Showing posts with label free trade. Show all posts
Showing posts with label free trade. Show all posts

Thursday, May 10, 2007

The Anomaly of Anti-slavery Legislation

How do we explain the need for government to impose regulations on such an atrocity while protecting free trade? Was William Wilberforce of the English Parliament against free trade by working to abolish slavery in the empire? What is the true role of government in economic enterprise?
This issue brings us back to our discussions regarding private property and the rule of law. It is government's charge to steward the rule of law and protect private property. The issue of slavery abolishment is not an impingement on free trade. It is government's duty to protect private property. Slavery is the most obscene private property violation in human history. Let government lay down its firm hand to abolish it, even if it costs the economy.
I believe the argument in the previous paragraph stands alone sufficient to argue for government intervention in antislavery. However, I would like to propose a hypothesis. If one were to research the archives of economic activity in the West Indies, I believe you would find high cost per unit of sugar production by using slave labor. I suspect that, as my professor, Dr. Howard Baetjer suggested once in a class, that companies utilizing slave labor would suffer from poor productivity. Their prices would not be as competitive as more honorable labor practicing companies. Looking at parliamentary archives would reveal these slave based companies need to protect their product through government regulation. If this were true, I suspect if the regulations favoring the slave based companies were lifted, natural selection would have worked its course. The higher productivity companies utilizing honorable labor practices would have choked out slave based labor. It would have no longer been a viable economic option.

Would You Change Your Opinion on Free Trade If It Harmed You Personally?

It is easy to talk about free trade in a classroom, however they effect real lives. Mine is one of them.
The last IT job I held was at a start-up company. One day I finished a project and my supervisors were overjoyed over my progress. The next day I had to return home to my newly wed wife and report to her that I was laid off.
We were married not longer than 2 years. We had a mortgage and now only one income. At that time, offshoring had reached its prime. IT companies were sprouting in India, while all the IT jobs in the US were going away.
I had been a researcher and data analyst my whole working life. I knew nothing of economics, globilization or the workings of the outside world. Somehow I knew that this was all for good. You know the phrase "God closes a door and opens a window"? Well for me, God had closed a door, shut all the windows and left me there to sweat a while to realize one thing. I am responsible for my own outcome.
Over the course of two years I had worked as a secretary, a teacher, took close to 10 different standardized exams, was sworn in and discharged as an officer within 1 month from the US Navy, and finally got accepted into the Doctor of Pharmacy program at the Univ of Maryland.
I am thankful no one advocated for the protection of my job. If they did, I would have never experienced the opportunity for this new and rewarding career path.

Social Justice Abolishes Free Trade

Hayek writes in Social or Distributive Justice, "To assure the same material position to people who differ greatly in strength, intelligence, skill, knowledge and perseverance as well as in their physical and social environment, government would clearly have to treat them very differently to compensate for those disadvantages and deficiencies it could not directly alter."

Government's attempt to make everyone on the same level field would abolish the spontaneous aggregation of free trade arrangements. We all learned in economics about the one farmer who is more productive than another. He can produce meat and potatoes more than the other farmer. However, the less productive farmer can produce potatoes at a lower opportunity cost than the first farmer. As Hayek describes they "differ greatly in strength, intelligence, skill, knowledge and perseverance as well as in their physical and social environment".

If left alone they spontaneously choose to trade. The first farmer could specialize in meat and the second in producing just potatoes. Together they produce more meat and potatoes by trading and specializing than the sum of their individual production alone. Their differences in ability while one greater than the other were mutually beneficial. The differences in comparative advantage made them mutually attractive to create a spontaneous trade relationship.