The Only "Fair" Trade is Free Trade

by | Dec 8, 2010 | POLITICS, Trade

In a recent defense of what he calls “fair trade,” Barack Obama stated that one major purpose of trade agreements is to ensure that American products are made at home — not bought from other countries. No such thing is true. The purpose of any trade agreement should be to liberalize trade to the greatest […]

In a recent defense of what he calls “fair trade,” Barack Obama stated that one major purpose of trade agreements is to ensure that American products are made at home — not bought from other countries.

No such thing is true.

The purpose of any trade agreement should be to liberalize trade to the greatest degree possible. In so doing, individuals in the marketplace will make up their own minds as to what best suits their interest. Should tires be made in the United States, or somewhere else? Should shoes and coats be made in the United States, or in a country that can produce them more efficiently and cheaply — even when considering the cost of exporting them to the United States? None of this is Barack Obama’s call. No politician is smart or virtuous enough to make such one-size-fits-all decisions to apply to an entire nation (or an entire planet). As most Americans are well aware, politicians are the least qualified, intellectually and ethically speaking, to make any important determinations of any kind. More than that, no one person — even a smart and ethical one — can possibly calculate the right number of imports or exports to have in any given country at any given time. These facts must be the result of countless — thousands, even millions — of individual decisions made by individual consumers, calculating their interests, any given day.

We’re used to talking about “the economy.” But the economy is not some kind of entity that can be controlled by any other entity. Some politicians, especially socialist ones such as Barack Obama, seem to think so. They seem to think that one individual, or group of selected people, can decide what’s best for millions. This explains why he thinks it’s perfectly reasonable to nationalize banks, medical care and the American automobile industry. This also explains how he can subscribe to the notion of “fair trade.”

The only “fair” trade is free trade. Freedom of trade is the only fair arrangement mankind has ever devised, or ever will devise. This is not to imply that under free trade, everybody is happy. Of course it’s impossible to ever make everybody happy. If the corner grocer goes out of business because a big grocery store sells better quality products at cheaper prices, then the majority of grocery shoppers will still be happy. The small grocer, his family and his most loyal customers will not be happy. Does this mean the freedom of trade that allowed the big grocery store to open up down the street is unfair? Of course not. Life is not fair, at least if “fairness” is defined as making everybody happy. The same applies to imports and exports. If businesses in a foreign country can produce goods of high enough quality at a cheap enough price, better than any business can in the American homeland, then rational Americans will buy the best product at the best possible price. That’s what consumers tend to do, and a free market (which includes freedom of trade) allows them to do it.

Even socialists like Barack Obama — who are far less intelligent than they’re given credit for — grasp this basic fact. When they speak of “fair trade,” they know full well that they’re never going to create an economic context in which everybody is equally happy. What they mean by “fair,” although they won’t admit it, is to please their constituency groups at the expense of others. When a liberal Democrat socialist like Barack Obama says “let’s make trade fair,” he means: “Let’s use the law to create advantages for labor unions who give me lots of money, and disadvantages for those who compete with those unions.” The same applies to the reasoning of a socialist Republican (of which there are plenty, and don’t be fooled). The socialist (or fascist if you prefer) Republican negotiates deals that benefit his own politically favored groups at the expense of groups or individuals who compete with his supporters.

This is more or less “the economy” as we know it. Few, if any, of the politicians in high office really care about free trade or fair trade, properly defined. They just care about using government force to tilt things in their own favor.

The same applies to that stale phrase, “level playing field,” something else Barack Obama sings the praises of. The only level playing field is one in which everyone is equally free to compete and produce. If everyone has an equal right to sell his product and keep whatever he earns from it, then the field is level.

Level fields and level outcomes, of course, are not the same thing. If an outcome is more favorable for one business than another business, then it’s because the one business satisfied more customers, in a more efficient way, than did the second business. It’s at this point that the politician — the advocate of the losing business — comes in and cries, “It’s not fair! We have to level the playing field.” Now who could disagree with a level playing field? Nobody, when it’s put that way — which is why Barack Obama will get his way. To a politician like Obama, especially a deeply socialist one like he is, it’s not about competence and freedom; it’s all about outcome. That is: A favorable outcome for those he deems worthy.

Think of politicians like Obama — and most if not all of the others, in both parties — as advocates not of a free market, not of genuine capitalism, but as advocates for their cronies. Their motto is not, “Let the best man win,” or “Let the most competent and profitable businesses thrive, and leave others free to outdo them.” Their motto is, instead: “Let my crony win.”

Crony capitalism has been around a long time. Ayn Rand called it the “aristocracy of pull.” Look at these pull-peddling creatures (like Rep. Charlie Rangel and Rep. Barney Frank) who hold office for decades in Congress, and you’ll see exactly what she meant. It applies no less to the high and mighty Obama than it does to all his allegedly inferior predecessors.

As more Americans start to realize that Obama is not “change,” but simply more of the same — a lot more of the same socialism and government intervention in the economy we have endured for decades — perhaps we can start to consider actual change: Change away from crony capitalism and towards genuine free market capitalism.

America does not suffer from a lack of fairness so much as a lack of freedom. Restore freedom, and you will in the process restore fairness.

Dr. Michael Hurd is a psychotherapist, columnist and author of "Bad Therapy, Good Therapy (And How to Tell the Difference)" and "Grow Up America!" Visit his website at:

The views expressed above represent those of the author and do not necessarily represent the views of the editors and publishers of Capitalism Magazine. Capitalism Magazine sometimes publishes articles we disagree with because we think the article provides information, or a contrasting point of view, that may be of value to our readers.

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