Free Trade and Freedom Are Under Attack

[In the Rick’s Picks forum, where he is a regular contributor, Mark Uzick is a stickler for getting definitions right, especially when it is libertarian ideas that are under discussion. He describes himself as someone who hates to write but loves to argue. In the guest essay below, he overcomes his distaste for the former to mount a spirited defense of economic freedom, which unfortunately has never been more desperately in need of friends. RA]

Of all the depredations of economic interventionism, one of the most disturbing is protectionism, which is nothing less than a declaration of war on life and liberty. When trading partners are treated as adversaries or exploiters, the next steps are inevitably envy, xenophobia, threats and violent conflict.

When someone says, “There’s not enough wealth to go around,”what he really means is, “There’s not enough wealth to be looted.” That’s especially the case when wealth creators are treated as marginally tolerable misfits and criminals; wealth doesn’t “go around” – it’s created and it belongs to those who create it to be traded for other forms of wealth from other creators.

Some people confuse wealth with resources: Resources are only of value to those who put them to creative/productive use. Our society has little use for creative/productive people or enterprises, viewing them as exploiters/parasites of the poor and ruling classes; whenever possible, we make sure that resources are put off-limits to these “evildoers” – these “exploiters of the environment.” In their Malthusian wisdom they believe that we were robbed of our wealth and resources by nations

emerging from tyranny and moving toward market based reform – that their liberty equals our enslavement and that their creativity/productivity equals our destitution. But this is a perverse perspective because: If we all are free, then there is not only competition for scarce resources, but competition to see who can create the greatest amount of wealth from a given amount of resources, thereby making resources both more valuable and more abundant; and trade between nations a way to multiply wealth as the various forms of wealth production are moved to where they each have the greatest marginal utility.

China Has Saved Us

A big complaint of the protectionists is that the American manufacturing base has been “Shanghaied” to China; but the transfer of the American manufacturing base is the life-line that has allowed American businesses and Americans’ productivity and prosperity to survive in the face of the criminalization of business activity, private property and domestic trade in the new socialist American empire. What good does it do to propose that we fight the results of domestic socialism with more comprehensive international socialism, never thinking to question socialism, but always ready to blame free trade?

That other countries engage in protectionism to enrich the oligarchs is a problem for the people of those countries to solve through the gradual process of liberalization; there’s certainly no reason to emulate them.  But if we care about our liberty and prosperity, we need to liberate ourselves from the stranglehold of socialism on both domestic and international trade, becoming, once more, a living example for the rest of the world to emulate. Competition and trade are mutually beneficial things; our prosperity does not come from trampling the hopes and dreams of others no matter how much relative power and status that some think that will give us. A free America will out-compete any oligarch ridden society, no matter how cheap their labor is kept or how hard they’re whipped to work faster (The belief that slave labor is more productive than free men would be laughable if it weren’t so sad.); and in so doing, will earn respect and friendship, becoming the template for world-wide reform.

***

For seven days’ free access to all of our services, including detailed daily trading recommendations and a 24/7 chat room that draws traders from around the world, click here.

  • Mark Uzick May 26, 2012, 8:01 pm

    Robert, you make some good points, but debate serves to help me form concepts in my own mind or at least helps me to clarify and elaborate them for my personal understanding – it’s up to others whether they choose to use these ideas for their own understanding of my perspective – whether or not they will share it – or as a challenge to their cherished dogmas, causing them, as in Benjamen’s case, to boil over with anger and sputtering rage.

    Debate also helps me to learn from my mistakes and misleading generalizations. Even when I “win” a debate, countering criticism helps me to refine my understanding and broaden my perspective; but what can be more memorably rewarding than to actually “lose” a debate, undergo a shift in my paradigm/s; and that giddy feeling of wonder and delight that comes with a liberating new perspective?

  • Robert May 19, 2012, 5:40 pm

    I use the concept of police as a metaphor – maybe I went a little too deep with that one. You might need to have “imagine” by John Lennon playing in the background as you pontificate the point… 🙂

    As a side- isn’t it fascinating that the federal “cops” (DOJ, DHS) are all up at arms to attempt to strip locally elected sheriffs of their law enforcement authority all over the country?

    Elected officials under attack by appointed administrative beauracrats in DC… makes me wanna barf. What’s next, state governors being declared unnecessary and the Natioanal Guard being “nationalized”…?

    If you are not considering the potential forward consequences of these developments, then all I can say is enjoy your totalitarian future.

    and Mark- I do agree that government is a beneficial human invention – the peaceful and social resolution of persoanl dispute and conflict is a necessary condition to living like grown ups in the real world; and and I also agree that statism is the complete corruption of this rational concept.

    I personally have arrived at the conclusion that justice and liberty die with the instantiation of political statism purchased (or coerced) by those who can buy it (or militarily compelled by those who have all the guns) into a postion of influence over others’ decisions. The societal environment can be labeled whatever you want to call it (fascism, communism, stalinism, socialism,etc…) but it is the faceless pattern of behavior that needs to be identified, and not the populist label du jour.

    and Benjamin- after re-reading your post I am perfectly comfortable granting you patent on the lightbulb. 🙂

    Enjoy your weekend everyone… I’ve got fish to catch. These falling oil prices are making my personal pastime of favor much cheaper to enjoy –

    Mario and Cam- I am enjoying your side-bar about prices, speculation, and the obvious nature of technical chart patterns…

    Have you ever considered that speculation is the by-product of a basic supply/demand imbalance created by the volume of currency units in a system against the number of items/objects that need to be priced in trade?

    As Mark so eloquently points out in the root post, speculation is the process of witholding resources from wealth creators unless they agree to pay an arbitrary markup. Now, possession may indeed me 9/10’s of the law, but like Mark said, resources and wealth are not the same thing. referencing China’s vacant cities is a perfect example of this- an asset unused is no asset.

    I would love to see supply side speculation go the way of the dodo, but in so doing, the derivative futures markets will lose their entire reason for being… a real shame that would be 🙂

    • Mark Uzick May 19, 2012, 8:24 pm

      Robert, you and Rick are the only ones – aside from the few obligatory polite remarks from the more civil amongst us – to voice agreement with my thesis that free trade is an essential requirement for any rational concept of liberty.

      Even though, because of my argumentative nature and love of deconstructing popular fallacies, I chose a topic that was sure to raise the hackles of closet neoconservatives who, for some reason are supporters of Dr. Paul, it’s disheartening to see how frightened otherwise intelligent and well informed people can be by true liberty. Are Americans jail birds? are their hearts really so hardened against freedom? How low will we have to sink before we realize what we’ve lost when we frittered away our heritage?

      Now Robert, I want to thank you for something that I come here for – argument -, but which you make so hard for me to do: I have a bone to pick with you:

      speculation is the process of witholding resources from wealth creators unless they agree to pay an arbitrary markup.

      Speculation is a vital part of how markets operate; the actions of the state and its bureaucratic minions may be arbitrary, but there’s nothing at all arbitrary about taking you own hard earned money and putting it on the line to speculate on your best estimation of the future shortage or surplus of raw materials and resources. This is what allows the suppliers and users of these essentials to hedge their future operations against catastrophic financial losses so they – unlike the managers of Delta Airlines – can concentrate at what they do best. Even more importantly: the research that is the life-blood of the successful speculator cause their actions to make prices rise or fall in anticipation of future needs, thereby sending a vital signal to the suppliers to increase production and hunt for new resources and to the users to conserve, substitute and find more efficient ways to utilize vital resources, thereby averting catastrophic disruptions in the economy.

      Contrary to popular myth, speculation tends to even out the wild price swings; when we do see these wild speculative swings, it’s due to uncertainty created by state interventions and even manipulation by the states’ central banks, yet we make the speculators – just as we make the businessman – a convenient scapegoat. Indeed, no good deed goes unpunished.

      Now, possession may indeed me 9/10’s of the law, but like Mark said, resources and wealth are not the same thing. referencing China’s vacant cities is a perfect example of this- an asset unused is no asset.

      Actually, the stockpiled supplies of refined resources and even the currently unused housing that will be sorely needed for a growing middle class can be thought of as assets; they are not unexploited natural resources. They serve a a convenient way to unload their worthless hoard of Euros and FRN’s for something that has real value.

      Of course this unnatural creation of “strategic” surpluses is a wasteful and inefficient use of capital that reduces the standard of living of their people that would be far higher if they eliminated their protectionist policies, but, given the glut of worthless paper this protectionism has engendered, they have few other options unless they end this protection of their oligarchs’ vested interests in evading competition for their domestic market. An end of protectionism would also help them to avoid a trade war that would be so catastrophic to their economy.

    • Cam Fitzgerald May 20, 2012, 2:35 am

      Well thanks Robert. I have really been enjoying your posts too. The couple above are noteworthy. Makes me feel guilty for getting on your case in the past. Actually this weekends thread has been one of the better ones in awhile. I did not respond to Marks posts though. Way over my head philosophy-wise. Seemed best to just let it go……is that evasion?

      Good luck with the fishing. It’s one of my pastimes although I have not had time this year yet. Getting hungry though!

    • Mario cavolo May 20, 2012, 3:54 pm

      I’ll continue to encourage all westerners to understand that in the mind of a Chinese in China who paid cash for a 2x5x8 inch rectangular bar of gold or a 20x9x50 ft rectangular room of bare walled concrete, either is just a choice as a longter asset store along with their cash bank account, each with it’s own unique set of useable characteristics.

      Which reminds me to note the recent released report showing that NINETY % of Chinese families own their home, with the vast majority being mortgage free. It is a staggering societal reality with implications well worth pondering…

    • Mark Uzick May 20, 2012, 5:43 pm

      Mario, you are mirroring my own thoughts in the second to last paragraph of my reply above to Robert; but I’d really love your perspective on my explanation in the last paragraph as to how this circumstance came to be through injustice and its consequential dangers.

    • Mark Uzick May 20, 2012, 10:48 pm

      No counter reply Robert?

      Yeah, I know you’d just say it’s a misunderstanding or a poor choice of words; that you actually agree with me completely. Arguing with you is like arguing in front of the mirror. I still have hope that one day we can find something to really debate about; and I hope that you will convince me that you’re right.

    • Robert May 22, 2012, 4:18 pm

      Hi Mark-

      I was fishing the past 2 days – your counter-reply was usurped by higher priorities. 🙂

      Your point regarding speculation being a legitimate part of the free market process is valid in my book; but only when said market is ruled by the true reality that when the greater fool fails to materialize, then you have to be accountable for your own past foolishness… That’s why I focused my point on supply side speculation.

      I love your observation about speculation being used to counter the possibility of future supply gluts and surplusses (again- I agree this is valid), but the real point I was focusing on was speculation used to create leveraged currency arbitrage (a point I witnessed first hand this past weekend as I purchased gasoline in Mexico for the comparatively dirt cheap price of 2.78 dollars per gallon, thanks to a multi-year high peso to dollar exchange rate of 13:1, and abetted by Mexican gov’t subsidies on fuel purchases. My boat holds enough gas to fill my wife’s car’s tank 6 times, so after a couple quick calculator moves, I determined it made economic sense to fill the boat and tow it back into the states with a full tank…

      But, back to speculative currency arbitrage and justice…

      A free market must still yield to the authority of uncorrupted justice, otherwise justice simply becomes distorted to strengthen the bias of the politically connected Oligarchs.

      Politics can be purchased for cheap. Justice is just a tad more expensive, but it is seemingly not without price.

      Another question of yours (“Are Americans jail-birds”) also resonates with me following my little weekend adventure. Between my home and the fish, there are 2 border patrol highway checkpoints, as well as the border crossing itself. Over 48 hours I had to validate my US citizenship 6 times to uniformed (battle fatigued actually) Border Patrol or ICE troops- good thing most of them recognize me seeing as how I run back and forth every 6 weeks or so… 🙂

      I must really love fishing. 🙂 (Which I do, especially when the action is as hot as it was this past weekend- we had a BLAST offshore)

    • Robert May 24, 2012, 1:30 am

      “I still have hope that one day we can find something to really debate about; and I hope that you will convince me that you’re right.”

      I find debate to be a corruptive influence on the art of expressive communication. It detracts (or critiques)the artist’s mastery of language as a medium; and language is truly what separates us all, because, while most people seem to equate language with communication, I see the transposition of concept from one mind to another as the true essence of communication. Language is little more than a medium of exchange, analogous to the artist’s brushstrokes and color pallette, if you will…

      To debate a concept requires an attack not on the idea, but on the linguistic construct of the expression; a phenomenon I think both you and Benjamin could reflect upon- because when I frame your seemingly mutual disdain for each other within my own interpretation of your individual viewpoints, you both seem more philosophically similar than either of you would probably care to admit 😉

      I would much rather construct a premise or a thesis and describe it to you, then to engage in a dialog about why the poor are commonly deemed to be stupid, while the rich are commonly deemed to be smart.

      My mind is the only resource I own. How can I justify it as being any more or less valuable than anyone else’s…? There is only one correct answer to the question: I can’t.

      If I seem to possess superior intellectual capital than my mailman, then could that merely be a manifestation of a linguisitic skill that might be easily offset by my mailman’s ability to completely humiliate me as a weekend cement court basketball player…?

      Are my linguistic or intellectual skills somehow superior to his hoops skills? If he should happen to get drafted into the NBA before I finish this post and press the “submit” button, then the answer would seemingly be a resounding “no”, no?

      Debate is a form of waste – sometimes we have to look within ourselves and realize we are never going to fully form the concept, as we understand it, in the other person’s mind. If we could, then Steven Fair could conceivably turn us all into sculptors, and Steven Hawking could turn us all into Quantum Physicists, and my wife could (finally) turn me into her ideal husband 🙂

      And so, when I read things like Cam’s mea culpa above:

      “Some days I write posts that make no damn sense at all. The one above seems to fit that category. Although I knew what I meant I sure didn’t write it sensibly…!”

      I can only chuckle at the fact that Cam and I, despite our deep, fundamental verbal disagreements in the past, do still share a brotherhood in humanity… As do you and Benjamin.

      Above, I said we are all born equal- cold, wet, naked and blind; but I missed one other trait that we all share that is the fundamental anchor of this entire discussion:

      We are born free. Dependent perhaps, but free nonetheless.

      Your freedom is yours to give- it is not for someone else to take. Don’t waste your energy fighting until they come to take what you are unwilling to give.

      Death by a thousand cuts still does not mean death until the thousandth cut, right?

  • Robert May 19, 2012, 7:26 am

    I read all the discussion on this topic, and I see all of you tip-toeing around reality; so I’m going to lay it out for you in bulleted form:

    1) The “wealth” is shifting from those who have no pull with politicians, to those who DO have pull with politicians. Several of you correctly called this a system of “oligarchy”

    2) This Oligarchy (for the most part) does not steal directly from the masses. Instead, they fund the politicians (via lobbying and campaign donations) to enable the politicians to enact the legislation of thievery… You see, theivery is somehow noble when it is the outcome of a parlimentary vote executed by the “servants” of the public. The only thing Robin Hood and his band of Merry Men did wrong was that they forgot to run for elected public office first.

    3) The Oligarchy, in collusion with the politicans, use the popular media to implement a con game – using sleight of hand, falsified/massaged/incomplete data, and outright chauvanism, they convince you that the “public servants” are working in the “public interest” to make your world safer, and to convince you that your vote is the most powerful agent of change you possess. Meanwhile, they continue the process of “re-distributing” your wealth upward toward those whom you assume to already be “too wealthy”.

    There are only two forms of truth – valid, and invalid.

    Do not mistake an invalid truth for a lie. A lie is the deliberate opposite of truth; while an invalid truth is a truth born out of deliberation to be truthful, and yet it can not be reduced to any fundamental and immutable law.

    The world needs police officers. – this is an example of an invalid truth – it is only expressed as truth because conditions warrant it, but there is no immutable law that says one human being HAS to take it upon himself to incarcerate other human beings.

    Valid truth is immutable to the common laws of nature. Gravity pulls things toward the ground, the green color of chlorophyl, and the varying oxidixing potential of solvents based on their relative PH – these are quanitifiable, and uncorruptable truths.

    Invalid truths are the truths we cling to typically because we are conditioned by society to abhor the opposite way of thinking. These truths are very fragile, because they often bend to the will of popular opinion and societal rage. Propaganda, it seems, is still as powerful a tool today as it has ever been.

    We look to assign blame. Many of you want to blame the Oligarchs- people who probably are not going to accept your blame, because they are endeared to the system, and they do not understand why you are angry at them instead of simply going out and leveraging the system in your own way for your own gain. They do not understand Why you despise them, and they probably find you repugnant for wanting to destroy a system “that works just fine once you understand it” . See Warren Buffett and Charlie Munger.

    Other people blame the Politicans- who probably are not going to accept your blame, because they are serving the “greater good”, and see your disdain merely as the price that must be paid to make sure that the 4 other people who don’t share your disdain will still vote for them and allow them to continue in their quest for personal fortune as a product of public political favor toward the Oligarchs.

    The truth (immutable and fully uncorruptable) is that the blame for your misery lies with YOU. Not because you fail to see the truth regarding the nature of politicians and oligarchs, but because you cling to the invalid truth of propaganda:

    1) The world is more complex today
    2) We need more cops locking up all the “bad people” who wish to harm “the system”
    3) There is not enough wealth for everyone
    4) I do not need to worry about what concerns me because there are “elected” people who are doing everything they can to make my life better.

    Tho politicians will continue to favor the Oligarchs over you (since the Oligarchs have more to offer them than you do), and the Oligarchs will continue using the tools of their trade (media and credit) to continue using your diminishing wealth to put their favored politicians into office so that they will continue favoring the Oligarchs over you.

    This is “The System” – laid bare in all it’s glory for you to gaze upon.

    What will you do with this knowledge? Declare me a malcontent? Assume I am over-reacting? or perhaps simply apply your favorite stereotypical mainstream media label to me; and go back to trying to figure out how you will pay for your next tank of gas.

    The only thing that will free you from the trap of being the collateral in this cycle of polical/oligarchical credit mongering is the embracement of the uncorruptable truth that is (or at least should be) self evident: That all human beings are created equal (cold, wet, blind, and naked); and that they are endowed by this Universe with certain key inalienable rights, and that chief among these are life, liberty, and the pursuit of whatever makes them happy (just so long as their happiness ends where the next person’s misery begins).

    The misery levied upon you by others is nothing more than the misery you WILLFULLY accept.

    Your goverment does not CARE about you. Your government exists to make you beleive that your misery is noble since it is shared by so many others.

    There can only be one dignified way to address this reproach- you must live your life as a human being who does not REQUIRE the prescence of government. To do so is to reject their notion of common misery as a valid substitute for common liberty.

    He who does not trespass upon the rights of others, will see no day where they call him to court to face charges for his actions.

    I live in a world that does not require police officers.

    This is merely the first inning of the greatest bull market in human history – the bull market of informationally driven human freedom and liberty.

    All of the “ulginess” you see in the mainstream media does not stand the test of intellectual scrutiny – A human who lives in dignity without fear of redress is justified to fight when their liberty is trepassed upon.

    Perhaps people do not even know WHY they have the impulse to fight against the system (to rage against the machine)… perhaps it is indeed something deeper, more primal, and more intuitive. The laws of nature still seem to rule our minds more than we would dare to admit.

    The fighting may be scary, but it is part of the act of cleansing a societal conscience that has hubristicly assumed that humanity is impervious to the ruling laws of nature….

    This too shall pass.

    • Benjamin May 19, 2012, 11:28 am

      “I read all the discussions on this topic, and I see all of you tip-toeing around reality”

      Not to whine and clamor for recognition as the first Thomas Edison in the room, but I most certainly did not tip-toe around anything, Roberto. Yes, we are all to blame for having not done anything to stop the crimes that were and are still taking place.

      You can have the credit for the light bulb if you really want it, though. It’s just that I kinda, sorta did put forward my own confession and chastize/crown myself the king of fools. So you understand, I kinda, sorta take a little offense when someone comes in and says “all of you” are evading The Issue.

      Anyway, some short responses to some of the worthy points you made…

      Myth 1: Indeed. Life does not nor can become more or less complex. It has always been as complex as it is today and will be as complex tommorow as it was 10,000 years ago.

      Myth 3: Whoa… hit the brakes! If more people understood and religiously respected it as a definitely-not-a-myth, we quite simply wouldn’t have a corrupt government.

      The very fact that wealth is limited is why every single newly proposed tax and attempt by government to expand it’s “duty” as pie-cutter must be answered with “we can’t afford it!”. If we do not, then no amount of enterprising spirit, from within or without, can save us.

      But even in genuine Liberty, it is the prudent wealth creator who, realizing his limits, does as much as he can to limit wasted time, money, resources, etc… so as to maximize his new wealth creation.

      Myth 4: Too true. Liberty requires eternal vigilence. But I will say this to everyones credit… Vigilence lapsed before most if not all of us were even born. It hardly does any good because there is little if any Liberty left to guard. So what we need now is more, more, more! scrutiny of what is, from many more people.

      What about myth 2? Hey… I swear to god that I don’t know how the police came to be involved! 🙂

      Seriously though, why did you bring that up? I’m puzzled…

    • Mark Uzick May 19, 2012, 12:17 pm

      I read all the discussion on this topic, and I see all of you tip-toeing around reality;

      Including me?

      As far as government and police are concerned, you should not dismiss our need, as (potentially) rational beings, for civilized order and specialization of labor; it’s the conflation of legitimate government with the tyrannical anarchy of the state that must be rejected.

    • Mario cavolo May 20, 2012, 3:38 pm

      Well done Robert. I’ll only argue a bit on the degree to which you suggest we have willfully accepted our fate. I’m much more inclined to consider how so many in societies all across the world, past and present, are nothing less than the powerless citizen victims of those in power, the oligarchs, the elitists, who in some way shape or form have tied their hands and locked them into untenable, unfortunate life circumstances.

      If I lock you in a jail cell, send you to a wonderfulmotivational firewalk weekend to remind you of your fabulous God given potential, then put you back in the jail cell on Monday,…..

      Cheers, Mario

  • John Jay May 19, 2012, 5:53 am

    Mark,
    I agree with you about the high level of civil discourse on Rick’s forum. That is why this is the only place I now post my views or engage others in debate. I would not hazard a post on another nameless financial blog where the repartee is usually at the level of “silver bitchez” or some abusive vulgar language. We can agree to disagree on some issues, and appreciate the opportunity to engage others in intelligent discussion.

  • Dave May 19, 2012, 5:05 am

    “Of all the depredations of economic interventionism, one of the most disturbing is protectionism, which is nothing less than a declaration of war on life and liberty”

    Has to be the worst article Rick has written that I have read as most I have read of Rick’s I thought were, well, thoughtful. The irrational fear of ‘protectionism’ growing in the US when China and most other thinking nations including those in the eurozone impose 17% or greater VAT taxes on imports. I bought some shirts that were more poorly made than they appeared that had been imported all the way from Pakistan (7,000 miles) . Quite a few ppl argue this is an example of the ‘efficiency’ of free trade or globalization and represents some kind of ‘economic freedom’. Artificially inseminating nations that ‘just so happen’ to have huge numbers of cheap and expendable labor with the technology and tools developed elsewhere, exporting the product back to the nation that the productive tools and jobs came from and then calling that production and resulting profit from vastly reduced labor and operational costs a credit to innovation, ‘productivity’ and keen business acumen is plain ignorant. I don’t argue with insanity anymore. Keep it up, war is what you’re going to get for it. I’ll design the weapons you’re kids or grandkids will fight and die using since at least that industry is export controlled. I’d rather design nice stuff that improves peoples’ lives (including your kids and grandkids) but noooo …. free trade theories rules people’s minds and it is ‘inefficient’ and protectionism terrible’ for the US to protect commercial design and manufacturing in this country. Too late, the free traders got my work in benign commercial engineering in the US outsourced. Don’t worry though, I’ll design the best and most technologically advanced weapons on planet earth for your kids/grandkids to fight with. Keep up the great thinking Rick.

  • watcher7 May 19, 2012, 1:44 am

    “Watcher7, the proposition that protectionism is required for a developing economy to advance is a lie…”

    That proposition was not mentioned in my post.

    America is in decline – no trade surplus since 1975.

    “Free trade is encouraged in bull markets; protectionism is demanded in bear markets.”

    Mark, you have to stop living in an ideological dream world.

    The post-WW2 era is over; the unique circumstances that contributed to America’s greatness no longer exist; that world is not coming back. It is over for America and Americans are going to learn how hostile the world can be as well as how hostile Americans can be to one other.

    You write:

    “once more, a living example for the rest of the world to emulate”

    Why not emulate the period prior to the ideological world of free trade?

    “[There were] many benefits enjoyed by the United States as it industrialized at British expense. In addition to the great infusions of capital and modern technology that the United States obtained from Britain in the nineteenth century, America also exploited British trade and defense policies in much the same way that Japan … exploited the United States [in the second half of the twentieth century]. America isolated its own industries behind high protectionist trade barriers while enjoying almost unfettered access to the free trade-trade system established and maintained at British cost.

    “The growth of trade in this system slowed after 1873. Declining British power combined with industrial depression induced many countries, including Germany, to erect tariff barriers. William Menelaus, president of the British Iron and Steel Institute, gave a speech in 1875 that highlighted in a remarkably clear way that connection between increased competition, declining hegemony and protectionism said Menelaus:

    “We have but little demand from Europe, and we seem to have lost our American market entirely… We must, I think, frankly accept the position in which we are placed, and prepare to seek new markets for own produce in countries which, even if they have the will, have not yet the power to impose restriction on our trade“ (Quoted in James A Kurth, “The Political Consequences of the Product Cycle”, International Organization, Winter 1979, p.16).

    “Those nations that did have the power “to impose restrictions on our trade” increasingly did so. While the British remained powerful enough to force free trade on weak tribal despots in Africa, British power now fell far short of what would have been required to oblige the United States or Germany to maintain open markets. As the barriers grew, trade growth slowed. Not surprisingly, British exports slowed disproportionately. The British alone maintained free trade and open markets. From 1873 to 1899 British exports grew at an annual rate of 1.6 percent while imports expanded at almost triple that rate – 4.5 percent (Forest Capie, Depression and Protectionism: Britain Between the Wars (London: George Allen and Unwin, 1983), 15-16). Imports from the United States made up by far the largest percentage of any country in the United Kingdom trade balance, taking 19.8 percent in the 1870s, rising to 23.9 percent in the1890s.

    “U.S. exports flooded into Britain on an even more unequal basis than on which Japan trades with the United States today. British goods and materials entering the United States during the height of the projectionist tariff under McKinley were subject to an average tariff rate of 57.7 percent. American goods gong the other way entered Britain unencumbered by any protective tariff at all. That was the major reason American trade relations with Great Britain were far larger than those with Germany, and were destined to be so for the foreseeable future. The Germans encountered American trade barriers with barriers of their own. The British did not…

    “[The German economy’s] strength, like that of the United States, was far more internalized. The Germans conducted less trade than Britain in proportion to their output. And several factors made it difficult for Americans to sell into German markets. The first of these was that Germany, more than Britain, was self-sufficient in food. The Germans had less need for the massive shipments of food from the American Midwest that were sold annually in Britain.

    “Secondly, in many areas, Germany industry was more dynamic and technically advanced than British industry. This made it more difficult for Americans to surpass German quality in sales to Germany. American steel, for example, was a major export to Britain. But cheap German steel, made with a Krupp process, was harder than American steel, and superior for many uses.

    “The third reason [as we have seen, was that the] United States was able to exploit the British commitment to free trade to sell goods under unequal conditions in a way that it could not have exploited Germany” (James Dale Davidson & William Rees-Mogg, Blood in the Streets, pp.82-84).

    As mentioned in previous post:

    “Don’t do as I did; do as I can afford to do now. The advice does not always sit well”.

    • Mark Uzick May 19, 2012, 11:53 am

      That proposition was not mentioned in my post.

      That was the major theme of your quoted materials.

      America is in decline – no trade surplus since 1975.

      You’re blaming socialistic regulations and money printing on relatively open trade? In a way, that’s true: trade has allowed business to evade the full consequences of the domestic strangulation of industry and commerce. If trade didn’t save us from our own tyranny, our trouble making empire would have crashed long ago; and a new, constitution respecting, America might already be emerging from the ruins.

      The analogy of Great Britten to America today is true in many respects except for the false belief that trade contributed to their declines; it is, in fact, trade that has cushioned and slowed down the declines that should otherwise have naturally occurred with greater rapidity as the consequence of their internal decay and over-extended empires.

  • Benjamin May 19, 2012, 1:34 am

    Now that the day’s over, I’ve decided to post my thoughts on the matter of free trade.

    I cannot express the level and intensity of utter dissappointment in what I’ve seen here today. Or anywhere else for that matter, be it on the net or face-to-face. I’ll try to be brief…

    China is not a State of the United States. Germany is not a State. Russia is not a State. India is not a State. They are therefore not entitled to free and unrestricted access. There are no restrictions on trade among the several States, because at one point or another they made a commitment to the Constitution by first ratifying it, then abiding by it (yes, I know… None of them do today, but that’s precisely the point).

    Let me ask yall something… Are you stupid enough to enter into a personal relationship in which you and your partner share/own everything between you and have sex whenever you want… Without the commitment of a marriage?

    That is precisely what the problem with ‘support’ of free trade is today. And societal standards as a whole. Everything is non-commital ‘whatever’. But every mature adult ought to ask themselves…

    What does a country — I don’t care if it’s Canada or China — that seeks to be a part of our internal free-trade zone, under the Commerce Clause of the United States Constitution, really want? Do they really want mutual prosperity? If so, then why not commit by applying for statehood? But that is just the thing. They want the benefits of statehood, but they could care less if the relation is mutually beneficial.

    That is why the Constitution allows for unrestriced internal trade, with the restrictions of things like tariffs and patents in foreign trade. But I can see that few if any are interested in upholding that, for their own interests as well as that of their countrymen. They’re far more interested in the ‘fun’ of non-commitment.

    I cannot respect those who fail to respect themselves. And as much as it hurts me to say so, I have to include Rick in that lot (in as far as this matter). He commented at the beginning of the article [to the effect of] that free trade has few friends and that today’s commentary was a refreshing reminder of what Liberty is all about.

    To that I say: With “friends” such as it has, who needs enemies?

    On a side-note to that, a wise man once told me that if one is using notes in High Treason one cannot bring a claim against the congress’s High Treason. He may have also said that the treasonous not only cannot, but will not (if he did not, then I think it a proper appendix).

    And that is all I have to say on the matter of free trade. But before I click send, I would like to point out that at a time not very long ago, I would’ve given a big thumbs up to the ideas contained in today’s commentary. For those with memory, you may recall that I even went as far as stating — right here in this very forum — that the Constitution was flawed because of the inclusion of things like tariffs. But I was a big stupid idiot for ever thinking so. I was (and still am) the king of all fools for ever having said so, especially with the degree of passion with which I did.

    So long, everyone.

    • Mark Uzick May 19, 2012, 11:22 am

      China is not a State of the United States. Germany is not a State. Russia is not a State. India is not a State. They are therefore not entitled to free and unrestricted access.

      Where you’re born has no bearing on your rights as a person; and any law that infringes on our natural rights is an injustice and, therefore, no law at all.

      There are no restrictions on trade among the several States, because at one point or another they made a commitment to the Constitution by first ratifying it, then abiding by it (yes, I know… None of them do today, but that’s precisely the point).

      Free trade agreements have a worthy goal, but they are and example of threatening evil in retaliation for evil done. Everyone knows that “Two wrongs don’t make a right.” Other nations will open their markets when they see how much more prosperous those with open markets become.

      Let me ask yall something… Are you stupid enough to enter into a personal relationship in which you and your partner share/own everything between you and have sex whenever you want… Without the commitment of a marriage?

      This analogy, if applied to trade, would imply that it would be promiscuous to have more than one trade partner. In practice, this would be have to be the jealous monopoly of a socialist state that would consider any trade outside of this exclusive relationship to be an unforgivable vice.

      Hillary may aspire to an America that’s one big busybody village of a family, but I’d rather not be part of this paternalistic, overbearing family that we call the state.

      Do they really want mutual prosperity? If so, then why not commit by applying for statehood? But that is just the thing. They want the benefits of statehood, but they could care less if the relation is mutually beneficial.

      Most of the “benefits” of statehood are no benefits at all. Free trade is a right; that other nations infringe these rights of their people and ours does not give our nation an excuse to emulate this criminal behavior, nor does it profit, but harms, our people to do so; but it does strengthen the corporate-state stranglehold of the competition fearing plutocrats over our lives.

    • Benjamin May 19, 2012, 8:22 pm

      Mark,

      I should’ve made it explicit that I was sharing my thoughts on the subject purely as a matter of conscience, and not to try and change your mind or anyone elses. I’m through with that jazz because I’ve finally come to accept that aruging between two or more people isn’t the best way to make progress. But since you took the time to respond, the very least I could do is respond in kind.

      Veni vidi vici. There is nothing in your points that I haven’t faced a dozen times already. If you want me to show you the way I took, I can only tell you to do what I did. Challenge you and only you. No one else is better at that than ones self. Nor is any other means more rich in gain for the effort. Who can better ride your ass morning, noon, and night to test and re-test and re-test and re-test ALL strong points and weak points of what you believe to be true?

      It sure as heck isn’t me. And you sure as heck aren’t the best source of challenge for me. You probably will find this at odds with my “strong nannyist” stance. Veni vidi vici. I know there is no contradiction.

    • Mark Uzick May 19, 2012, 11:39 pm

      I’ve finally come to accept that aruging between two or more people isn’t the best way to make progress.

      That’s unfortunate; I was hoping that you might rise to the challenge and offer something that was not so easily debunked; I thrive on challenges; and, unlike you, most of the evolution of my beliefs have taken place during debates. From my perspective, I have not won an argument unless my opponent teaches me something new, either by his winning (the best possible outcome), by making a valid point I hadn’t considered before (second best outcome) or teaching me something that doesn’t change my opinion, but gives me a new perspective from which to understand it (the most common positive outcome).

    • Benjamin May 20, 2012, 10:13 am

      I don’t know if you’re still around, Mark, but if so, this is my final word…

      I have balls. I also have the good sense to exrecise control over them (often, anyway, but I’m only male). And you’re just not going to get a rise out of me.

      But one sincere recommendation I would like to make is that you learn the difference between metaphor and literal interpretation. For example, the dating/marriage metaphor I used. By failing to see that it was a metaphor, you spun waaaay off into such outlandish conclusions. A bit too easily, I add, because I suspect…

      That is simply what you wanted to do. That was the conclusion you wanted to reach, for me to reach, and for anyone reading to reach. Because that way, you can easily claim to have easily refuted someone.

      Seems you’re too used to things being easy for you. So you need to work on that, too. The hard way, this time around.

      Lastly, because you’re such a mess, I just have nothing that I can work with. It’s a waste of time for me to exert the kind of energy I would need to exert in explaining things to you. So, no. I will not take you by the hand and take you down the road, over the hills, to the mountain, under the mountain, to the bowels, and up back up the tubes to self re-invention. Bust your own ass and do it yourself. I was not too good to suffer for mine. Blood, sweat, tears, literally, as I went through the process. Downright brutal, even.

      And you want me to take your hand and help you carry yourself up, including the aforementioned baggage?

      Boy, either get real or stay in the realm of the easy-breezy and keep rotting away. That is all.

    • Mark Uzick May 20, 2012, 5:21 pm

      For example, the dating/marriage metaphor I used. By failing to see that it was a metaphor, you spun waaaay off into such outlandish conclusions.

      A metaphor is a form of analogy; and this is precisely how I treated it: they’re intended to imply something but you didn’t bother to elaborate what that is, leaving it to the reader to make the logical implication himself. That your metaphor doesn’t work is shown by its bizarre nanny statist implications; but then, it is consistent with your bizarre belief in the need for state regulations of economic activity, but only for “when it’s needed” where “when” will be determined by the fiat of some “authority”, leaving me to wonder whether, if on some level, your metaphor actually works to convey a belief that’s purposely put into a vague metaphor so that it would not be too closely examined and seen that you want to have things both ways.

      It clearly upsets you that you can’t get away with that type of tactic with me; and your repeated personal attacks only serve to underscore how your fear of of being wrong outweighs your concern for what’s true.

      There are others here, clearly more statist than yourself, who have made their arguments in a polite and civil fashion; even if I believe they are in error, their dignified responses make it clear to me that they are sincere. You would do well to learn from them.

  • Bradley May 18, 2012, 10:13 pm

    Gotta love it.
    FB shares flat on their back, with the trainer screaming from the corner, “Get up! Get up!”
    That was some pretty fancy defending, trying to keep the shares from breaking the “opening” price.
    Unfriend, unfriend…

    • gary leibowitz May 18, 2012, 10:39 pm

      FB was priced too high and everyone knew it. The big brokerage housed defended it today.

      I personally don’t like the risk going forward but there is a case for it being another google. I suspect it will drop some before basing.

    • Mark Uzick May 18, 2012, 10:57 pm

      Was FB a great business model in need of a capital infusion in order to grow; because I thought they were already a profitable company, saturating their market and with IT infrastructure already in place? I wonder what their justification for raising $100 billion was? I hope it wasn’t just because they could.

      I guess that most of the money won’t go into the company but into the pockets of the pre-IPO investors which shows that they’re smart – smart enough to sell off most of their stock at what will probably be near its all time peak.

    • Bradley May 19, 2012, 12:11 am

      “Everyone knew it”
      Five hundred and eighty million shares traded hands today, many of which were at prices above $38 where it “opened” and closed, so at least a few people didn’t know it…

    • Mark Uzick May 20, 2012, 10:32 pm

      Sorry…I realize now that they “only” raised $20 billion; the $100 billion referenced is their new market cap.

  • gary leibowitz May 18, 2012, 9:33 pm

    All the complaining about the lack of deficit hawks will find themselves on the other end before long. It is always easy to complain when you are sitting on the outside. Governments are not intrinsically evil. It’s the nature of the job to be caught up in power. Some actually survive this pull, most do not.

    You would think that what governments around the world do is some strange cultist ritual. Just human being engaged on two fronts. One to keep their job and the other to appease the masses. Not a winning solution without printing up more money and building larger debt. The wind of change is already here. Not many on the political front is ignoring this fact. The most ingenious way they have accomplished this on a bipartisan basis was to enact automatic cuts.

    The politics of taking money from the tobacco industy changed overnight as circumstances changed, so too has the idea that we can spend to oblivion. Give it time.

    • bc May 18, 2012, 9:55 pm

      You do realize you are making my case that deflation is coming. Spend to oblivion or deflate are the only two options. We have to choose one.

    • gary leibowitz May 18, 2012, 10:07 pm

      bc,
      I have alwasy thought deflation would hit before any recovery. The debt situation is front and center. No way to ignore it now.

      The timing of this is another matter. I still see a really good stock market till next year. Spending, borrowing, low mortgage rates, company profits all point to a good year. Given the fact that the SPX is below 1300 my confidence isn’t as good as it was. Still expecting a basie around here followed by a nice long rally.

  • bc May 18, 2012, 8:49 pm

    Kudos to the author. We’ll know which way the wind is blowing when we see Bernanke in front of congress whining that “He can’t do this alone just by wrecking his balance sheet.”. No, not this part, this part is a given. In fact, we’ve already seen this part. The clue will be in the legislative response. If congress jacks deficits to the moon, at least doubling the current borrowed burn rate, the banks will continue to survive and so continue sucking the life and liberty out of our nation. I say the congress won’t go along, but I also say, it’ll be damn close.

  • Rich May 18, 2012, 8:28 pm

    I wish everyone on this forum would take a ride on Amtrak to see how well things are really going in America.

    The California Zephyr train was close to full occupancy with business people and tourists from all over the world.

    The Cargo Containers arriving in ports and moving on rails on the Northeast Regional from Boston to Charleston were staggering.

    Yesterday on the Texas Eagle/Sunset Train 1, there were more diesel tractor trailers than cars on the road.

    Today on the Bakersfield/Oakland high speed rail, California’s bread basket is booming now that the Delta Smelt waters have been turned on again for the new Ag owners.

    $4 or $5 gasoline is not the end of America, only the current regime…

    • Mario cavolo May 20, 2012, 3:21 pm

      We’re in the same choir…. I keep saying it’s a damn schism. One BIG part of the economies is unquestionably humming along and that is a fact too ignored or twisted by the bears…

    • Robert May 24, 2012, 12:01 am

      well, by your logic Rich and Mario, the 1930’s were a boom time then, because the nation did not grind to a halt then, either…

      1) Consumption of beef and butter (heretofore considered “luxuries” boomed)

      2) Automobile purchases boomed

      3) Radio purchases boomed

      You see, in a world of 25% unemployment born out of real deleveraging (what some choose to call deflation) – the remaining 75% experience an improving standard of living…

      Do the needs of the many, outweigh the needs of the few? Perhaps, if we yield our humanity back to nature.

  • mario cavolo May 18, 2012, 6:44 pm

    Hi Mark, I’m commenting and discussing and then I realizea I forgot to say thanks to the article author …nice write up for discussion here, well done, thanks alot…Mario

    • Rich May 18, 2012, 8:22 pm

      Agree…

    • Mark Uzick May 19, 2012, 1:13 am

      Thanks back to everyone for discussing and arguing about the most important issue: LIBERTY.
      I wish to especially thank those, like John Jay – the inspiration for this modest essay – who vehemently disagree with me but are civil about it. I don’t really write – I just argue with people and they make it possible by motivating me to speak out against what I view as errors.

  • John Jay May 18, 2012, 6:19 pm

    Mark,
    Wealth is EXACTLY a limited pie to be distributed to the huddled masses after the plutocrats take their over sized slices. Wealth = Jobs. Period. Hong Kong, Taiwan, OPEC, and now China all prospered due to unlimited access to the US import market, shifting our wealth (Jobs) to them. The average American has no savings his Job is his only access to Wealth. Why are there almost 20 million people attending some level of College in the USA? In the forlorn hope of getting a good Job, that is why. Why have millions of illegals flooded north to the USA? For Jobs. The average person is not Andrew Carnegie or John Rockefeller. The average person needs that anchor of stability a weekly paycheck provides. Los Angeles had no great gang problem back in the day when you had your choice of well paying Jobs in Aerospace, an auto plant etc.
    This nation was at its most productive and prosperous when we had protective tariffs from the 1880s onwards.
    I don’t know where you live Mark, but when I look around me here in Southern California I see lots of free people creating nothing. They are living off the scraps from the old Jobs based Wealth of the past here in the USA. Asia built their Wealth (Jobs) off free access to our markets for decades. How many more Free Trade Agreements will it take for the great benefits promised to the American Worker to appear? How many more millions of poor illegals do we need to absorb before the great benefits of Open Borders appear? Wealth is of course limited. So are Gold, Crude Oil, Mahogany flooring, estates in Beverly Hills, first class medical care, Corvettes, trophy wives, Boeing 787s, on and on, you name it.
    In the USA, access to those good things is allocated by a price in Dollars, which you spend from your Wealth pile.
    There is some disconnect between us, I just don’t see how you can argue that Wealth is free, unlimited, and ubiquitous like the atmosphere. It is not and never will be. Humans have been slaughtering each other for centuries for no other reason than to access Wealth.
    Every politician in every nation on Earth is talking the same game, Jobs. Once again, a Job is the only access to Wealth for 95% of the population. And there are not enough of them to magically appear every time we add another billion people to this creaking world.

    • Mark Uzick May 19, 2012, 12:50 am

      Wealth is EXACTLY a limited pie to be distributed to the huddled masses after the plutocrats take their over sized slices.

      Wealth is not a natural resource just sitting there to be claimed and divided up; wealth must be created by mental and physical effort. Without people to produce it there’s no pie to divide.

      Wealth = Jobs. Period.

      No… Wealth = Steve Jobs; but not “Period.”; people at all levels of ability do their jobs to produce wealth except where prohibited by “law”.

      But if you mean that wealth is dependent on having the liberty to engage in production and trade without interference from tyrants, then I’d agree.

      Hong Kong, Taiwan, OPEC, and now China all prospered due to unlimited access to the US import market, shifting our wealth (Jobs) to them.

      No, we treated production as a criminal enterprise or as a vice that had to be strictly limited and punished; so businesses, in order to survive, moved production to where it was tolerated, while keeping the lion’s share of the wealth produced to be paid to American stock-holders, designers and marketers, office workers, assemblers and re-packagers of imported components, consumers and retailers, keeping America alive until we can enact market reform.

      Normally, comparative advantage would allow each nation to produce what it can make most inexpensively in order to trade for that which other nations can do best, giving everyone greater wealth for their effort. This is the same principle as the wealth multiplying effect of the baker trading with the farmer or the shoe-maker; but if the farmer stops working his farm full time and pays the baker with IOU’s for his crops, eventually the baker will claim his farm to settle the debt. In this case, you can’t say that by feeding the farmer, the baker stole the farmer’s job. The baker may very well have saved the lazy farmer from starvation until he could motivate himself to work harder, but the choice and the responsibility was the farmer’s.

      The average American has no savings his Job is his only access to Wealth. Why are there almost 20 million people attending some level of College in the USA? In the forlorn hope of getting a good Job, that is why.

      This is because entrepreneurs are relegated to a semi criminal class, forcing people, in order to survive, to work for the state or its corporatist cronies.

      Why have millions of illegals flooded north to the USA? For Jobs.

      When there were jobs to be had and businesses they were allowed to pursue; immigration’s what made America wealthy.

      Now the only jobs available are as illegal semi-slave labor and the only businesses they can operate are as thieves, prostitutes, smugglers and dealers of anything illegal.

      There is some disconnect between us, I just don’t see how you can argue that Wealth is free, unlimited, and ubiquitous like the atmosphere. It is not and never will be. Humans have been slaughtering each other for centuries for no other reason than to access Wealth.

      This is what I’m talking about when I say,”When someone says, “There’s not enough wealth to go around.”what he really means is, “There’s not enough wealth to be looted.” ; it means that you don’t really understand what wealth is or where wealth comes from.

  • Mark Uzick May 18, 2012, 5:02 pm

    Watcher7, the proposition that protectionism is required for a developing economy to advance is a lie propagated by vested business interests that wish to exploit a nations consumers without having to worry about competition.

    If protectionism helped economic progress, then Hong Kong would have been an impoverished backwater compared to the PRC’s economic dynamo, but it wasn’t until the PRC started to liberalize trade, moving closer to the Hong Kong ideal, that it began to make any progress.

  • gary leibowitz May 18, 2012, 3:08 pm

    A few quick points.
    1 -China has complete control, at least for now, to rev up the economy, and I believe they will rather quickly. No crash or bubble yet.
    2- Socialism destroying our way of life would mean that Unions are on that list. Interesting to note that right before the last depression Union membership was just about extinct. Imbalance of money towards the top has never before been seen, expect for today. Lack of government control allowed banks to play with our lives as if it was Monopoly Money. Gee, I believe that is happening yet again.
    3 – Government controlling our lives. You should ask yourself just how much govenment is needed in our everyday life. You would think having government control was a planned conspiracy, when in fact it is the disbanding of these controls that favor the few to get rich on the back of the many.
    4 – Gold has risen 5 to 6 fold from the lows. To see it at 1500 you would think the sky is falling. It also ran up on speculation that we would have an ever deminished dollar when in fact that has not been the case. Up this much on assumptions is pretty darn good. When the reality of hyper-inflation does hit you will see Gold spike.

    • Mark Uzick May 18, 2012, 4:46 pm

      JJ, wealth is not a limited pie to be distributed among the “huddled masses” after the plutocrats have first allocated to themselves over-sized slices, it’s what these “huddled masses” will create for themselves when given the liberty to do so. The origin of wealth is creation, not theft or hoarding.

    • Mark Uzick May 18, 2012, 5:28 pm

      Gary: Government controlling our lives. You should ask yourself just how much govenment is needed in our everyday life. You would think having government control was a planned conspiracy, when in fact it is the disbanding of these controls that favor the few to get rich on the back of the many.

      It’s the state’s regulations that make it possible for the corporate, banking and bureaucratic plutocrats to grow wealthy at the expense of the people. Regulatory controls are the venom that allows these parasites to paralyze their victims – the entrepreneurs and their would-be employees – to challenge their established positions of wealth and power with competition.

      Government is the management and controls of free men over their own actions, I.E., government by the consent of the governed. What you – Gary – refer to as “government” is arbitrary rule by decree of the fiat state; it’s nothing less than oppression, mob rule, a war of all against all – the proliferation of both domestic and foreign wars on the latest scapegoat of the day – in other words – ANARCHY.

    • Cam Fitzgerald May 20, 2012, 2:13 am

      I will agree there is no crash in store for China, Gary, but there is absolutely no doubt whatsoever that a bubble exists in the property markets. It seems obvious to me that the government there should be loosening up on what it allows its people to invest in. A more open market might go a long way toward dissipating some of the capital flows that are distorting everyone elses economies. Not that we can’t use a little of the inflation they are sending our way but the people there do tend to act in herding behaviour and sometimes it makes everyone else a little uncomfortable. The Vancouver real estate bubble is just one example of how excess capital flows are finding their way into already overheated markets and stirring up resentments. If only some of those dollars would start finding their way into entrepreneurial activities, business startups, invention, the arts and culture etcetera. Why does it all have to end up flowing to gold, homes and Treasuries?

  • watcher7 May 18, 2012, 10:36 am

    “The advent of ‘free trade’ as the prevailing ethos coincided with an economic boom, lasting from the early 1850s to the early 1870s. Contemporaries saw the first as causing the second; economic historians have been more sceptical. The removal of tariff barriers probably had only a marginal impact on the British economy, but the ascendancy of ‘free trade’, in its larger sense of national commitment to economic progress, was closely related to an entrepreneurial enthusiasm which all classes seemed to have shared… The free-trade movement accompanied rather than anticipated the commitment of the British economy to manufacturing, transport, and service industries with an urban base…” (Kenneth O. Morgan, editor, “The Oxford History of Britain”, Revised Edition, (Oxford, Oxford University Press, 1999), pp.528,520).

    “… Economic theorists have argued forcibly, even passionately, that such interferences with the market hurt everyone. But the fact remains that history’s strongest advocates of free trade – Victorian Britain, post-World War II United States – were strongly protectionists during their own growing stage. Don’t do as I did; do as I can afford to do now. The advice does not always sit well” (David Landes, The Wealthy and Poverty of Nations, (London: Abacus, 1999), pp.265-66).

    “The period 1892-1914 raises some difficult problems for liberal theories of foreign trade. The evolution of the European economy reveals a disturbing correlation. Grossly oversimplified this can be expressed in the following equations: protectionism = economic growth and expansion of trade; liberalism = stagnation in both… the return to protectionist trade policies undoubtedly coincided with a considerable change in the main economic trend, leading to a period of growth unprecedented in European history… foreign trade in the protectionist countries grew more rapidly than in the liberal countries…” (Paul Bairoch, “European trade policy, 1815-1914”, The Cambridge Economic History of Europe, Vol.8, The Industrial Economies: The Development of Economic and Social Policies, (Cambridge, Cambridge University Press, 1989, p.69-70).

    The oversimplified hegemonic-cycle: Protectionism – Free Trade – Decline. Its over for America. America has had its day in the sun and is headed for balkanization.

    The rise to greatness in both Britain and America was accompanied by religious revival – arguably, the peak in church-attendance roughly coincided with the peak of Britain and America relative to other nations.

    The next hegemonic power is in the East – that is, east of America. A German-dominated European superpower, accompanied by religions revival, will emerge from the next Great Depression, to sponsor a brief period of Gobalization MK3 and WW3.

    “Every modern transition of world power supremacy has involved an ally or former colony of the previous hegemonic power” (James Dale Davidson & William Rees-Mogg, The Great Reckoning, Revised Edition, (London, Sidgwick & Jackson, 1993), p.137).

    United Provinces of the Netherlands (Protestant) then United Kingdom of Great Britain and Ireland (Protestant) now United States of America (Protestant) next United States of Europe (Catholic).

    “The 1990s should be seen as but a temporary interlude between eras of cosmic competition. And America’s allies in the last round (against the Soviet Union) are shaping up as opponents in the new one” (Daniel Pipes, Europe vs. America, capmag.com, January 21, 2003).

    The “Anglo-American hegemonic Cycle” may be viewed at http://www.members.optusnet.com.au/futurewatch/id10.htm

    • Benjamin May 19, 2012, 1:59 am

      Interesting read, watcher. A bit much to sort through to say how much I agree or disagree with, but a good read all the same. Thanks for posting it.

      Anyway, I think the conclusion, that of a re-surgent Germany, is more than a possibility. Take a gander at this…

      http://www.numberwatch.co.uk/german_kyoto_protocol_hoax.htm

      I don’t believe in coincidences to such a degree as to ignore what a “victory” in the war on carbon dioxide would accomplish!

  • Mark Uzick May 18, 2012, 4:56 am

    I want to apologize for one major and some minor errors; I tried but failed to contact Rick to make the changes. The worst one was mixing up the concept of “comparative advantage” with “marginal utility”. Below is how I wanted the essay to read:
    ——————————————————————-

    Of all the depredations of economic interventionism one of the most disturbing is the inducement to the wholesale threat to life and liberty – war – that is brought about by protectionism. When trading partners are treated instead as adversaries or exploiters the next steps are inevitably envy, xenophobia, threats and violent conflict.

    When someone says, “There’s not enough wealth to go around.”what he really means is, “There’s not enough wealth to be looted.” That’s especially the case when wealth creators are treated as marginally tolerable misfits and criminals; wealth doesn’t “go around” – it’s created and it belongs to those who create it to be traded for other forms of wealth from other creators.

    Some people confuse wealth with resources: Resources are only of value to those who put them to creative/productive use. Our society has little use for creative/productive people or enterprises, viewing them as exploiters/parasites of the poor and ruling classes; whenever possible, we make sure that resources are put off limits to these “evildoers” – these “exploiters/despoilers of the environment”. In their Malthusian wisdom they believe that we were robbed of our wealth and resources by nations emerging from tyranny and moving toward market based reform – that their liberty equals our enslavement and that their creativity/productivity equals our destitution. But this is a perverse perspective because: If we all are free, then there is not only competition for scarce resources, but competition to see who can create the greatest amount of wealth from a given amount of resources, thereby making resources both more valuable and more abundant; and trade between nations a way to multiply wealth as the various forms of wealth production are moved to where they each have the greatest comparative advantage.

    A big complaint of the protectionists is that the American manufacturing base has been “Shanghaied” to China; but the transfer of the American manufacturing base is the life-line that has allowed American businesses and Americans’ productivity and prosperity to survive in the face of the criminalization of business activity, private property and domestic trade in the new socialist American empire. What good does it do to propose that we fight the results of domestic socialism with more comprehensive international socialism, never thinking to question socialism, but always ready to blame free trade?

    When protectionism, should it worsen, leads to war there will be plenty of blame to spread around; after-all, almost every nation seems to be involved in this counterproductive, inflammatory game of “tit for tat”. A lot of good spreading blame will do us – who cares who started it? Revenge – the return of evil for evil done – is a profitless endeavor; and, as in all wars, the people who will pay most of the price will be the innocent, while the greedy and power lusting perpetrators will thrive all the better on their misery.

    That other countries engage in protectionism to enrich their oligarchs is a problem for the people of those countries to solve through the gradual process of liberalization; there’s certainly no reason to emulate them; but if we care about our liberty and prosperity, we need to liberate ourselves from the stranglehold of socialism on both domestic and international trade, becoming, once more, a living example for the rest of the world to emulate. Competition and trade are mutually beneficial things; our prosperity does not come from trampling the hopes and dreams of others no matter how much relative power and status that some think that will give us. A free America will out-compete any oligarch ridden society, no matter how cheap their labor is kept or how hard they’re whipped to work faster (The belief that slave labor is more productive than free men would be laughable if it weren’t so sad.); and in so doing, will earn respect and friendship, becoming the template for world-wide reform.

    • John Jay May 18, 2012, 2:51 pm

      Mark,
      For the vast majority of Americans and the rest of humanity, wealth means a stable, well paying job.
      It is that simple. Unless you are the fortunate son of a wealthy family, or a Wall Street carnivore, you need a stable job that provides more than a hand to mouth existence. For most of the planet, it is just that simple. That is “Wealth” to the bulk of humanity.
      With modern manufacturing techniques and a global workforce thanks to “Free Trade” a very small number of workers can make everything the entire world needs. The United States was ruined by “Free Trade” which in our case meant our markets were left wide open to the world while their markets were closed to us by protective tariffs. How productive is slave labor? Very productive, ask AAPL. How destructive are open borders? Very destructive, ask California. There can never be enough jobs or “Wealth” for 7 billion people to enjoy a pleasant lifestyle. To prove my points about Open Borders and Free Trade, I suggest a road trip for you to Wilshire and Alvarado in Los Angeles, right by MacArthur Park. You can try distributing your Wealth which you probably got from a Job to all the Huddled Masses from the Third World in that locale.
      You will run out of Wealth before you run out of Huddle Masses. I don’t know anyone who has lived in California since the 1960s or 1970s that thinks Free Trade and Open Borders has increased the Wealth here. We had the upper hand after WWII in the global economy, and no, I do not think we were under any obligation to share our Wealth of Jobs.
      Only the Dollars Reserve Currency status has allowed massive money creation here to mask our Third World status. It did not have to turn out like this. Anymore than you do not have to go to MacArthur Park and give away all your money in one afternoon.
      Financial suicide is always a poor choice.

  • Cam Fitzgerald May 18, 2012, 4:54 am

    “Gold and Silver turned up sharply on Thursday, and although I am skeptical…”
    ———————
    Same here, Rick. This is a fakeout that will draw in the flock of die-hard metal heads before hammering them back into oblivion. If Greece keeps threatening to depart the region (and the powers keep suggesting it is a good idea) the Euro will take a tumble smacking down gold in the process. But this is about much more that gold. We are slowing without a doubt and we are doing so on almost every continent in unison.

    The prefect setup seems to have arrived. It is brain-dead easy on so many charts. Just buy gold and some commodities, sell the market as the dollar rises and see the profits roll in.

    HaHa. Good one! Not this time though. It is too obvious. Everyone can see it and yet very little has happened. Wonder why?

    Off in the background there is a significant risk that the Euro will sell off hard with a Greek departure. The dollar would soar and that is the intention as the worlds reserve currency is again proven the go-to place for safety. Be careful with the meaning of the charts. There is hazards that are not obvious to most people at this time.

    Metals and commodities will be casualties of course, taking stocks down heavily in their wake. I still expect a significant correction is in the cards and that it could arrive at anytime now. Unexpectedly of course.

    We don’t have any signals that easing is on its way. Remember when I wrote “first the sickness, then the medicine”? That is perhaps more true now than at any time in the past few years. Investors will beg for intervention this time and afterwards few will complain that it was actually delivered.

    We are going into a deflationary episode with the news of a slowing Europe, a China housing bubble crash and now falling commodity prices as speculators back off the market.

    We worry for good reason.

    • mario cavolo May 18, 2012, 12:13 pm

      Its really true Cam as I also ranted about a couple of days earlier. It is all SO obvious, therefore negating itself all to neatly…can’t make heads or tails of so many variables…scary times. Election year and bingo as I was thinking months ago, oil declines to appease the voting masses. They don’t care so much about the stock market or gold correction because they’re not in it!!

      You said..”…falling commodity prices as speculators back off the markets”

      But isn’t it the case that the speculators will speculat long or short, not caring either way? This is what I mentioned earlier, when everyone jumps on the other side of the ship because the “short” play is now so obvious…that’s why the decline will in fact go farther than it “should” but then bingo, everyone jumps back on the long side again…Pff&^%!!

      Cheers, Mario

    • Cam Fitzgerald May 18, 2012, 1:09 pm

      Yes, Mario. Blatantly obvious chart patterns that even novices can read are really a trap, not an opportunity. Like fences, they are designed to contain and then to drive the herd in a single direction. I would be very cautious.

    • Rich May 18, 2012, 8:19 pm

      Gold hit its target of $1550
      and Silver is targeting $58…

    • Cam Fitzgerald May 20, 2012, 2:05 am

      Some days I write posts that make no damn sense at all. The one above seems to fit that category. Although I knew what I meant I sure didn’t write it sensibly…!

      Anyway, so here we are. The G8 is getting all warm and fuzzy with growth in Europe and trying to shed a little of the austerity madness that is driving them over the edge. Looks like they made progress so the Euro should begin to rise versus the dollar.

      And that means gold is going up, Goodness, it really is time to buy and do it fast because this run should take us up quite a ways. I will have to get busy Monday. Miners are on my target list and as stocks will most likely rise as the dollar falls then most everything will look tasty.

      Anyone else think Sugar might be a bargain? Bless those Euro Leaders dark hearts. The setup is going to work out after all.

  • Cam Fitzgerald May 18, 2012, 3:27 am

    “We’re not at war with China, we’re at war with ourselves”.

    Amen, BDTR. Well said.

  • BDTR May 18, 2012, 2:39 am

    Who exactly is doing the looting, Mark?

    The last time that I looked at income distribution, the top tenth of one percent is still gaining handily against the steady decline of the bottom sixty-five percent.

    That’s simultaneous to a steady decline of living wages in eighty-five percent of ‘replacement’ jobs, slashing of welfare rolls, record numbers without healthcare, record numbers of unemployed youth, accelerating foreclosure rate and personal bankruptcy rates, record student debt, spike in domestic violence and property crimes, surging suicide rates, so I suppose that you’re right in saying that ‘wealth doesn’t go around’.

    But the suggestion that we’re up against a socialist conspiracy as the cause of our economic decline reflects the ideological delirium promulgated by the very same corporate fascists that are rolling in trillions of profits exacted from a population smothering in debt, futureless and growing more desperate by the day.

    Our country is an Oligarchy that’s bought and paid for Congress, the White House and the courts. They will play off ideology to fear-monger division and usurp national resources just as they’ve been doing to the developing world for decades.

    Socialism? How about a fascist slave state that destroys entrepreneurship and small business as mere by-product of global monopoly. Competition? Ask a Wal-mart, Monsanto, Exxon or JP Morgan Chase about it.

    There is no ‘free’ America left except what’s not yet on their radar to usurp or destroy. We’re not at war with China, we’re at war with ourselves. Socialism is deader than ‘free markets’, both we’re illusions to begin with.

    • Mark Uzick May 18, 2012, 5:29 am

      Who exactly is doing the looting, Mark?

      It’s he fascist/socialist oligarchs and power hungry tyrants that you point to; but I’m referring to those who propose to loot – whoever they may be – those who view wealth as a limited resource like a pie that must be shared with fairness, when in fact wealth is not a resource; it’s something that is created and it has no fixed limit.

    • mario cavolo May 18, 2012, 12:59 pm

      …a biting rant on reality BDTR…nice. Mario

  • Benjamin May 18, 2012, 2:38 am

    Given the history on this forum between Mark and myself, but not wanting to ruin his moment in the spotlight, I’ll just say “present” and leave it at that. I also hope that others will help him with his (or rather, Friedman’s) blind spots.

  • Cam Fitzgerald May 18, 2012, 2:30 am

    Seen this yet, Mario? Remember when I told you China would be THE story of 2012? Well the chickens are coming home to roost. Lets start getting serious about the dangers posed to our investments. This is now a very big deal.

    http://globaleconomicanalysis.blogspot.ca/2012/05/real-estate-crash-in-china-underway.html

    • mario cavolo May 18, 2012, 11:21 am

      Hi Cam, did some fishing on this today….I’ll start keeping a closer eye but there’s nothing new here and the word crash is being poorly used by Mish, and not used by the professor who is the author of the article Mish is referencing, its really ridiculous rhetoric compared to reality.

      I want to remind that the problems of isolated overleveraged developers are not such a huge impact on the broad market. Soft is soft and that’s certainly the case but the problem developers are as I have said before quite isolated.

      I called our real estate developer of our apt complex in Shenyang and the real estate agent and we know business is soft. Same story as I checked with my close friend in Chengdu, prices definitely down 20% there.

      Existing urban apt prices are holding steady as a rock here in urban Shanghai and other main cities with a couple of developers on the outside of town dropping their price on new apts by 15% because business slow, as reported.

      So I’m just reminding I don’t see that a 10-20% drop in sales and prices is a crash and after a 300-500% rise on mostly mortgage free properties it isn’t going to be a systemic disaster. The market has peaked and is now flattening and correcting, happy days for most anyway. Its like me reading that the DOW will PLUMMET or TANK to 12,000. That’s NOT plummeting.

      May home sales rebounded sharply over the May holiday across the country ( but folks need to understand that its tradition for buyers to buy during the national holidays here in China, sort of like “Christmas” shopping back in the states)

      According to Centaline (huge real estate agency here) below “May 17 — Home transactions in Beijing during the May 1-15 period rose 45.4 percent month-on-month and 44 percent year-on-year to 9,703 units, reports China Securities Journal, average transaction price was basically unchanged from April at 19,666 yuan per square meter as ordinary housing accounted for most of the transactions, according to Beijing Centaline Property. …” Shanghai’s transactions also rebounded up substantially year on year. (but once again that indicates more so that its the rich people who are enjoying themselves much more than the average folks.)

      On the commercial side, I can see there is a shortage of commercial office space for rent in most of the major cities according to multiple sources reported in Shanghai Business Review. (SBR) I’m afraid China is getting like the U.S., the big corporations are humming along in their fancy big office spaces while the little guys are the ones struggling. The new 43 story office story here at Kerry Parkside is now 95% occupied, again, this is Shanghai the center of the earth, it is the same in Beijing. I’ll check on commercial for Shenzhen, Guangzhou, Shenzhen, Tianjin, Qingdao, Chengdu, Chongqing and let you know.

      You know, I want to recommend that when wanting to know what’s really going in China, to read and reference org, news and industry websites which are based in China; amcham shanghai, and the other ones I mentioned which have a high foreign expat readership.

      I continue to point out that Mish rhetorically misuses the word “crash” In Mr. Chovanec’s article which Mish is basically just rewriting, the author himself said “At least one major sector of the Chinese economy (10-13% of GDP), which had been a leading growth driver, is undoubtedly in contraction.”

      The author himself I note, an intelligent Beijing university professor, said “in contraction” .

      Across the globe it all seems certainly to be slowing unfortunately…Cheers, Mario

    • Mark Uzick May 18, 2012, 4:30 pm

      Regarding the overbuilt housing in China: Housing may be thought of as just one more “resource” or “infrastructure project” that will be needed in the future that they can use to dump their worthless FRN’s while they can still get something for them while placating a destabilizing unemployment problem. These may be thought of as misallocated investments by some, but the Chinese may consider holding depreciating paper as an even worse allocation of funds.

  • Erin May 18, 2012, 2:29 am

    “But if we care about our liberty and prosperity, we need to liberate ourselves from the stranglehold of socialism on both domestic and international trade, becoming, once more, a living example for the rest of the world to emulate.”

    So very true…except the majority of America has no idea nor do they seem to care what those two words mean. If they did, Ron Paul would have been elected a long time ago. He is simply the only one who believes in letting a society and it’s people make decisions for themselves and not the government.
    This country has become sickening on so many levels that it is really hard to believe. People are much more interested in American idol than what is happening to their currency and their liberties. Good luck changing that…Ignorance is bliss!

    • Mark Uzick May 18, 2012, 5:12 am

      Dr. Paul still has a good chance to be President. His supporters are numerous; and even if they are not the majority, the passion and enthusiasm that each one brings to his campaign is equal to one-hundred of his rival’s supporters. A minority won the American revolution and so a minority can win the Ron Paul revolution.

      The MSM wants you to think that Dr. Paul is out of the race, not because they support Romney, but because they’re for Obama and only Dr. Paul can beat Obama.

    • Rich May 18, 2012, 8:17 pm

      Erin, things are a lot better than monopoly media are reporting.

      We say that with conviction on this last leg of our one month American Campaign US Senate tour.

      Let’s not confuse virtual market reality with economic recovery, either to the downside or upside.

      Re MC’s points, there is no apparent market crash anywhere, despite “great” expectations by many.

      Re MU’s points re the good Dr Paul, most media are blissfully or deliberately ignorant of the 12 states now where he holds the majority of August GOP Tampa Convention delegates.

      A scary bear market to SPX 1180 could wake a few “Change Believers Up” for the Constitutional Independent LOVE Revolution.

      We are still accumulating silver for a healthy double and more long-term as government continues to loot the real economy…