motion in the House of Commons:

...the welfare of Canada requires the adoption of a National Policy, which, by a judicious readjustment of the Tariff, will benefit and foster the Agricultural, the Mining, the Manufacturing and other interests of the Dominion; that such a policy will retain in Canada thousands of our fellow countrymen now obliged to expatriate themselves in search of the employment denied them at home, will restore prosperity to our struggling industries, now so sadly depressed, will prevent Canada from being made a sacrifice market, will encourage and develop an active interprovincial trade, and moving (as it ought to do) in the direction of a reciprocity of Tariffs with our neighbours, so far as the varied interests of Canada may demand, will greatly tend to procure for this country, eventually, a reciprocity of Trade (12 March 1878). [2]

If not exactly free trade, nor is it an unflinching nationalist programme: Macdonald would accept economic liberalisation, but only with reciprocal responsibilities. Free market adherents may deride Sir John’s protectionist programme, but its ‘open borders’ under-current can give no comfort to economic autarkists. [3]

Furthermore, if Macdonald wanted to campaign under the banner of social democracy, the works of Marx and Engels and their brethren were undoubtedly at his disposal, as were the theories of Rousseau’s collectivised general will. That he did not do so is an indication that he was first a believer in the free economy, if not necessarily a capitalism left to furrow the field unaided or unscrutinised.

Sir John’s legacy, then, provides challenges for his twenty-first century admirers. While a few of his ideas have fallen into disfavour and desuetude—such as the withering away of the provinces—many more remain resilient and key to Canada’s continuing prosperity. Strong central government with ‘holistic’ oversight over the country; the complementary, symbiotic roles of Ottawa’s upper and lower parliamentary chambers; accommodating and respecting the cultures of the founding peoples, while welcoming all immigrants who aspire to adopt the Canadian identity as their own; fealty to the monarchical principle and to the Commonwealth of shared history and traditions—all this, and more, we owe to Macdonald.

So long as the Dominion endures, Macdonald will live on. A supporter once cheered in a crowd, ‘Sir John A., you’ll never die!’ We echo those sentiments on his birthday.

For more on Macdonald and his legacy, see the Centre for Confederation Politics.

ENDNOTES


1. Joseph Pope, Memoirs of the Right Honourable Sir John Alexander Macdonald, Volume II (Ottawa: J. Durie & Son, 1894), 235 (emphasis added). Nor is this view of upper chambers in the Westminster parliamentary system antiquated; see the Parliamentary Campaign for an Effective Second Chamber and the excellent essay by Lord Norton of Louth, ‘Complementing the Commons’.

2. Quoted in Pope, Memoirs, 200.

3. Any serious student of contemporary Toryism—with its economic roots firmly planted in the soil of protectionism—must reconcile his beliefs with the free market critique of state intervention and its consequences. See Ludwig von Mises’s Planning for Freedom (Indianapolis: Liberty Fund, 2008)—its eponymous first essay plus ‘Middle-of-the-Road Policy Leads to Socialism’.