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Hornberger's Blog is a daily libertarian blog written by Jacob G. Hornberger, founder and president of FFF.
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Free Trade Is Not Government-Controlled Trade

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I can’t help but laugh when I read about President Obama’s plan to negotiate a “free-trade” agreement with the European Union. What part of “free” does he not understand?

First of all, let’s be honest about why Obama is suddenly doing this. He, along with many other U.S. officials, has witnessed the success that China has had making friends with countries all over the world through trade, as compared to the way that the U.S. national-security state makes friends — through the projection of military strength. U.S. officials, especially those in the Pentagon and the CIA, increasingly see China’s rise through economic activity as a grave threat to the United States and its principle of strength through military prowess. So, Obama’s plan to negotiate a “free-trade” agreement with the European Union is obviously designed to “compete” against China on its terms and attempt to counteract its rising influence in the world.

But that’s not the part that’s funny. The part’s that funny is how a negotiated trade agreement is referred to, by both Obama and the mainstream press, as a “free-trade” agreement.

What does “free trade” mean in a genuine sense? It means trade that is free of government interference, control, or regulation. That’s also what “free enterprise” means — enterprise that is free of government interference, control, or regulation.

How can trade be considered free of government interference, control, or regulation when the government is negotiating with foreign regimes the terms by which Americans will be permitted to trade with people in those countries?

What’s an example of genuine free trade? The United States! That is, inside the United States. The United States is the biggest free-trade zone in the world. People in one state are free to trade with people in other states. There are no tariffs and no protectionist barriers.

And notice something important about all this: No one suffers from anxiety over the size of the trade imbalances between the respective states. Think about it: Do you know whether New Yorkers spend more money in Florida than Floridians spend in New York? Do you care? Do you pace the floors at night worrying about the trade imbalance between the two states?

Of course not. It just doesn’t matter. What matters is that, thanks to our American ancestors, people within the United States are free to buy and sell things with people in other states without having to pass through customs, pay import fees, or overcome other artificial political barriers to trade.

Notice something else important here: The governors of the respective states aren’t negotiating trade agreement with other governors. The issue just doesn’t arise because trade between people within the United States is truly free — free, that is of government interference, control, and regulation. That’s a good thing! (Of course, we’re leaving out any discussion of the drug war here, which constitutes a severe violation of the principles of free trade and economic liberty.)

Free trade within the United States is one of the primary reasons that Americans still have such a relatively high standard of living. Every time people enter into an exchange, their standard of living rises. Why is that? Because by entering into the trade, each trader gives up something he values less for something he values more.

We all take this remarkable process for granted since it is the system under which we have been born and raised. The problem is that we’ve also all been raised under government-controlled system of trade when it comes to the rest of the world, and so it’s difficult for Americans to extend the concept of free trade to foreign countries. Even worse, many Americans have been inculcated with the notion that this government-controlled system of international trade constitutes “free trade.” That’s obviously a ridiculous notion. All one has to do is compare it with the genuinely free-trade system within the United States to see that.

If Obama and Congress were genuinely interested in free trade, as compared to government-managed trade, they would simply drop all U.S. trade barriers, including sanctions and embargoes. The president doesn’t need to negotiate anything with anyone. He doesn’t need a “free-trade” agreement. All he needs to do is unilaterally eliminate all barriers to Americans’ ability to trade with people all over the world.

Does that mean that other regimes will do the same? Of course not. But so what? Their imposition of controls on their citizens’ ability to trade with Americans is an infringement on their economic freedom. And as soon as they realize that that’s hurting their standard of living, all their government has to do is lift its own barriers. Their government doesn’t have to negotiate a “free-trade” agreement with Washington because Americans would already be free to trade with their citizens.

The most important argument for free trade, however, is not the utilitarian argument but rather the moral argument. People have the natural, God-given right to exchange their money and everything else they own with everyone else anywhere in the world. No government has the legitimate authority to interfere with that fundamental right. That’s what the Declaration of Independence was all about — the idea that everyone has been endowed with certain fundamental rights with which no government can legitimately infringe upon.

President Obama should forget about negotiating with the EU over what we Americans can do with our own money. Leave government control over economic activity to China and other socialist countries. Instead, the president and Congress should free up trade by expanding our domestic free trade zone here in the United States to encompass the rest of the world. Not only would it improve people’s standard of living, it would also help move America away from statism and toward economic liberty, free enterprise, free markets, and free trade.

 

This post was written by:

Jacob G. Hornberger is founder and president of The Future of Freedom Foundation. He was born and raised in Laredo, Texas, and received his B.A. in economics from Virginia Military Institute and his law degree from the University of Texas. He was a trial attorney for twelve years in Texas. He also was an adjunct professor at the University of Dallas, where he taught law and economics. In 1987, Mr. Hornberger left the practice of law to become director of programs at the Foundation for Economic Education. He has advanced freedom and free markets on talk-radio stations all across the country as well as on Fox News’ Neil Cavuto and Greta van Susteren shows and he appeared as a regular commentator on Judge Andrew Napolitano’s show Freedom Watch. View these interviews at LewRockwell.com and from Full Context. Send him email.