02/15/16 – Sheldon Richman – The Scott Horton Show

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All right, you guys, welcome back to the thing here, man.
I'm Scott Horton.
It's my show, The Scott Horton Show.
Hey, guess what?
I got Sheldon Richman on the line.
Hey, Sheldon, how are you doing?
I'm doing fine, Scott.
Thanks for having me back.
Very good to have you on.
Sorry, everybody, for the audio quality.
My Skype computer exploded.
I'm going to work on that.
But anyway, I can hear you okay.
Sheldon, I'm happy to have you on the show because there are some things I want to ask you about, some things that, of course, you've written about.
Oh, and you guys know Sheldon.
He's from all those libertarian institutions that you've heard of over the years.
And he's a regular writer for AntiWar.com.
His own website is SheldonRichman.com.
Free Association, it's called.
FreeAssociation at SheldonRichman.com.
And if you just type in Sheldon Richman, China, you'll get all kinds of stuff.
Decades' worth of articles about trade.
And so I guess kind of sort of the way I want to set this up, Sheldon, is to try to put you on the defensive here.
Evil establishmentarians like Jeb Bush and Hillary Clinton, they like all these big free trade deals with countries like Mexico and China.
And the insurgents from the outside, Trump and Sanders, sticking up for the American worker and the American people and saying we're sick and tired of these corporations moving all of American people, American workers' jobs overseas where they don't have jobs anymore.
And now even studies coming out talking about life expectancy getting shorter and shorter for people as they just sit home drinking and smoking and dying instead of working.
And I don't know if you saw this, but there's a viral video that Trump referred to in the most recent debate that was going around last week of this air conditioner company, announcing to everybody, sorry dude, we're moving the factory to Mexico.
That's the way it is.
Business is business.
Gotta keep costs down.
And so I think I'm going to unfairly lump you in with Jeb Bush and Hillary Clinton and say you are for what's destroying America, and that is why everybody is turning to Trump and Sanders to save them from the destructive forces of the free market and free trade.
Sheldon, so now defend yourself.
Well, I must lodge a protest at being thrown into the same bin with Jeb Bush and Hillary Clinton and those others.
Okay.
Just as a quick aside, Trump ought to be of really mixed emotions about the carrier moving to Mexico because if carrier moves to Mexico and creates a lot of jobs down there, that'll be fewer Mexicans will stick across the border to come here.
So he should be happy about that.
So I don't know why he hasn't at least given us a little asterisk to his complaint about that.
But here's what I'd say overall, just to get to the big picture first.
Historically in the United States, free traders have given free trade a bad name.
And by that I mean the leading American office holders and influential people throughout, I mean from the very beginning of the country.
But when they talked about trade, the people that were regarded as open to trade still saw that as a government policy.
They wanted the government to open up, and this was true of obviously manufacturers and merchants and whatnot, they wanted the government to open up markets using the full range of tools available, or I should say weapons, from diplomacy all the way to gunboats.
That's what was considered free trade.
And, of course, the opposite side of that is you could withhold trade.
And we saw presidents from early on, John Adams, Thomas Jefferson, James Madison, they used trade as a weapon.
They imposed embargoes.
Jefferson called it peaceful coercion, if you want to make some sense of that term.
So trade, even among people who were open to trade, like the idea of trade and didn't want to close themselves off, who were not, let's say, mercantilists, still saw trade as government policy, which means it was still being done at the bidding of particular interests.
It wasn't just, hey, let Americans as individuals or as voluntary groups of individuals trade with whomever they want.
Nobody was taking that position.
Oh, maybe there were a few people that we would regard as the libertarians of the day, but they were not the influential people.
They weren't making policy.
So trade has always been seen as a government tool.
And so these so-called free trade agreements, we shouldn't be surprised that that's just another form that it has taken.
And those agreements, which are always, what, 1,000 or more pages?
I mean, if it's really free trade, why would you need 1,000 pages?
You just say, at midnight tonight, all trade restrictions in the United States are hereby repealed.
Period.
That's it.
Instead, there's all kinds of commissions that are set up, and people can claim, hey, these are unelected commissions.
How do we know what these bureaucrats who get appointed, how do we know what they're going to decide, what's the recourse if we don't like the decisions?
There's all those problems.
A very big problem, which I heard you mention the other day, is these so-called free trade agreements always impose very strict IT regimes, intellectual property regimes, on developing economies.
In other words, our so-called, well, I'll say ours, not mine, but the establishment's view of how patents and copyrights should be enforced or should be enforced at all are imposed on budding economies, which has a stifling effect that makes them dependent on American manufacturers.
That's not free trade.
But it's called free trade, and therefore it gives plausible grounds to Trump and Sanders to complain about it as simply another form of big, special interest, special favors to well-connected interests.
And they're right in that regard.
However, it's not free trade.
Okay, and now, so I want to get more into what is in those deals and things like OPIC, the Overseas Private Investment Corporation, where government is literally subsidizing and encouraging companies to offshore, doing everything they can to help them do it, and all this kind of thing.
You know, pro-tobacco programs and anti-tobacco programs at the same time.
It is government that we're talking about here.
But what about that maybe, I don't know, Sheldon, it sort of kind of sounds like a cop-out, like, well, yeah, but true communism ain't been tried, and no true Scotsman would ever do a thing like that, so you must not be one.
Because, after all, Chinese will work for cheaper than Americans will.
You can't deny it, man.
Labor is cheaper in poorer countries.
And so it makes perfect, just on-paper sense for American corporations to move their factories over there.
Why wouldn't they?
Yeah, China makes the same complaint about Vietnam and other places.
So Trump is only partially aware of this.
He'll complain about China, and then he'll throw in Vietnam and say, well, you know, Vietnam too.
In other words, the wave of development toward places with abundant labor, and therefore low-cost labor, is already passing China by, and people in China complain about that.
So that's the way of the world.
Under freedom, that's going to happen.
But that doesn't mean people are then in a dynamic economy.
If the U.S. economy were actually free, that doesn't mean people then are forever unemployed and sit around and commit to a side and drink and do that because there's nothing else to do.
In a dynamic economy, I mean, look at all the jobs that exist today, even in our corporatist economy that didn't exist 10 years ago, 20 years ago, 30 years ago, 50 years ago.
50 years ago, we'd sit back, and if I said, well, you know, people will get work programming phones that we're going to carry around in our pocket that are going to be more powerful than what they can put in a satellite today, you'd say, well, are you a dreamer?
Are you crazy?
In other words, we don't know what will come along if the economy is actually free.
But we know some things will come along.
We can make that kind of pattern prediction, to use the Hayek phrase, that new things will come along even if we can't say exactly what.
Now, that gives us some disadvantage in making an argument, right, because we have to point to something vague.
Oh, yes, something will come along, so you can easily say, oh, sure, something will come along, fine.
But look at the past.
Look at the past.
You know, imagine somebody from 1700 coming to the United States, coming to our time and looking around, and you're taking them on a tour of the economy, of our society, and you show them your iPhone.
And he'll say something like, well, that's very cool and all, but how do you draw people away from the farm?
I mean, don't you need people to grow food?
How can you afford to have them making this thing, not food?
Food's more important than this.
And you'd say, you don't get it.
You didn't draw people away from the farm.
They weren't needed on the farm anymore.
Now they're making iPhones or whatever they're making.
I don't know.iPhones are made in China.
But something else.
That's how economic development occurs when economies are free.
All right, now hold it right there.
I'm going to pretend to argue with Sheldon Richman as best I can more on the other side of this break.
SheldonRichman.com and AntiWar.com for his great stuff.
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Hey, I'm Scott.
Welcome back to the show.
I'm talking to Sheldon Richman.
He used to be at the Foundation for Economic Education, the editor of their journal there.
He's at the Future Freedom Foundation, editor of their journal there.
Now he's regularly contributing for us at AntiWar.com, and he's written 10 million articles about what I would consider the most very libertarian take on every single thing in the world.
Just type in Sheldon Richman and whatever it is you're interested in, and you're going to find something cool.
Right now we're talking about trade and how, well, Trump and Sanders, they're sticking up for the little guy by saying we don't want to have these deals with Mexico and China anymore.
Now Sheldon says he opposes whatever the current deals are that have all their flaws in them, and he would rather have actual free trade.
So we're talking about overall, I guess, we need to get into whether protectionism could serve the American people better.
I mean, after all, there are towns, I don't know, maybe this is more mythology than truth, Sheldon, but there are towns, I think, where, you know, almost whole towns or huge portions of the population of a town are built around one big factory, something like that.
And when that factory closes, that's people's lives.
That's, you know, families separated from each other.
That's human tragedy falls in the wake of that virtually every time.
And all the people in town who didn't work for that factory still suffer the same loss and everything else, and you know how it is.
So, you know, maybe Trump should threaten them to not move to Mexico, and maybe the Mexicans should just make their own damn air conditioner company or something like that.
Well, look, here's the problem.
When you legislate stagnation, which is what you're saying, if we're honest about it, legislate against change, you know, freeze change, you hurt a whole lot of other people, including people in the United States.
Not only does it harm the people who are way poorer in other countries, but it hurts Americans too, many of whom are not doing well.
They'll be deprived of lower prices, they'll be deprived of products that would make their lives better or save their lives, because that's what you get from trade and the division of labor and comparative advantage.
If the government is not tilting the scales one way or another.
The great pro-peace, anti-war free trader of the 19th century in England, Richard Cobden, said that if you apply violence to trade, you distort trade in the same way that if you apply violence to religion.
It's not religion.
So it's not trade if you apply violence to it.
That means all subsidies, and I include the military, the War Department, I don't call it the Defense Department, the big military subsidy that, say, long-distance shippers get or the highway subsidies that long-distance road shippers, surface shippers enjoy, that's all subsidy, which comes by forcing other people.
So yes, you can look at a town that was built around one factory and say look at the hardship, but in a dynamic economy, there'd be change, but most turnover historically in jobs comes not from the fact that foreigners produce what those people used to produce, but from technological change.
You know, factories today, automobile factories today, hardly have any people in them.
It's all computerized.
There's a few programmers sitting up in a control room and a few people on the floor.
It's not the way it used to be.
That's not because of foreigners.
There were factories here.
Manufacturing has not shrunk as a percentage.
It's only shrunk as a percentage of the economy because the service economy has grown.
We still make a huge amount of things in this country, but we just need fewer people to make those things.
Now those people are available for other things if the economy were completely open and free, and I mean by that sweeping away intellectual property, sweeping away licensing laws, building permits, eminent domain, those things Trump would not be complaining about.
Then you get a dynamism.
But to say in order to protect workers, we're going to freeze the current condition as it is, makes no sense.
What if they had done that 50 years ago?
You and I wouldn't be talking today, would we?
Well, we might be talking over a landline, but we certainly wouldn't be using computers to get on the air and things like that.
So why is this moment in time the right moment to freeze?
So I'm sure it's been a little while since you've read the thing, but so what is exactly then the difference between NAFTA and hey, let's just have free trade?
I mean what all is actually in that thing, other than opening the border to trade?
A few thousand pages I guess is the difference.
Yeah, but I mean what's on them?
Maybe it just says a little bit of kickback here or there, but it's not really much.
I don't know.
It doesn't.
It has all kinds of technical exceptions.
They made exceptions for sugar.
They always do stuff like that.
Some special interests will get set aside.
Like I say, you get demands that there be an IP regime, which is very stifling.
Look, if a factory in a very poor area, poor country, wants to say to hell with Nike, we can make our own sneakers and export them to the United States, Nike will come in with all their power, all their money, all their lawyers, and say you're infringing on our patent or our copyright or whatever, trademark, whatever.
Even if they're not calling on Nike.
And they'll crush them.
So those people then become dependent on those factories.
And then often those companies work with, at least sometimes they work with the local governments there, the national governments in those poor countries, to drive people off the farms out of the rural areas by taking their land and whatnot, driving them into the city so you have all this very cheap labor available to Western-owned factories.
That's not freedom.
Now we can't really do anything about that, what a government in Sri Lanka may be doing.
Obviously we don't want the U.S. government dictating policy to them.
But these so-called free trade agreements dictate policy to them and cooperate in dispossessing people of land so that now they have very little choice but to go into these factories.
That's not free trade.
And Trump ought to understand that.
He's now a throwback to the old narrow-minded protectionism that doesn't understand these positions.
Some of the time, though he sounds like you, Sheldon, some of the time he says, I'm for free trade, but these are crooked deals and I don't want these deals which give the advantage to China, not us.
Yeah, but he'd be saying the same.
He doesn't like the idea of companies moving, period, out of the country.
They're our jobs.
They're not our jobs.
You can't own jobs.
And that's a know-nothing appeal that's a throwback to the most unsophisticated form of protectionism that exists, that somehow we own this economy, we own this culture.
Look at it across all his issues.
We own the culture.
We quote we, meaning him and his cronies, eventually, if you were to get into office, we'll decide what infringes on our culture, what infringes on our economy.
That's not economic freedom.
Free trade is what Adam Smith talked about, and he condemned all the subsidies and interferences.
Even if it's in the name of expanding trade, it's still government using force on behalf of special interests.
All right, now in the next couple of minutes here, last couple of minutes here, Sheldon, I want you to address the robots because you brought it up, too.
This is the majority of the change when it comes to manual labor, factory labor in American societies, the robots.
And I don't know if you saw this, but you've seen them before in the past at least.
This new one is from The Telegraph.
Robots will take over most jobs within 30 years, warns expert.
The rise of robots could lead to unemployment rates greater than 50%.
And I know you're going to say, yeah, but they'll be driving prices down if we had a free market.
Well, we don't, and that's a high unemployment rate.
Maybe we need Bernie Sanders to put everybody on welfare.
Well, robots aren't going to be performing services.
And I don't know why we put down the service economy, as if that's something inferior.
It need not be.
Services can be finance, insurance, health care, a lot of things.
This is, again, a throwback to the idea of the physics.
I believe that only working the land, the land was the only real wealth, right?
This has gone through a series of revisions of thinking where they pick up on one thing and say, that's wealth.
And if that changes, oh, my gosh, the world's going to come to an end.
Our country's going to come to an end.
Lots of people reject this idea that someday robots will be doing everything.
And don't forget, if they're making things that nobody can buy, then they're not going to stay in business very long.
That can't be the long-term story.
So I think we can reject that.
I mean, I know Tyler Cowen, even a fairly free-market guy, has warned that we're in for this great stagnation.
But even in his own thesis, he's just saying, oh, this could easily get reversed through some big discovery in 10 years.
It's always bad to bet that there's not going to be some breakthrough that people make in the future, because if they're free, there's an incentive, there's an entrepreneurial incentive, namely a profit incentive, to make those big breakthroughs.
And look at the breakthroughs we lived through that people weren't predicting.
Most people weren't predicting.
The few people that did were thought to be just millionaires who were unrealistic, utopian.
Count me in.
Freedom works.
Sheldon Richman, everybody.
He's at SheldonRichman.com.
That's his great blog, Free Association.
Just type in his name in China.
You'll find a bunch at F-E-E and F-F-F and elsewhere.
Thanks again, Sheldon.
My pleasure, Scott.
Anytime.
See you all tomorrow.
Thanks.
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