That explains why my usual counter-point to non-economists’ negative views of international trade, which is to note that perhaps Hamilton should close its’ borders to trade from the rest of New Zealand, often fails to hit the mark. – Mark Cameron
No this is not an analysis of the agreement, which I will never get into because it contains mind-numbing details such as those quoted above in the British political blog, Guido Fawkes, with his usual witty take on the matter.
Given such details it’s hard to imagine that the thing actually will promote free trade between the three nations, but then just about any legal contract is like this.
And it seems that it is making progress and was talked up the other day in The House of Lords by Baron Hannan of Kingsclere – better known as Daniel Hannan, who has had a fairly extensive career in politics and is one of the most eloquent and intelligent speakers I’ve observed over the years.
He’s also a mixture of libertarian and conservative and his various stands on issues have annoyed those who like pigeonholing people. Hannan was a member of the EU Parliament but then got involved early in the Brexit campaign. With that behind him he’s now back to working on things like Free Trade. This speech got my attention because it mentions New Zealand frequently (I regret to say that, try as I do to avoid it, like many Kiwis I suffer from the “Oooo – we’re being talked about” disease).
Hannan specifically addresses (from 2:05 in the clip) the strange “Polar switch” that has developed since Brexit among people who think of themselves as supporting the liberal order, including free trade, but who are now concerned about Britain “being swamped by cheap food” and so forth (“Associating Global Britain with people they didn’t like and arguments they didn’t like”) and thus becoming more protectionist. Meanwhile the UKIP voters who a decade ago were concerned about the French owning British energy companies, are now more in favour of free trade and “Global Britain.”
Hannan also makes good points about the economic impact of Free Trade on ordinary people, helping their income go further by enabling lower prices. He specifically addresses the “Food Miles” argument (at 9:30) – that the CO2 emissions footprint of NZ lamb sold in Britain must be larger than lamb from Wales because of shipping across a vastly greater distance. Actually it’s not – because the CO2 emissions footprint is almost entirely in the farming, and our farmers just happen to be more efficient than those in Wales.
He talks also to how FTA’s nowadays are about far more than agricultural and manufactured goods, covering shipping, architecture, digital services and so forth, the simple result of our economies being more complex. All good arguments.
However, there are points of disagreement here. Hannan seems surprised by the “Polar switch”, but he really should not be. Margaret Thatcher once said that many arguments in a democracy are never permanently won or lost. Meaning that they surge back and forth over time. Since the great fights over free trade and free enterprise were won in the 1980s by the likes of her and Reagan, people have been able to see the downsides in the form of destroyed industries in their homelands – and more importantly the resulting destruction of the communities around them.
It was that which formed the basis of Donald Trump winning so many votes from former Working Class Democrats in 2016 in a reaction to claims like this one, which I covered in a 2019 post, Continental Drift and Its Victims:
The truth about these dysfunctional, downscale communities is that they deserve to die. Economically, they are negative assets. Morally, they are indefensible. Forget all your cheap theatrical Bruce Springsteen crap. Forget your sanctimony about struggling Rust Belt factory towns and your conspiracy theories about the wily Orientals stealing our jobs. Forget your goddamned gypsum, and, if he has a problem with that, forget Ed Burke, too.
– Kevin Williamson, National Review (2016)
The jibe about Burke is a reference to the 18th century philosopher and Irish MP, Edmund Burke, supporter of the American Revolution and initially of the French Revolution – before it turned ugly. The modern historian Simon Schama summed it up pretty well in the episode Forces of Nature from his TV series, A History of Britain:
But when the lynching started, Burke decided the revolution was, above all, an act of violence and he denounced it in his vitriolic Reflections On The French Revolution.
It’s hard to know which was more painful – the fact that Burke’s savage denunciation came from an erstwhile friend of liberty and reform, or that it flung back into the teeth of the radicals some of the mushier platitudes about nature. They had taken it as read that nature filled your bosom with the love of mankind, that nature was fraternal, was cosmopolitan.
Rubbish, said Burke, nature is rooted in place. It teaches you to love YOUR birthplace, YOUR language, YOUR customs, YOUR habits. Nature is a patriot.
And what does Hannan then go on to address but that exact point, when he hints at the same issue at which Williamson sneers, in talking of what can be done to save the Welsh hill country farmers (at 8:00) who cannot compete with New Zealand lamb or Australian beef. He speaks of their stewardship of the land and how that could and should be supported by the State via direct grants. In other words he knows that they are likely to fail under this FTA and has ideas on how to fix that. But will it be fixed? Farmers don’t have the votes and how many would want to become effective wards of the State anyway. Is not abandonment of the land more likely, as with Williamson’s American “solution”?
They need real opportunity, which means that they need real change, which means that they need U-Haul.
No wonder he wants to forget Ed Burke. The architects of Rogernomics could not have put it better. But they and their successors like Hannan and Williamson have failed to note Thatcher’s thoughts on ideological battles. Hannan states that the free exchange ideas of Ricardo and Smith long ago won the arguments both in theory and practice (6:00 and 12:30):
The idea that you judge a country by its trade surpluses, that exports are the only thing that really matter, was debunked by Adam Smith. But it continues as a kind of zombie argument to keep coming back in every generation.
Perhaps he should ask why it keeps coming back every generation in the face of economic science? One article, The evolutionary roots of folk economic beliefs, suggests one answer. These are “the widespread beliefs about economic and policy issues, which are held by members of the public untrained in economics”. The writer is one of those trained economists, Michael Cameron from Waikato University, and he looks at a paper arguing evolutionary psychology as the culprit:
The particular aspects of evolutionary psychology that Boyer and Petersen invoke are: (1) detecting free riders in collective action; (2) partner choice for exchange: (3) exchange and assurance by communal sharing; (4) coalitional affiliation; and (5) ownership psychology.
Boyer and Patersen list eight such beliefs, including this one: “International trade is zero-sum and has negative effects” and using their theory they explains that:
We should expect the view that trade is bad to be particularly attractive when the trading crosses perceived coalitional boundaries. It is predicted to invariably occur in the context of, precisely, debates about trade between countries. American consumers may find it intuitive that the United States might suffer from Chinese prosperity, but, on this theory, they would find it less compelling that development in Vermont damages the economy of Texas.
(“YOUR birthplace, YOUR language,… etc.“) Cameron wryly notes:
That explains why my usual counter-point to non-economists’ negative views of international trade, which is to note that perhaps Hamilton should close its’ borders to trade from the rest of New Zealand, often fails to hit the mark.
Simply saying that people are stupid (Williamson) and that there is a consensus among economists, is not going to cut it in the face of these “zombie arguments” backed by folk beliefs, whether based in evolution or not. A similar blind spot shows up with Objectivist Peter Cresswell who thunders away on his Not PC blog at the particular coalitional boundary of Nationalism, explaining that none of the 18th and 19th century societal theorists – whether the Enlightenment philosophers, Marx and other communists, Comte, Social Darwinists or Adam Smith – foresaw that:
No force in the world since 1848 has been more powerful, more deadly, more pervasive, or more persistent, than nationalistic zeal.”
Mr Cresswell damns it of course and he has a point but no explanation as to why that too persists and unlike Cameron I doubt he’d accept the arguments of Boyer and Patterson on Free Trade – to be fair Cameron also has doubts about their explanations in general but he regards them as interesting.
There is theory and there are practical outcomes and people “untrained in economics” notice only the latter in the form of practical improvements in their lives. Being able to pay less for a second-hand iPhone won’t cut it if your community is falling apart because the jobs destroyed have not been replaced by ones as good or better.
Whether it’s China’s increasing control of key supply chains and resources that see the Biden Administration following Trump (however quietly) on tariffs and other anti-China measures, or Hannan talking of the State propping up Welsh farmers and their communities, the fight has been swinging back to mercantilism and protectionism.
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