The Future of NATO

The recent NATO summit in Chicago that produced absolutely nothing has opponents of the alliance smelling blood. Indeed, the only thing that the Chicago summit may have produced is a healthy recognition by many factions that the future of NATO itself is increasingly in doubt. This should come as no surprise to any of us here at the Notewriter’s consortium, but in some ways this development is surprising.

Even mainstream pundits, ensconced as they are in Beltway ideology, have begun to notice that the alliance is on its way out. From CNN’s Security Clearance blog (“security clearance”? Really?):

Europe’s collective fatigue with NATO’s globetrotting has often left the United States shouldering most of the burden, which is considered one of NATO’s greatest shortcomings. The United States now covers 75% of NATO defense budgets, while the majority of allies don’t even allocate NATO’s benchmark 2% of gross domestic product to defense.

Sharp reductions in European defense budgets have only increased dependence on the United States.

While realists have been bemoaning the alliance for decades, it has become apparent that the reality of the situation has finally smacked some sense into the Beltway consensus. This must be kind of like how libertarians felt after the collapse of the Berlin Wall in the late 1980’s.

Like the collapse of the Soviet Union, though, there are many things to be worried aboutwith the impending collapse of NATO. The major issue that the US should be worried about is deteriorating relations with Europe. While the American taxpayer got stuck subsidizing the defense of Europe for well over half a century, the relationships brought about by working together have proved fruitful, and in order to keep these relations on good terms, Washington should undertake policies that will further integrate American and European societies: freer trade.

There is no reason why there shouldn’t be a free trade zone between the whole of the US and Europe on the scale of the US itself or the EU (the same goes for the US and its nearest neighbors: Canada, Mexico, and the Caribbean).

One thing that American policymakers should not fear is the rise of a competitor in the form of a European superstate. This fear (or hope, if you are an American socialist) is off-base. Just think of Europe’s sclerotic answers to the worst economic crisis in its history, and then imagine a European Union trying to implement a common, cohesive foreign policy on a global scale like that of the US.

It isn’t possible. Not even states with highly centralized power structures like China can compete with the US in this regard, and the thought of Brussels actively trying to compete with the US in international relations is ludicrous.

The demise of NATO is ultimately a good thing. There is no need for a collective security alliance to combat a menacing Russia any longer. Moscow’s empire of Soviets is long gone, and its focus in the near future will be domestic and along its borders. NATO’s demise will also save the US a lot of money, and will spare the European people from the negative effects (like terrorist attacks) associated with supporting a worldwide hegemon. We can only hope that NATO’s demise comes sooner rather than later, and that each party involved will recognize that continued relations with each other, especially in regards to trading policy, are still vital to peace and prosperity.

21 thoughts on “The Future of NATO

  1. Hello Branden:

    Agreed that NATO is probably on its way out due to the unwillingness of Europe to contribute its fair share, but I think a free trade zone between Europe and the US is a little far-fetched in the current climate.

    A large part of the current dilemma in Europe can be traced to trade imbalances within the Euro zone. Germany is an export juggernaut that floods countries with a weak export sector like Greece with its goods while having a debased currency because it is tied to such economically weak countries. The reason the EU is failing is because there are no financial transfers between richer and poorer states to offset the huge disparity of the countries in the bloc. The US not only has these transfers- so that states like California subsidizes states like Mississippi, but amazing the economic difference between US states is much less than gap between EU states. A free trade zone between the US and Europe would likely not solve Europe’s problem, and actually bring it across the pond to North America.

    • Rick,

      Trade imbalances have never had a negative economic impact upon an economy or a society. They have, however, had a negative political impact since time immemorial. In defense of free trade, observe Adam Smith:

      The annual produce of the land and labour of England […] is certainly much greater than it was, a little more than a century ago […] Though, at present, few people, I believe, doubt of this, yet during this period, five years have seldom passed away in which some book or pamphlet has not been published, written too with such abilities as to gain some authority with the public, and pretending to demonstrate that the wealth of the nation was fast declining, that the country was depopulated, agriculture neglected, manufactures decaying, and trade undone. Nor have these publications all been party pamphlets, the wretched offspring of falsehood and venality. Many of them have been written by very candid and very intelligent people; who wrote nothing but what they believed, and for no other reason but because they believed it.

      The reason the EuroZone is in trouble is because the PIIGS lied about their books. Quick question: if financial transfers through political means are what keeps the US so rich, why don’t we just start making financial transfers to Africa?

    • Happy Memorial Day Brandon.

      Many of the most insightful economists do think structural imbalances are a huge problem. Best among them is Martin Wolfe over at the Financial Times. Check him out, at least in the name of an open mind.

      It seems a little unfair to quote Smith in FAVOR of protectionism, but sorry I feel like I have to:

      …every individual necessarily labours to render the annual revenue of the society as great as he can. He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. BY PREFERRING THE SUPPORT OF DOMESTIC TO THAT OF FOREIGN INDUSTRY, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.

      I am not claiming that financial transfers make or keep the US rich. They merely balance out some of the differences between states. Those differences are
      not nearly as great as those between Eurozone countries:
      The Difference Between the US and Europe in 5 More Graphs.

      This lack of difference between US states is also reflected in labor mobility which is facilitated by a shared language.

      The fact that there are constraints as to how broad an economic unit can be before you run into problems of different economic levels of development,
      institutions, history, and cultural elements that ease economic transactions such as shared language you appear to ignore. These are real world constraints on free trade that even Smith took into account.

    • Rick,

      Thanks, I spent the day drinking wine at a reggae concert in Los Angeles. There were no American flags in sight, but there were quite a few Belizian and Californian flags flying around.

      Wolf is not that insightful of an economist anymore. After the 2008 crisis, he lost his credibility when he advocated a massive fiscal and monetary stimulus package (a la Keynes) to shore up the economy. Oooops.

      That Smith quote you found is not an argument in favor of protectionism. This is important to realize because, as Smith states, it is the natural inclination of the common man to regard domestic industry more highly than that produced abroad. This is a big mistake. Jump down one paragraph from the one you just quoted (it’s on page 573 of the cheap Bantam paperback edition of The Wealth of Nations in case anybody out there is following along). Smith writes:

      To give the monopoly of the home-market to the produce of domestic industry, in any particular art or manufacture, is in some measure to direct private people in what manner they ought to employ their capitals, and must, in almost all cases, be either a useless or a hurtful regulation.

      Smith goes on further in the paragraph with astute examples of why protectionism is so hurtful to a society.

      I have come across many, many ignorant arguments in favor of protectionism and I cannot stress enough the dangers that protectionism poses to world peace and prosperity. Here is another goodie for you Rick (It’s on pages 682-683):

      The laws concerning [protectionist measures] may every where be compared to the laws concerning religion. The people feel themselves so much interested in what relates either to their subsistence in this life, or to their happiness in a life to come, that government must yield to their prejudices, and, in order to preserve the public tranquility, establish that system which they approve of. It is upon this account, perhaps, that we so seldom find a reasonable system established with regard to either of those two capital objects.

      Sound familiar?

      Now, I don’t mean to pick on you Rick but your mistakes are so common that I feel I can exploit them for the purpose of helping other readers to further clarify the concept of free trade. Your misreading of Adam Smith is one thing, but your own illogical statements regarding a couple of other matters is quite another. This one set off my alarm immediately:

      This lack of difference between US states is also reflected in labor mobility which is facilitated by a shared language.

      Sorry Rick, but labor mobility has nothing to do with language and everything to do with policies promoting free trade. Remember, the US was essentially set up as a massive free trade zone made up of 13 different polities. If there had been no free trade between the 13 states then labor mobility would have been severely restricted. Language has nothing to do with it. Even in the EU the transaction costs associated with language barriers are minimal to none within states that have no restrictions upon labor or capital mobility.

      Up next Rick apologizes for the redistribution of wealth via the political process:

      I am not claiming that financial transfers make or keep the US rich. They merely balance out some of the differences between states.

      Great. So what is the purpose of stealing money from wealthy, prosperous (and handsome!) Californians and giving it to back asswards swamprats in Mississippi? To foster “national cohesion”? Eliminating the political means of dividing up the wealth within a nation would force poor states like Mississippi to start implementing better policies. Right? Am I missing something here?

      This is an important point to take into consideration because protectionism actually goes hand-in-hand with all the various strands of socialism: from Chavez’s Venezuela to Hitler’s Germany to Nasser’s Egypt to Nkrumah’s Ghana. Protectionism is also a good way to isolate a populace from the rest of the world. After all, if you can’t trade with people abroad, or restrictions are so heavy that only the rich can afford to do so, then how (or why) else is a populace going to interact with the rest of the world? I like to use the abusive spouse analogy to illustrate some of the social and political dangers associated with protectionism: just an abusive wife-beater or child molester seeks to isolate his victims from their families and friends, so too does the protectionist – wrapped in a national flag – seek to isolate the populace of a state from the outside world. The names associated with protectionist policies in the past should give readers ample reason to suspect what would come next.

      Rick’s last point deserves mention because I think that, even though we disagree on many things, there is still much we can learn from each other. He writes:

      The fact that there are constraints as to how broad an economic unit can be before you run into problems of different economic levels of development,
      institutions, history, and cultural elements that ease economic transactions such as shared language you appear to ignore. These are real world constraints on free trade that even Smith took into account.

      Aside from the “shared language” point (which, as I’ve demonstrated, is total nonsense), these are reasons why freer trade is needed in the world. Of course there are going to be different levels of development and institutions…THAT’S WHY FREE TRADE IS SO IMPORTANT TO IMPLEMENT!!!

      Fostering deepening trade ties between two or more states is how we are able to improve institutions, create jobs, and develop deepening cultural ties as well. Can you think of a more prosperous, rational, non-coercive or charitable way of accomplishing these goals? Foreign aid had just propped up dictators. Wars speak for themselves. Isolationism also speaks for itself (just look at North Korea for a great case study on “national self-sufficiency”).

      Free trade’s empirical success has shown that when societies begin to incorporate free trade into their policies they end up being the freest, the richest, and the most charitable. As NATO continues its long descent into irrelevancy, it would be smart on Washington’s part (an oxymoron?) to continue to push for deeper economic and cultural ties (free trade) into the region.

  2. Glad you had a good time at the concert.

    If we tried to debate Wolfe we’d become trapped in a game of dueling counterfactuals which is pointless, so it’s best to deal with the other-points.

    Smith’s meaning is lost when taken out of historical context. What he is especially against is mercantilism in the form of state monopolies. Have you read his Theory of Moral Sentiments? Reading that in combination with The Wealth of Nations provides a much more comprehensive view into what he was about, and especially provides a more balanced view of the role of the state including the role of the state in facilitating trade and balancing out inequalities.

    I think you completely missed my point on labor mobility. All I am saying is that, given that the US shares a common language, it is easier for me to move from one state to another than in Europe when every time I moved to a new state I might have to learn a whole new language. Yes, America is a immigrant country, but the fact that there was only one language to learn makes it easier for new arrivals to move once they have mastered English. Things would be much more difficult for labor if the US had a dozen languages like Europe. I think that’s just common sense.

    Last I heard we had a federal system of government which means among other things that costs that benefit the country as a whole are shared with the wealthiest or most populous states pulling their fair share which means providing more resources for those common ends. These are common goods that actually facilitate the trade you find so important things like national highway and aviation systems.

    And free trade between the states didn’t prevent the Civil War in any case.

    You should realize that even if what you are pushing for would ultimately be for the good they are as utopian as any socialist dream. If I remember correctly in a past post you suggested the US joining together politically with Mexico. By who’s political will? Certainly not Americans in general or the Mexican people in general who have as deep a sense of national pride as we do. This lack of concern for political realities, along with an overwhelming idea of the deterministic effect of economics is almost Marxist.

    The Freetrade zones we have, such as NAFTA, have not resulted in some kind of North American paradise and almost no-one is happy with it. We are highly unlikely join with Europe in any similar agreement. The system of free trade we already have is showing great cracks. And unless we fix those cracks trade, which I also agree is a net positive for humankind is likely to become more a weapon of state against state than a path to universal prosperity.

    • Rick,

      A couple of quick points:

      If we tried to debate Wolfe we’d become trapped in a game of dueling counterfactuals which is pointless, so it’s best to deal with the other-points.

      Not really. This is a game I’d be more than willing to play. In times of crisis many otherwise intelligent people are capable of making very stupid mistakes. Mr. Wolf is no different in this regard, but the fact that threw out all of his principles and lifetime of work in the time span of two years does nothing for his reputation as an economic journalist.

      Smith’s meaning is lost when taken out of historical context.

      Oh really? So why are we debating his arguments over 200 years later? Provide me some more quotes purportedly in favor of protectionism (in either book you mentioned), and I will show you how you misread him again.

      I think you completely missed my point on labor mobility.

      Perhaps, though I doubt it. The reason why transaction costs associated with language are so low in Europe is because English is the de facto language of Europe anyway. English, it must be remembered, was never promoted by any state as the de facto language either. It just sorta worked out that way. Again, people would be speaking English anyway, but the removal of barriers to both labor and capital mobility in Europe is what has truly enhanced prosperity in the region.

      […] wealthiest or most populous states pulling their fair share which means providing more resources for those common ends.

      Great. It’s always a pleasure reading the arguments of people in poor, culturally stagnant states lecturing people in rich, cosmopolitan states about the necessity of contributing our “fair share” of the pie to their swamps.

      If I remember correctly in a past post you suggested the US joining together politically with Mexico. By who’s political will?

      Ah, really? Which post was it? I enjoy re-reading flashes of brilliance on the web. I probably said that we should work to further integration economically, not politically (though political union would be the next logic step were our trade ties to deepen). Here, let me re-quote a passage from Smith:

      The laws concerning [protectionist measures] may every where be compared to the laws concerning religion. The people feel themselves so much interested in what relates either to their subsistence in this life, or to their happiness in a life to come, that government must yield to their prejudices, and, in order to preserve the public tranquility, establish that system which they approve of. It is upon this account, perhaps, that we so seldom find a reasonable system established with regard to either of those two capital objects.

      I am well-aware that superstition in regards to freer trade is a very potent factor in implementing policies of deeper economic and cultural integration worldwide. My solace is that Adam Smith recognized the same thing in 1776.

      The Freetrade zones we have, such as NAFTA, have not resulted in some kind of North American paradise and almost no-one is happy with it […] The system of free trade we already have is showing great cracks.

      Do you have any empirical evidence to support these statements? Because all I see are projections for higher standards of living throughout the Western world (where free trade is relatively well-followed despite demagogic distractions), including Mexico, Canada and the US (all have experienced nothing but growth and stability since entering NAFTA, the current economic crisis notwithstanding). You are also conveniently forgetting that the US itself is a huge free trade zone.

  3. Okay Brandon, I’ll go another round.

    My point with Wolfe is that you and I are working from different assumptions. I take you to mean that the stimulus didn’t work, and indeed was counter productive. The fact is EVERY major economy engaged in massive fiscal stimulus. We don’t have a country, or a world where such stimulus didn’t occur so NEITHER OF US have anyway of really knowing if things would be better or worse without the stimulus.

    As far as Smith, again, the whole reason he even came into the debate is that you brought him in in the first place. My quote, and suggestion that you read his Theory of Moral Sentiments was intended to get you to realize, “hey wait a minute, this guy (Smith not me) is probably a little bit more sophisticated than the axiom “free trade good” “anything else bad”.
    My life is too short for a dueling Smith quote contest.

    You conveniently forget that most of us rich eastern states subsidized California for most of its modern existence via the defense industry, interstate highway system etc. Until the 20th century you guys were America’s “swamp” (beautiful as your state is). And since the dot com bust which is quite a while- you don’t seem to be doing so hot.

    Sure the US is a huge free trade zone, but it’s a free trade zone with a political element you ignore that includes a feeling of common identity and responsibility for fellow nationals when they get into trouble. As a states and regions sometimes do for a generation or so. Although it’s a little early to tell, before you retire we might be subsidizing CA with our shale gas riches.

    What you are conveniently forgetting is that the US government got most of its revenue in the 19th century FROM PROTECTIVE TARIFFS. That is we were externally protectionist internationally and internally free trade. From 1800-1900 the US went from the world’s backwater to its largest economy. No major economy that I can think of has not gone through this protectionist or quasi protectionist phase. Please name one (besides Britain with the very exceptional circumstance that it was the 1st country to industrialize).

    And that’s the point: free trade isn’t some magic formula that leads to universal prosperity it’s a stage that the richest economies reach. When they get to be big enough or have a robust enough global presence it is in their interest to open the doors wide, because the majority of goods being made are ones they have made or invested in, or they act as middle men in such trade. Just as the US replaced the UK as the world’s biggest promoter of free trade, someday we will likely be replaced by China. I think your correlation is backward- countries get rich THEN adopt free trade, not the other way round.

    • Rick,

      Thanks for obliging, but I can’t argue with your imagination. For instance, you write:

      The fact is EVERY major economy engaged in massive fiscal stimulus. We don’t have a country, or a world where such stimulus didn’t occur so NEITHER OF US have anyway of really knowing if things would be better or worse without the stimulus.

      Well, according to Wolf (not Wolfe) and other Keynesians, there was not enough stimulus. Thank god nobody takes Keynesians very seriously, or the current economic sluggishness of the world would be much worse.

      We can also take a gander into the past and see exactly what would have happened if no fiscal or monetary stimulus had been enacted. In the early 1920’s a major stock market crash occurred (caused by too much credit being injected into the American economy by the new central banking system) and the Harding administration did nothing about it. Have you ever heard of the 1920-21 depression? That’s because the government kept its grubby hands out of the marketplace and declined to try to fix its own mistakes. Compare that with the policies undertaken by both the Hoover and Roosevelt administrations in the ensuing decade.

      My […] suggestion that you read his Theory of Moral Sentiments was intended to get you to realize, “hey wait a minute, this guy (Smith not me) is probably a little bit more sophisticated than the axiom “free trade good” “anything else bad”.

      Thanks. There is nothing I enjoy more than being told to “go read a book.” It would be better if you could actually provide some quotations, though, so that I can show you how you have most-likely misread Smith (just as I did earlier in this exchange). If you can’t produce any quotes, I will have to continue to assume that you do not know what you are talking about, and remind you that you have yet to rebut Smith’s words.

      Speaking of not knowing what you are talking about, your understanding of history is as bad as your understanding of Smith and your understanding of how protectionism works. I would like to know where you receive your information.

      I must point out that your historical interpretation sounds like it was regurgitated from Lenin’s writings. Many of the bad dictators I mentioned earlier were all influenced by Lenin’s writings (Hitler was an exception; he got his protectionist ideas from men like Friedrich List). Now, perhaps Lenin was right all along after all, but the burden of proof lays with you Rick.

      You are correct that throughout most of history polities enacted protectionist policies. The result, obviously, is economic stagnation for millenia. Once Britain and other states in western Europe began to open up their economies to free trade the benefits of such policies hoisted them far above the rest of the world. There are no “stages” (speaking of Lenin and Marx) involved in free trade. You either adopt policies to promote free trade and prosper, or you adopt protectionist policies and stagnate. This is why you see post-colonial states mired in economic stagnation: their elites have adopted the idea that free trade is a stage to be achieved once…once what Rick?

      In regards to the US, the republic did not become an economic powerhouse until well-after the Civil War, when slavery was abolished. In fact, one of the reasons that the US threw up protectionist barriers to world trade was to protect the slave-based economy in the South from competition. Remember my analogy comparing protectionists to child molesters and wife-beaters?

      You have many more mistakes in your facts and your reasoning, and I cannot be bothered to correct you on all of them (though “you’re welcome” for the few that I have) because I have a hot Jewish chick coming over in a couple of hours to “study”. However, I will end by pointing out that you are also confused about what a subsidy is: a subsidy is an assistance granted by a state to a business or economic sector of a society, not another state. Please Rick, think about that (and the other rebuttals I have provided you with) and don’t come crawling back for more until you’ve fully processed all of the information I have generously given you!

      PS, you still haven’t provided a coherent explanation for why you think that Mississippi deserves all the lavish pork it gets with money stolen from California. I’m sorry, but a national identity and common bond just doesn’t cut. I have more in common with people from Mexico and China than I do with cousin-humping rednecks living in swamps.

    • Rick,

      A devastating rebuttal!

      I think our dialogue shows exactly what education is supposed to do: get people to think clearly so that superstitions can be discarded from man’s thought process. I have to note that every single one of Rick’s objections do not stand up to scrutiny. This is not because they are stupid opinions, but because they are simply false beliefs he holds about certain things pertaining to the world.

      This is the task that educators like Adam Smith and those of this consortium are bound. The fact that Europe’s institutions and culture are so similar to ours – economically and culturally – makes integration between the region and the US virtually common sense. Yet this notion is met with hostility and superstitious hearsay by the common man. Such opposition lends credence to Smith’s observation that while men are inclined to associate with those they know best, it does not follow that those men know what is best for others. Indeed, protectionism is counterproductive to peace and prosperity. The fact that people like Rick continue to be so opposed to such measures based upon the superstitions that he holds suggests that the task of the educator is both daunting and a testament to the intellectual class’s failures thus far.

      This is a big subject, and I don’t expect Rick or others to “get it” right away. Free trade is a complicated issue, and should not be confronted with superstition and litanies. As co-blogger Jacques Delacroix states:

      Facts matter but thinking things through slowly is also important.

      Indeed.

    • Brandon, the fact is that you play fast and loose with the facts. Prime example. You say:

      “In fact, one of the reasons that the US threw up protectionist barriers to world trade was to protect the slave-based economy in the South from competition.”

      You’re simply making this up. Think about it- the South was the EXPORTING portion of the American economy, hello cotton whereas the North wanted its infant industries protected from British industry and pushed for protection.

      You mention the 1920-21 depression which was short, and had no government intervention, but not the Long Depression of the 1870s that also had no government intervention and lasted for a generation.

      If this is just a game of who can make the best story to fit their position- what’s the point?

      You are an intelligent person, but you are an ideological thinker. I am open to doubt, was the stimulus good or bad- I am not sure, and don’t pretend to truly know. There are good arguments for and against. The difference between us is that I am not sure, and you have already made up your mind.

      Another thing that’s kind of annoying is all the bluster. Why don’t you leave that to Jacques- it’s his sthick. If I am trying to make a case for federalism and you are calling fellow American’s “cousin humping swamp rats” you might get a laugh from your audience, but you wont convince me that your really thinking things through. I really do wish you the best in your life, for such a young person you are very impressive, but until you are willing to have a more adult conversation, I am taking my time elsewhere.

    • Rick,

      You are still not thinking things through, especially in regards to the facts and how they relate to social processes. As I have already said, I cannot argue with your imagination.

      Here, take your own advice:

      Think about it- the South was the EXPORTING portion of the American economy, hello cotton whereas the North wanted its infant industries protected from British industry and pushed for protection.

      And what would protectionist policies do for northern states in regards to access to American cotton (according to protectionist logic)? There would suddenly be lots of cotton with nowhere to go. Jesus Christ Rick, don’t make me spell it out for you! Now, the fact that nationalists were wrong about what protectionist policies would do for industry and agriculture does not negate my point that one of the reasons for protectionist isolation was to prop up the slave-based economy for (purportedly) cheaper cotton from the agricultural South to feed the North’s uncompetitive industrial regions.

      You are still avoiding my point that slavery flourished behind the protectionist walls erected by the federal government, too. As I have said (I hate repeating myself, by the way): protectionism is just another ploy to isolate a regime’s nasty policies from the broader world community.

      The depression of the 1870’s was a result of the devastating Civil War, so of course it was going to take longer to recover from than a central bank-induced credit boom. Sheesh!

      Just because you are unsure about the effects of the stimulus packages that various governments concocted doesn’t mean that they didn’t fail outright or make the problem worse. Ignorance is bliss, after all. Next time you are getting gas or buying groceries or reading about the unemployment rate why don’t you think about how great of an idea the stimulus packages have been.

      Speaking of ideologues, federalism does not mean stealing from successful states in order to reward the less successful ones. Where, pray tell, did you get this silly idea from? Please don’t say “from your gut instincts” Rick!

  4. Really dude, your exhausting, and very sloppy. The Long Depression was not caused by the American Civil War. It was brought on BY A CREDIT BUST FROM EUROPE- THE COLLAPSE OF THE VIENNA STOCK EXCHANGE- AND WAS GLOBAL IN SCOPE, which can not be explained by the Civil War:

    http://en.wikipedia.org/wiki/Long_depression.

    Slavery was supported by the British policy of free trade (not in itself an argument against free trade, but true none the less) the British wanted to get their hands on cheap American cotton to be paid for by British imports. This was one of the major causes of the Civil War:

    http://www.yankeerino.com/protectionismcivilwar.bhs

    There is no “stealing” involved in federalism. If your brother needs a hand and you lend him one it’s because he’s your brother. And when the moment comes he will hopefully do it for you.

    I got this idea from Ben Franklin:

    “If we don’t hang together, by Heavens we shall hang separately”

    And that’s it man, I am done.

    Good luck in law school.

    • Rick,

      You are still reciting litanies and not thinking things through. I grow tired of arguing with your imagination.

      Just as I swatted away your attempts to use Smith’s words as an argument in favor of protectionism, so too will I swat away your attempts to peddle protectionism through Wikipedia articles. It would help if you had actually bothered to read what you have provided before posting (I can tell the difference, and so can others). From the Wikipedia article Rick provides:

      Like the later Great Depression, the Long Depression affected different countries at different times, at different rates, and some countries accomplished rapid growth over certain periods […] economic historians have complained about the characterization of this period as a “depression” due to conflicting economic statistics that cast doubt on the interpretation of this period as a depression. They note that this period saw a relatively large expansion of industry, of railroads, of physical output, of net national product, and real per capita income […] The view that a single recession lasted from 1873 to 1896 or 1897 is not supported by most modern reviews of the period. It has even been suggested that the trough of this business cycle may have occurred as early as 1875.

      Indeed. Rick’s nonsense about a global, decades-long depression just before posting an article to contradict his statement does nothing to inspire my confidence in the human race. Fortunately, it should inspire confidence in those of us who are pushing for more free trade (and, therefore, more liberty) throughout the world.

      The Wikipedia article gets better Rick:

      In America the speculative nature of financing due to both the greenback, which was paper currency issued to pay for the US Civil War, and rampant fraud in the building of the Union Pacific Railway up to 1869 culminated in the Credit Mobilier panic. Railway overbuilding and weak markets collapsed the bubble in 1873.

      There you have it. I emphasized the important aspect, which is that aside from all of the destruction of the war, printed paper currency (a result of the war effort) invited profligate activities (sound familiar?). The railway corruption, of course, was a product of the cronyism that the Republican Party indulged in after the US Civil War.

      Now, Rick’s musings about the contribution of protectionism to the US Civil War is interesting and is a point that deserves further treatment. Unfortunately, the rest of his incoherent statement regarding the British and the author-less, citation-free article he threw at my feet does nothing to inspire dialogue about the subject. If there are any readers who would like to riff on the subject of tariffs and the US Civil War I would be grateful for your initiative. The second article Rick provides, which, I guess, is supposed to further solidify his argument, set off my bullshit detector with the following sentence (did I mention that the article provided is author-less and citation-free?):

      Today’s labels of “protectionist” and “free trader” were actually invented by wealthy Southern slaveholders.

      Seriously?! I guess the unknown author didn’t read Frederic Bastiat’s 1848 article on protectionism and communism. The rest of the article, if you can call it that, contains many more myths and uncritical thinking.

      I hope that by exploiting Rick’s superstition some better understanding of how protectionists peddle their arguments can be found. Like a religious zealot quoting his holy book, the protectionist will pick and choose any passage he fancies and exclaim “see, I told you!”

      Once scrutinized, however, the arguments of the protectionists never amount to anything coherent, at least when it comes to enhancing peace and prosperity throughout the world. To date, those states that are able to beat back special interest groups and open up their economies to world trade are the states with the freest, most prosperous, and most healthy citizens. Those that attempt to close off their economies to the world? Well, history speaks for itself.

      One last thing. Rick writes (perhaps in desperation):

      There is no “stealing” involved in federalism.

      You obviously don’t know what federalism is. Federalism is a political system whereby many states come together to form a relatively loose political bond with the goal of creating a more cohesive economic bond in mind. When you argue that stealing from rich states to give to poor states is federalism, you are wrong. That’s socialism, not federalism.

    • You crack me up, man. Thanks for the Frederic Bastiat citation. I’ve taken away one good thing from this conversation, and eager to check him out.

      I’ll lay it out for the record- I am not against free trade or in favor of a totalitarian state or any such nonsense. I am for people not being beholden to any ideology. Trade is mostly good, but to hold it up as some sort of god that promises universal prosperity and peace is, I contend, to be blind to history.

      Below are our what I think were our major dispute points. I don’t think either of us resolved them to any satisfaction. Anyone interested can try to figure them out for themselves.

      1) How did Adam Smith define protectionism, and the role of the state? Is this similar or different than the definitions used by modern libertarians?

      2) What, if any, role do structural differences play in the stability of a free trade or trading zone?

      3) Are politically integrated/federal trade zones more or less stable than non-integrated ones?

      3) Do non-trade factors, such as language or culture, negatively impact the integration of a trade zone?

      4) What was the role of free trade and protectionism in the rise of the major world economies, especially the US?

      5) What was the role of free trade/protectionism in the American Civil War? And what role does trade play in war generally?

      6) How did economic crises since the industrial revolution play out? Did they tend to be over more quickly or last longer with government intervention?

      Later.

    • Rick the Trick (go ahead, click here for a definition):

      Your sophistry is not amusing. You’ve already proven your obstinate ignorance throughout this thread, and nobody is buying it.

      Of course you are “for people” and those who expose your ignorance and dishonest use of facts are ideologues. It’s one of the oldest tricks in the book, Rick, but readers of this consortium aren’t as gullible as the average voter.

      I’ll end this thread with yet another quote from the late, great Adam Smith, who was by no means right about everything, but whose intellectual legacy is reflected everyday with conversations like these. For those of you who have read The Wealth of Nations (unlike Rick), or would like to, the following passage is on pages 615-616 of the cheap Bantam paperback edition:

      Nothing, however, can be more absurd than this whole doctrine of the balance of trade, upon which, not only these restraints [tariffs], but almost all other regulations of commerce are founded. When two places trade with one another, this doctrine [protectionism] supposes that, if the balance be even, neither of them either loses or gains; but if it leans in any degree to one side, that one of them loses, and the other gains in proportion to its declension from the exact equilibrium. Both suppositions are false. A trade which is forced by means of bounties and monopolies, may be, and commonly is disadvantageous to the country in whose favour [sic] it is meant to be established […] But that trade which, without force or constraint, is naturally and regularly carried on between any two places, is always advantageous, though not always equally so, to both.

      By advantage or gain, I understand, not the increase of the quantity of gold and silver, but […] the increase of the annual revenue of its inhabitants.

      […] If their trade should be of such a nature that one of them exported to the other nothing but native commodities, while the returns of that other consisted altogether in foreign goods; the balance, in this case, would still be supposed even, commodities being paid for by commodities. They would, in this case too, both gain, but they would not gain equally.

      The emphasis is mine. Protectionist policies, even under the guise of veiled (or not so veiled) nationalism, are at best useless and at worst harmful to the point of starting wars. In matters of trade, everybody gains. I have yet to see anybody rebut this simple observation. Free trade with Europe? Yes please.

  5. […] I’ve written about this before, but due to the inevitable fiscal constraints of empire I think American military policy towards Europe needs to go one of two ways: 1) either withdraw our troops completely or 2) start implementing trade policies that would make living, working, and traveling between the US and Europe much, much easier. Like moving to Louisiana from Languedoc should be as easy as moving from California to Connecticut. […]

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