Wednesday, March 8, 2017

Interview: Richard Ebeling claims NAFTA "is really the North American Managed Trade Agreement", explains why

This is the third of seven articles spanning my discussion with Dr. Richard Ebeling. The first and second pieces are available. 
Story by Joseph Ford Cotto
"Soon after taking the oath of office, President Donald J. Trump signed a series of Presidential Memoranda to fulfill his promise to make America Great Again on trade and other issues," the White House's public relations arm declared shortly after Trump assumed office.
It continued: "The first executive action the President took was to permanently withdraw the United States from the Trans-Pacific Partnership, a multinational trade agreement that is not in the best interest of American workers. 
"This action ushers in a new era of U.S. trade policy in which the Trump Administration will pursue bilateral free trade opportunities with allies around the world, wherever possible, to promote American industry, protect American workers, and raise American wages. It is the policy of the Trump Administration to represent the American people and their financial well-being in all negotiations, particularly the American worker, and to create fair and economically beneficial trade deals that serve their interests."
A few days later, the Donald announced his plan to change the conditions of America's participation in the North American Free Trade Agreement, a trilateral commerce bloc which binds us with Canada and Mexico.    
“I’m deeply concerned by President Trump’s statements today reaffirming his commitment to renegotiate the North American Free Trade Agreement (NAFTA)," John McCain said shortly after. "While renegotiations could help to strengthen and modernize NAFTA to benefit American businesses and consumers, any effort to restrict or impose new barriers on our ability to trade with Mexico and Canada could jeopardize the future of this trade agreement and have serious consequences for Arizona and the country." 
McCain later added: “The free flow of trade has been the foundation of U.S. economic policy for decades, and a major factor in our prosperity and greatness. We should not have to relearn the lessons of history. Retreating from NAFTA and other international trade agreements will harm our ability to compete in today’s global economy, raise costs for consumers, threaten jobs, and undermine our relations with our closest neighbors.”
What is going on here? So many sparring perspectives on trade from such powerful people.
The Trump-McCain spat is but one theater in a battle of ideas between protectionist and laissez faire personalities. This disagreement has come not only to dominate the right, but our country's left -- think of the difference between Bernie Sanders and Hillary Clinton on economic policy.
Few people are so familiar with the limited government perspective as Dr. Richard Ebeling.
As his employer, The Citadel (South Carolina's prestigious military university -- an unlikely site for such a titan of libertarianism), tells, he "is the BB&T Distinguished Professor of Ethics and Free Enterprise Leadership .... Among the courses he offers are "Entrepreneurial Leadership and Capitalist Ethics" and "Ethical Entrepreneurship and Profit-Making."
"Dr. Ebeling is recognized as one of the leading members of the Austrian School of Economics and is the author of Austrian Economics and Public Policy: Restoring Freedom and Prosperity (Future of Freedom Foundation, 2016); Monetary Central Planning and the State (Future of Freedom Foundation, 2015); as well as the author of Political Economy, Public Policy, and Monetary Economics: Ludwig von Mises and the Austrian Tradition (Routledge, 2010) and Austrian Economics and the Political Economy of Freedom (Edward Elgar, 2003)." 
Ebeling recently spoke with me about several issues concerning the American economy. Some of our conversation is included below.
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Joseph Ford Cotto: Since it went into effect during late 1995, the North American Free Trade Agreement has formed a trilateral commerce bloc between Canada, the United States, and Mexico. From your research, has this proven to be of benefit to our country? 

Ebeling: The North American Free Trade Agreement (NAFTA) is really the North American Managed Trade Agreement (NAMTA). I say this because it is a politically negotiated trade agreement between the governments of the United States, Canada and Mexico. These governments have decided what may be traded across the three borders, with what manufacturing methods and workshop conditions, and how the goods may be transported and sold across North America.

To the extent that trade barriers were lowered, and goods and services have been able to more freely and competitively trade across North America, we have all benefited – Americans, Mexicans and Canadians, alike. But it remains a politically managed trade arrangement, and not trade fully determined and directed by the open, competitive market forces of supply and demand. Nonetheless, we have gained from the agreement.

The answer to any seeming disadvantages that the new Trump Administration sees in the current NAFTA setup is not to raise trade barriers or renegotiate the terms under which governments think people should be allowed to buy and seller across these borders. The U.S. government should simply say that it will practice open and completel freedom of trade regardless of what policies our neighbors may follow. That is, a policy of unilateral free trade.

Cotto: One reason the American economy fails to meet standards set by its postwar halcyon era is that it produces a decreasing number of material goods. What would you say could be done to reinvigorate our manufacturing sector?

Ebeling: In a free society, it is not the business of the government to manage and manipulate production and trade. Those in government suffer from two shortcomings that strongly suggest they should not be involved with such things.

First, those in government possess neither the knowledge, wisdom nor ability to know enough how goods and what goods should be produced, better than those individual producers and businessmen in their respective corners of the marketplace. Second, those in government are inescapably motived and guided by one over-arching goal: their election and reelection to political office. To do so they need campaign contributions and votes on Election Day.

Invariably, this means that their policy decisions will be made not on the basis of some nebulas and indefinable “national interest” or “general welfare,” but on what will benefit various special interests with whose help those politicians hope to triumph on Election Day. This means policy will always tend to be at the expense of consumers and other potential competitors less lucky or affective in getting politicians to do their special interest bidding.

And, third, in a free society, individuals should be left free to trade and associate both within a country and with the citizens of other nations as they find it more profitable and advantageous. As long as government can interfere with a free market, there will be those who want to get their hand into the cookie jar of political privileges and favors. The political cookie jar must be taken away, and that means restricting government to the impartial protection of people’s individual rights to their life, liberty and honestly acquired property.

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