Don’t Call It Free Trade

Because our economic problems are not caused by our ability to buy some goods from people who live under other governments. They’re caused by the people trying to get us to believe that.

Earlier this month, The Atlantic ran an article by Rogé Karma arguing that after nearly half a century of commitment to unmitigated free trade, politicians and thought leaders in both parties are making a historic turn toward protectionism.

This characterization has been gaining popularity in recent years, appearing in articles and reports by both opponents and proponents of America’s supposed protectionist turn.

From The Atlantic article:

Since the 1980s, American economic policy has largely been guided by the belief that allowing money and goods to flow with as little friction as possible would make everyone better off. So overwhelming was the agreement on this point that it became known, along with a few other free-market dogmas, as the “Washington Consensus.” According to this way of thinking, free trade wouldn’t just make countries rich; it would also make the world more peaceful, as nations linked by a shared economic fate wouldn’t dare wage war against one another. The world would become more democratic, too, as economic liberalization would lead to political freedom. That thinking guided the trade deals struck during the 1990s and 2000s, including the North American Free Trade Agreement (NAFTA) in 1994 and the decision to allow China into the World Trade Organization (WTO) in 2001.

There has indeed been a Washington Consensus on trade policy for decades. And it is true that, at least nominally, politicians have described the program they are unified behind as “free trade.” But, as Peter Klein has explained, “free trade” means something very different to politicians than it does to economists.

To economists, and most people outside of Washington, DC, free trade simply means the absence of government interference with trade. But to politicians and federal trade officials, “free trade” refers to complex agreements that only come about after governments negotiate thousands of pages of tariffs, taxes, and subsidies designed to ensure balance between imports and exports. Underlying these agreements is the economically illiterate mercantilist idea that countries benefit from selling goods to foreigners but are made poorer by buying foreign goods.

Add to that the ideology of globalism, which holds that international markets and peaceful cooperation can only come about through top-down global governance enforced and secured by a global superpower, and we’ve arrived at the true Washington Consensus. Our politicians have been unified not over a commitment to let Americans buy what they want and sell to whomever they like, but behind government-brokered and government-subsidized trade enforced by multinational organizations like the WTO, the World Bank, and the International Monetary Fund, all backed by the globe-spanning power of the United States military.

That is not the absence of government meddling in trade that Karma is trying to pretend “dominated American policy making for nearly half a century.”

Some libertarians and free market advocates, like Murray Rothbard and Lew Rockwell, saw the post–Cold War trade deals of the 1990s and 2000s for what they were: efforts to take legislative and judicial authority away from states and localities and centralize it in multinational organizations ultimately controlled by Washington.

Of course this hasn’t gone well for the American people. For decades, our government has prohibited us from buying all the foreign goods we may want or need and forced us to pay almost a trillion dollars a year to fund a massive military. All so it can serve as the world’s police force—further warping the structure of global trade—and to back the global organizations working to regulate trade to the liking of America’s political class.

But, as both Rothbard and Rockwell warned about back in the 1990s, by labeling this interventionist status quo “free trade,” the government has been able to sidestep criticism from most opponents of government intervention. And as the economic destruction wrought by such a system comes to pass—amplified by the destructiveness of Washington’s monetary policy—the American public can easily be tricked into accepting that the problems stem from the fact that we have too much freedom.

The change in trade sentiment that The Atlantic article is picking up on is not a fracturing of the Washington Consensus or some paradigmatic shift in the economic ideology of the political class. It’s just a change in rhetoric that seeks to seize on the rightful but misplaced anger of the American people. As the “free trade” hoax withers away, the precision and clarity of thinkers like Klein, Rothbard, and Rockwell is needed more than ever. Because our economic problems are not caused by our ability to buy some goods from people who live under other governments. They’re caused by the people trying to get us to believe that.



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