Globalists go wrong in free trade

With the arrival of the pandemic in at least 19009, the main media condemned the coming globalization. These lamentations have only accelerated since the Trump administration announced “Liberation Day” on April 2, and the unfair practices of our counterparties will be resolved by increasing and partial mutual obligations (and minimum tariff levels).

Listen to the media, this tariff is the death link of the global trading order that is beneficial to the world and will cause billions of dollars to disappear. But at the end of globalization, such votes pushed forward a scarecrow novel about what is now called the lost novel: that is, President Trump’s policies violate a agreed framework, where goods, capital and labor move across state borders in most unrestricted ways.

If people believe in the advantages of free trade and cross-border capital flows, then ideals must not be confused with reality. In fact, the friction and costs associated with such movements are always (usually large).

Today’s so-called free trade system recalls Western support for Soviet communism, “never tried true communism” to defend its countless failures. Love it or hate it, what exists today is hardly true free trade.

If we have anything today, then free trade is closer to its Plato ideal look? The idea is that the terms of trade are rarely completely free or unfree, and also confuses the media.

The reality is that the terms of trade sit uneasily along the continuum, and relatively free trade only occurs under certain conditions. These include (among others):

• Commonly agreed rules for international trade, consistently applied or at least universally observed, allow relatively open and mutual market access;
• The exemption to the strategic industry is a form of insurance for the state, preventing them from being caught in subsequent conflicts with trading partners;
• Reliable cross-border supply chains that allow the decomposition of production into its components (control of transaction resources at cost efficiency) and
• Ideological unipolar historical moments, or a multipolar world, international trade mainly occurs at the poles.

These and other trade-friendly conditions were obtained in the decades before World War I, about 20 years after the end of the Cold War. Although the World War was an obvious culprit, ending an earlier era of globalization, what explains the current suffering?

Rules-based transaction orders can withstand certain restrictions (tariffs, regulations, quotas) – in fact, some of them are needed by the protection strategy sector. But as in China, overuse, and thorough cheating – subsidies, intellectual property theft and currency manipulation – caused prisoners’ plight and brought suboptimal results.

Similarly, the extended supply chains that have expanded over the past 30 years believe that what is important is the only national interest of economic development.

Consider the terms that have made fashion over the past three decades: “a boundaryless world”, “global citizen”, “the end of history” and “soft power”. The split of business models that previously lived under the roof of a single company never anticipated challenges to PAX Americana to Pax America, such as the retrograde gunboat diplomacy of China’s belt and road initiatives, not to mention the rise of states where transnational terrorist groups undermine commerce and production failed.

In addition, the monopole torque has ended. As China under the Communist Party rule, the Soviet Union became our main geopolitical rival, which was granted the United States’ World Trade Organization’s recognition in 2001 by Joseph Stalin.

The return of history is not only China, but Russia, Turkey and others advocate areas of influence and promotion of narrow interests, while embedded in the global economic system and multilateral institutions, further inspiring unbounded trade and capital movements.

Failure to understand that globalization – the mutual dependence and integration of mutual benefit between countries requires largely unrestricted movement of goods, capital, information and personnel – only thrives under certain conditions, only half of the media and institutional elites. Another is globalism as a fetish for ideology.

One can support globalization without becoming globalism. Free trade and capital flows themselves do not include a belief system, but a means to achieve their end: to realize individuals’ wishes and represent their country.

Free trade is the maid of freedom and vice versa. The adverse outcome of trade risks at the expense of other free values; offshoring of a country’s drug production capacity to potentially belligerent countries is just an example.

Another danger of globalism as an ideology is its fall to be a victim of historical determinism.

It is believed that global integration inevitably brings several risks. It is believed that it is impermeable to threaten insufficient investment in its sustenance (see the collapse of the WTO’s Doha Round); competitive goals such as state self-determination and border defense may also obey the tenets of globalism, undermining the stability of countries seeking to benefit from globalization.

The proposed Trump tariff system is not a full-scale attack on critics of operating trade orders. It is to admit that this is not to blindly defend the government’s policies. Tariffs use it as a leverage for heavy trade restrictions on counterparties. They also help support strategic sectors in an increasingly dangerous world.

What the tariffs won’t do is restore the rust economy, and this won’t come back. Comparative advantage, a is still unbeaten. Tariffs should not be provided to the public as government revenue while existing revenue, sales and other tax programs.

Globalization improves life and should promote life. Free trade and capital movements have always been mutually beneficial when necessary conditions exist. How these benefits are allocated, and whether unchecked movements across borders are equally beneficial is more complex.

But promoting globalism as a creed of intruders, both for its own sake and for the opposite of the “America First” policy, cannot understand that globalization cannot be summoned by magical ideas, and that it is the servant of freedom, not its master.

Richard J. Shinder is the founder and managing partner of the financial consulting firm Theatine Partners.

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