Friday, December 14, 2012

Misunderstanding a "Free Market"

In the article on Wal-Mart and foot stamps, a correspondent left the following comment, probably prompted by my previous comments, published yesterday, 12/13/12:

Walmart is driven by one factor: So-caled "free trade". Obama, W, Clinton and Reagan all have embraced free trade to help the rich get richer. (Obama just found the cheating Chinese don't cheat to keep the ripoff going). It's done by having the communists pay dirt wages for shoddy product that's then sold at a retail outlet. What's missing? Manufactures here, in America, with employees getting paid a decent wage. If you don't like Walmart wages, you don't like Obama who only offers the palliative Food Stamp Program to justify his relocation of 10,000 manufacturing jobs to foreign countries a month. They've already moved textiles, chemicals, drugs, tool die makers, electronics and steel out....forever. Then, Obama advertises our Food Stamps in Mexico, so they can come here and filch jobs and benefits from us. 
Think about it. Walmart doesn't work in a vacuum.

I left these replies:

Free Trade is a moral principle; meaning, voluntary association free from physical force and interference from others, including government. Free trade’s purpose is not to “help the rich get richer.” It is a logical consequence of the guarantee of each individual’s inalienable rights to his own life, liberty, property, and pursuit of happiness. The fact than many get rich under free trade is a virtue, because—under free trade—fortunes are made by enriching everyone who engages in free trade. Without free trade, those of us who manage to survive at all would all be dirt poor. 
Today, we have a mix of free trade (the moral) and force, with government as the hired gun (the immoral).  
To the extent that overseas manufacturing is driven by free trade, it is a win-win-win; good for the company, the worker, and the American consumer. To the extent that it is driven by forcible government interference into the market—such as the government-induced massive mis-allocated resources from manufacturing-related investments to housing-related over-expansion that led to the Great Recession—it is a lose-lose-lose. We shouldn’t confuse free trade with statism. 

By the way, not everyone who gets rich in today's economy does so legitimately by free trade. Many get rich through so-called "crony-capitalism"--government favors--which is really crony socialism. But, that's the mixed economy.

In the first reply, my sentence "The fact than many get rich under free trade is a virtue, because—under free trade—fortunes are made by enriching everyone who engages in free trade" should have ended with the words "with that productive company." But the point should be clear enough without it (I think).

1 comment:

Mike Kevitt said...

If a company in one country deals directly with a company in another country, and the gvt. of neither country interferes with nor mandates the dealings, that's free trade.

But, if in at least one of the countries, the gvt. regulates wages or employment practices, or otherwise regulates the daylights outa the company in that country, the free trade gets to be more of a dealing between that gvt. and the other company, or a dealing between the two gvts., if the other gvt. also regulates a lot.