Thursday, May 16, 2019

Interview: Richard Ebeling says "the real benefit of every trade we enter into is what we import"

Editor's note: This interview was originally published in March 2017.

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.
Joseph Ford Cotto: Prominent economists and politicians often say that free trade will benefit America in the long run. Many Americans disagree strongly. What is your take on this situation?
Dr. Richard Ebeling: Freedom of trade is always beneficial to the participants. First, people only trade when, all things considered, they value more highly what they can buy from someone than the price being asked. Whether our potential trading partner is next door, down the street, or from half way around the world, the same logic applies.

Second, why do we trade? Either someone can make something we cannot, so we either buy it from him or do without it; or he can make it for less or of a better quality than if we tried to make it ourselves; or by buying it from him rather than making it for ourselves, he frees up our time and resources to make something that is more productively profitable to ourselves. In the latter case, for instance, I may hire a gardener to mow my lawn or a housekeeper to clean up my home, so my time is freed up to do something that enables me to earn, on net, more money than the cost of having them do this work for me.

Third, the same logic applies to people living in different countries, who end up trading with each other across a line on a map defined as a political boundary between nations. In this sense, while the world is divided up into nation-states, from the economic point-of-view of a mutual betterment for all of mankind, the global is potentially one marketplace.
We surely take for granted our increasingly global economy as reflected in the many products and services we choose to buy from others living in other parts of a common planet, just as many of those others find it advantageous and profitable to buy from people living in the United States.

We need to also not forget that the real benefit of every trade we enter into is what we import. Our exports are merely the necessary means by which we buy what we find desirable to purchase from other. I “export” my teaching skills as an economics professor in the classroom to earn the dollars that, then, enables me to “import” into my personal household all the goods offered by others that I desire to have and use. This is no less true for Americans who export some of the goods they produce in exchange for the imports they acquire from people in other countries.