Free or fair?

Cheaper prices on various goods and services from around the world are generally a good thing for American consumers. So why is it that so many 'free trade' advocates see this as unfair?
Walter-williams

At first blush, the mercantilists' call for "free trade but fair trade" sounds reasonable. After all, who can be against fairness? Giving the idea just a bit of thought suggests that fairness as a guide for public policy lays the groundwork for tyranny. You say, "Williams, I've never heard anything so farfetched! Explain yourself."
       
Think about the First Amendment to our Constitution that reads: "Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances."
       
How many of us would prefer that the Founders had written the First Amendment so as to focus on fairness rather than freedom and instead wrote: "Congress shall make no unfair laws respecting an establishment of religion, or prohibiting the fair exercise thereof; or abridging the fairness of speech, or of the press; or the right of the people to peaceably assemble in a fair fashion, and to fairly petition the Government for a redress of grievances"?
       
How supportive would you be to a person who argued that he was for free religion but fair religion, or he was for free speech but fair speech? Would you be supportive of government efforts to limit unfair religion and unfair speech? How might life look under a regime of fairness of religion, speech and the press?
       
Suppose a newspaper published a statement like "President Obama might easily end his term alongside Jimmy Carter as one of America's worse presidents." Some people might consider that fair speech while other people denounce it as unfair speech. What to do? A tribunal would have to be formed to decide on the fairness or unfairness of the statement.

It goes without saying that the political makeup of the tribunal would be a matter of controversy. Once such a tribunal was set up, how much generalized agreement would there be on what it decreed? And, if deemed unfair speech, what should the penalties be?
       
The bottom line is that what's fair or unfair is an elusive concept and the same applies to trade. Last summer, I purchased a 2010 LS 460 Lexus, through a U.S. intermediary, from a Japanese producer for $70,000. Here's my question to you: Was that a fair or unfair trade? I was free to keep my $70,000 or purchase the car. The Japanese producer was free to keep his Lexus or sell me the car.

As it turned out, I gave up my $70,000 and took possession of the car, and the Japanese producer gave up possession of the car and took possession of my money. The exchange occurred because I saw myself as being better off and so did the Japanese producer. I think it was both free and fair trade, and I'd like an American mercantilist to explain to me how it wasn't.
       
Mercantilists have absolutely no argument when we recognize that trade is mostly between individuals. Mercantilists pretend that trade occurs between nations such as U.S. trading with England or Japan to appeal to our jingoism. First, does the U.S. trade with Japan and England? In other words, is it members of the U.S. Congress trading with their counterparts in the Japanese Diet or the English Parliament?

That's nonsense. Trade occurs between individuals in one country, through intermediaries, with individuals in another country.
       
Who might protest that my trade with the Lexus manufacturer was unfair? If you said an American car manufacturer and their union workers, go to the head of the class. They would like Congress to restrict foreign trade so that they can sell their cars at a pleasing price and their workers earn a pleasing wage.

As a matter of fact, it's never American consumers who complain about cheaper prices. It's always American producers and their unions who do the complaining. That ought to tell us something.


Walter E. Williams is a professor of economics at George Mason University in Fairfax, Virginia. He has authored more than 150 publications, including many in scholarly journals, and has frequently given expert testimony before Congressional committees on public policy issues ranging from labor policy to taxation and spending.


5 comments from readers  

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Suggest a reading of the classic Bastiat essays, the Candlestick Maker's Petition, next time you hear this one. The only fair trade is free trade. If it's "unfair" for one market participant to have to compete with another participant who can do the job better and cheaper, how much more unfair is it for the second participant to not be allowed to participate at all, or to have to offer his own goods at a price reflecting the first's relatively poor woorkmanship rather than his own, superior, craft?
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This column was the most simplistic bs I have ever read. Trade treaties and agreements govern the transactions between nations, which is the framework within which individuals operate whether we like it or not. Not once does he mention the fact that many of our competitors in the world market are subsized by their governments--whcih is why there is a legitimate discussion about "fair or unfair trade."
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This piece seemed to ramble a little, and it really didn't clear up "Fair Trade" for me.

"Fair Trade" advocates a bunch of fine-sounding vagaries, but take away the flowery language and "Fair Trade" boils down to: (1) Minimum price floors, (2) Working condition "safeguards" and "standards", (3) encouraging "representation" for workers and *small* farmers, (4) A politically-driven "certification" process.

In other words, "Fair Trade" is about labor unions, price controls, and bureaucratic micro-managing.

"Free Fair Trade" is an oxymoron.
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But Williams, it is completely fair that you should be able to trade with whomever you wish, exercise your right to speech as you wish, and have the freedom of your individual mind.

What a twisted notion of fairness those ubiquitous Progressive Socialist Elitists have!

Reason had an interesting, but strange article on a study of how the minds of libertarians are different from those of conservatives or liberals. While libertarians were said to put more weight on reason, they were also said to put less weight on fairness than do liberals and conservatives. This is wrong. They think of fairness in a different way and do not think that government should have the power to impose the values that inform what fairness is. Without rational values and rational analysis, one cannot know what is fair.
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To use your example of domestic cars vs. foreign cars; many of the "foreign cars" are manufactured here in the USA. The foreign car companies use the same material suppliers, and the same American labor force and are seemingly making a reasonable profit. The only major difference is the foreign companies don't have unions to destroy their productivity and demand unreasonably high wages. Most foreign companies also have lower tax burdens. When we get smart enough to through out the parasitic union leaders and remove over burdening taxes from our businesses we will again be competitive with the rest of the world.
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