Sunday, August 23, 2009

Which Is Worse: Anti-Semitism or Protectionism?

This morning, I happened to catch a few moments of The McLaughlin Group. The subject had apparently turned to economics and trade, and Pat Buchanan was railing about his idee fixe, the idea that our "trade deficit" with China was evidence of a purposeful policy of Chinese economic sabotage.

OK, to start with, there is no such thing as a "trade deficit." Trade is the exchange of economic goods. If I give the gas station $3 and the gas station gives me a gallon of unleaded, do I have a "trade deficit" with the gas station?

The United States has, relative to China, a surplus of wealth. China has, relative to the United States, a surplus of labor. Chinese labor produces goods which are then exchanged for American wealth. There is no "deficit" in the pejorative sense suggested by Buchanan.

If U.S. manufacturers could produce fireworks as cheaply as do the Chinese, then I wouldn't buy Chinese fireworks. In fact, the Chinese make fireworks so cheaply, no U.S. manufacturer even attempts to compete with them, and I don't even have a choice: If I'm going to buy fireworks, I must buy Chinese fireworks.

Why is this? Well, we are a wealthy nation, fireworks manufacturing is dangerous work, and people in wealthy nations do not do dangerous work cheaply. Also, the United States has a lot of tort-happy trial lawyers who'd sue a fireworks maker into bankruptcy the minute a stray spark ignites the kind of accidental explosions that routinely kill Chinese fireworks facctory workers. (e.g., "Fireworks factory explosion in China kills 13," "Second China fireworks factory blast kills 11," "16 killed in China factory blast," etc.)

In addition to such considerations, the U.S. has OSHA guidelines, EPA, food stamps, Medicaid, worker's compensation, minimum wage, etc., etc. These various mechanisms of the liberal welfare state have the effect of increasing labor costs and reducing incentives for work at the lower end of the wage scale.

If the United States were to implement free-market reforms that had the effect of reducing the anti-competitive impact of tort lawyers and the welfare state, U.S. manufacturing would be in a better position vis a vis China. This would not bring about Utopia ("Alabama fireworks factory explosion kills 14 illegal immigrants") but at least we wouldn't have to listen to Buchanan talking incessantly about imposing protective tariffs.

To the extent that the Chinese government is pursuing protectionist or quasi-protectionist policies (i.e., subsidizing industries for the export of goods at sub-market prices), the primary victims of this policy are the Chinese.

Just as there is no such thing as a "trade deficit," so is there no such thing as "dumping" of sub-market goods. If Beijing wishes to tax its citizens in order to sell us steel at sub-market prices, I say we take all that cheap steel we can get. If the steel lobby and the steelworkers' union cry foul, screw 'em. They can either reduce wages or do without a job, but there is no point in making workers in every steel-dependent industry suffer on their behalf by imposing steel tariffs.

Now, I have recently scolded my friend David Frum over his 2003 attack on Buchanan (and Buchanan's friends, including the late Robert Novak) in regard to the Iraq War. I dare risk Frum's enmity on this score because (a) Buchanan's criticism of the Bush administration's Iraq policy has been amply vindicated, and (b) Frum resurrected the accusation of anti-Semitism against Buchanan & Co.

It is irrelevant (or, at least, should be irrelevant) to a discussion of U.S. foreign policy whether Buchanan is or is not an anti-Semite. It's a free country, and Buchanan's personal hatreds are his own business. But if the invasion of Iraq was a bad policy, undertaken without honest debate and in the absence of accurate intelligence or adequate planning for the post-invasion phase, then criticism of that policy ought to be respected, whether the criticism comes from Buchanan or John Kerry or Louis Farrakhan.

Tangling up Iraq policy discussion with the toxic charge of anti-Semitism isn't helpful. A thing can be true even if a bad person says it. Trying to pre-emptively disqualify an adversary's argument by saying that he is a bad person -- "A notorious former colleague of Michael Gerson!" -- simply won't do.

Moreover, these sorts of accusations of mala fides invite the question of whether the irrational prejudice alleged -- e.g., that Buchanan hates Jews -- actually causes harm.

Suppose that it is alleged that David Frum hates fat women. Evidence of this hatred is adduced in that Frum's wife Danielle Crittenden is thin and, even when he was single, Frum was never known to date fat girls, nor even girls who might be described as "pleasantly plump." Furthermore, it is remembered that Frum once harshly criticized Hillary Clinton (who isn't exactly Olive Oyl, if you get my drift).

Ah, so Frum now stands credibly accused of hating fat women. And Frum's defense is, "So what? Lots of people hate fat women. What's your point?"

Exactly right. And while it may be shown that, in terms of group averages, fat women have lower income than thin women, that they have less education, fewer social advantages, higher crime rates -- the usual sorts of evidences of "victimhood" -- you still haven't proven that David Frum's irrational fatchickaphobia has resulted in any particular harm to any particular fat woman.

Now, this probably sounds silly as an analogy for anti-Semitism, but on the other hand, so far as I am aware, the evidence that Pat Buchanan has ever done actual harm to any particular Jewish person is non-existent. It's one thing to say that, vis a vis U.S. Middle East policy, Buchanan's positions are as wrong as that thick-thighed Hillary Clinton's, but . . .

Having personally felt the sting of irrational prejudice against Appalachian-Americans -- no, I've never cooked moonshine, my parents weren't first cousins, and I don't even own a banjo -- I understand the sensitivity about such crude bigotry. But how can anyone claim to be doing good for the conservative cause by indicting Buchanana for bigotry so subtle as to be indistinguishable from the sentiments of most liberals, including pudgy-bottomed Hillary Clinton?

I guess what I'm I trying to say is, can't we all just get along? Jews and Jew-haters, David Frum and fat chicks like Hillary Clinton, protectionist fanatics and soon-to-be-exploded Chinese fireworks factory employees? Everybody hold hands and sing along.

Kumbayah, my Lord, kumbayah . . .


  1. It's amazing that people still worry about "trade deficits" as if they were a grave threat to America or - as you note - as if they even existed.

    These deficits date back to the mercantilist era, when European trade was primarily in gold and the sovereign was considered the owner of all a nation's gold. Jealous of their gold, governments did not wish to allow their reserves to be depleted by the purchase of foreign goods, so insisted the accounts "balance" between purchases and sales so that their treasuries remained constant.

    Then, as now, of course, it was a stupid policy which sabotaged economic growth. It does serve one useful function these days: whenever I hear someone raise the issue of "trade deficts" today, I instantly know they are completely ignorant about economic and trade issues.

  2. Not only Hayekian, but Miltonian! (I would say Friedmanian, but I like the sound of Miltonian better.)

  3. Antisemitism has been shown to cause the death and suffering of large numbers of people for several thousand years. Fatchickophobia has been shown to cause loneliness and feelings of rejection, at least recently.

    There is no comparison.

  4. "I don't even own a banjo -- I understand the sensitivity about such crude bigotry."

    Uh-huh. So what is it you have against banjos?

  5. Trade deficits are very real, as they indicate the indebtedness of the nation-state running up the deficit. And that affects the value of the currency of the nation-state running up the debt and failing (or in the case of the USA, refusing) to produce its own goods and services.

    Beyond that, one cannot be free and be dependent. This truth goes for nation-states even more than it does for individuals. America could be close to self-sufficient if it aimed to be and it should be a goal for America to be as self-sufficient as possible, which is considerably more self-sufficient than we are now. “Free trade” is a Left wing delusion, as any true conservative knows. And most Americans will soon learn to their great regret what being dependent on other nations for manufactured goods means, even aside from the fact of the lack of employment caused by substituting foreign for domestic production.

    A final two points would be to note that those nation-states (or whose elites) that develop a contempt for making things, for working with one’s hands, don’t last very long. And any “conservative” movement that doesn’t ally itself with the legitimate interests of those folks who do make things don’t really have the right to call themselves “conservative” and certainly won’t get the votes of those who do, or of those who should be so employed.

  6. Left wing secular movements were responsible for the murder of what, over 100 million people in the Twentieth Century. Does that mean everyone associated with Left wing secularism is to be treated as if they are about to murder 100 million people?

    There were plenty of people in the period up to World War Two who didn’t approve of unassimilated Jews who also were very opposed to Hitler and Nazism. By today’s loose standard, those anti-Nazis would be labeled “anti-Semites.”

    When Buchanan argues in favor of economic protectionism, is that a sign of “anti-Semitism”? When Buchanan opposes a “pre-emptive war” (aka a war of aggression) does that make him blood thirsty? The questions answer themselves, at least to any rational, fair minded and honest person.

    Those hurling nasty smears at Buchanan are other than rational, fair minded and honest.

  7. OK, my beef with Pat is the tone whenever he starts down the road of being anti-Israel. There does seem to be some kind of near conspiracy tone when Pat talks about people being in the AIPAC "amen corner". On this subject, protectionism, Pat is just plain wrong. He might as well be a spokesman for labor union A or whatever. Hey, Pat is a big boy and I think understands when he is critizized for the tone that makes it appear that he is anti-Semitic. And on protectionism, he is out and out wrong.

  8. Here is a list of (just some) countries that have a border adjusted Value Added Tax (VAT or BAVAT):

    European Union (including the UK and Ireland)
    South Korea

    A BAVAT operates like a tariff, except that for domestically manufactured goods that are exported, the VAT is refunded to the manufacturer. So a BAVAT operates to encourage exports and discourage imports even more than a traditional tariff.

    And the only major developed country in the world without a BAVAT is the good ole USA. Not having a tariff or a BAVAT is the equivalent of unilateral economic disarmament.

  9. There you go again Righty64. Why is it “anti-Israel” to be against the Iraq wars or to disagree with AIPAC on some issues?

    Don’t you realize Righty64, that by terming any disagreement with the policies that you prefer as “anti-Israel” or “anti-Semitic” that you are somewhat (understatement) poisoning the “debate”? In fact, your attitude, imported from the big time Neocons, is to prevent a debate and rational thought by smearing one side or one viewpoint, in this case the one that seeks to limit interventionism.

    For you information there is a highly respected Israeli scholar, who also happens to be Right wing, named Martin van Creveld who has taken a position similar to Buchanan’s. Yes, Creveld’s position isn’t exactly like Buchanan’s and I’m sure he reject being associated with him, but Creveld has counseled against bombing Iran and is skeptical of the use of conventional military forces against terrorists and in “nation building.”

    For your further information, it wasn’t Buchanan who started the controversy but the Neocons who you parrot. In 1989, in the Neocon “National Interest” journal, Buchanan put forth a post Cold War foreign policy program that called for American to retrench and focus on the home front. He was attacked by various Neocons, such as Ben Wattenberg (an LBJ aide and Clinton supporter). Buchanan hadn’t dealt with the issue of Israel at all in his essay, but was immediately attacked by Neocons, even though he previously had a good relationship with many of them. The Neocons wanted the USA to ramp up its global interventionism in the wake of the Cold War, rather than tone it down as Buchanan and other traditional conservatives advised.

    The late great Robert Nisbet advised the same thing in his 1988 Jefferson Lecture (published as “The Present Age: Anarchy and Progress in America”). Nisbet, whose obit was a lengthy essay in the Neocon Weekly Standard, lamented that the USA was caught up in a virtual “100 years war” between 1917 and the end of the Cold War. Russell Kirk, 25 year essayist at National Review and “godfather” of conservatives was against the first Iraq war too, and was Michigan chair of Buchanan for President. There are reasons behind Buchanan’s positions, but all so many can do is parrot the Neocon smears. Truly pathetic.