The world is much bigger than you or I can imagine. In a recent post, David Henderson does a nice job of showing the absurdity of talking about “the United States” as if it were a single person. So what would you think of someone talking about North and South America, plus Western Europe as a single person? That would be even more absurd. Much more. The 1.4 billion people who live in that area might almost be said to form an entire world. (More specifically, the entire world circa 1870.)
China’s 1.4 billion people do have a single federal government, unlike the Western world. But it’s also a vast region full of people trying to get by as best they can. There is much, much, much more to a country than its government. If I buy a stylish dining room set from Denmark, I do not view that as an endorsement of the human rights policies in Hungary, even though both are nominally under the jurisdiction of the EU. Similarly, if I buy some patio furniture from a company in Fujian province, I do not view it as a comment on the Chinese government’s human rights policies in faraway Xinjiang province. The world is full of people going about their daily lives, interacting with each other.
History has shown that in the long run, free trade, free travel, free investment, free speech and other forms of liberty are the best road to human progress. Unfortunately, the Chinese government restricts freedom in several important respects, especially in Xinjiang. But that shouldn’t stop us from engaging with the actual 1.4 billion Chinese people as vigorous as we are able to, at least those who wish to engage with us.
A policy of free trade has one definite direct effect and one possible side effect, which depends on the highly uncertain art of political science:
1. Free trade definitely tends to bring prosperity, and other things like better health and education, which are associated with prosperity.
2. Free trade might also bring positive political change, as a side effect of prosperity.
A policy of economic warfare has one definite direct effect and one possible side effect, which depends on the highly uncertain art of political science:
1. Economic warfare definitely tends to bring poverty, and other things like worse health and education, which are associated with poverty.
2. Economic warfare might also bring positive political change, as the targeted government cleans up its act to get out from under economic sanctions.
If you believe that free trade is likely to promote positive political change, you’ll favor free trade. If you believe that no one really knows the political effects of free trade vs. economic sanctions because political science is an imperfect art, then you’ll clearly favor free trade due to its positive direct effects. If you have a high level of confidence in one specific (hawkish) model of political science; if you believe the theory that economic warfare usually leads to positive political change (i.e. many more South Africas than Cubas), then you may (and I emphasize may) want to support economic sanctions. Can you guess camp I lean toward?
I worry that the media tends to shrink vast regions, teeming with populations beyond human comprehension, down to a sort of anthropomorphized caricature—“The US”, “Japan”, “China”, etc. Then our foreign policy responds as if we were dealing with a single person, not a whole world of people. “What should we do with that bad guy?” No, it’s not that bad guy, it’s a bad guy named Xi Jinping and 1.4 billion other people, as many as the entire world had in 1870.
There’s a reason why people who travel a lot and meet many other flesh and blood human beings are less likely to be nationalistic, less likely to fear foreigners, less likely to anthropomorphize other countries. When you’ve travelled throughout a country like China, it’s harder to see it as a single human being. (Full disclosure; my wonderful mother-in-law lives there.)
PS. Speaking of the reliability of poly sci, last night I watched “Fair Game”, a film about the arguments used in the decision to go to war with Iraq in 2003. Ahem.
READER COMMENTS
Ed
Dec 16 2018 at 2:37pm
Scott,
I don’t believe that the trade issue is anywhere near as simple as that. I believe that the economics profession doesn’t weight the unintended consequences sufficiently. Free trade policy, as well as many other causes, can have a disruptive impact on many of those home country individuals that need to be addressed as well. If policy makers and economists were as diligent in following up on theses disruptive impacts as they are on their policy defensiveness we might be able to reduce our nationistic tendencies.
Jon Murphy
Dec 17 2018 at 1:11pm
I’d disagree we don’t address the issues sufficiently. Paul Krugman’s textbook (which is pretty standard) goes into lots of details on these issues. Don Boudreaux’s book Globalization does as well. Adam Smith addresses it in Wealth of Nations. Tons and tons of digital ink has been spilled on the very matter here.
I’ll admit that in popular writing, some authors oversell the case, but centuries of economists have looked at the issues and concluded free trade remains the best option.
Benjamin Cole
Dec 16 2018 at 8:06pm
There are many ways to frame international trade narratives.
Suppose the actions of dirigiste authoritarian economies and governments lead to chronic current account trade deficits on the part of the United States.
Suppose such large current account trade deficits lead to bloated asset values in the United States, as posited by the Federal Reserve and the International Monetary Fund.
Suppose such bloated asset values are unstable and when they collapse pull down the financial system. The IMF posits this is a possibility again in the US.
Or suppose the comparative advantages of nation A are due to intellectual property stolen from nation B. Should nation B buy product from nation A? What if doing so destroys the research and development base in nation B? Or leads to lower levels of business investment, which are mysteriously unexplained?
There are many ways to frame international trade narratives.
Scott Sumner
Dec 17 2018 at 12:55am
Ben, You seem to have posted your comment in the wrong place; it has nothing to do with this post. Next time please read the post carefully before commenting, it’s tiresome to read comments that are entirely unrelated to the post.
TMC
Dec 17 2018 at 12:52pm
Ben’s comment is directly related to this post. You feel free trade is the best policy (as do I, with some exceptions.) Ben has listed some valid exceptions to your claim.
Jay
Dec 18 2018 at 9:31pm
A lot of social science is about finding the best level of theory to work at. A good theory has to be simple enough to work with – we can’t realistically model each of the 7+ billion humans on the planet and all of their interactions; we’re limited by our intelligence and the quality of the data (computers help, but also add new failure modes). On the other hand, a theory also has to be complex enough to capture the important dynamics of the system. On the third hand*, it has to be flattering enough to people’s pre-existing beliefs or they won’t act on it at all.
*Serious internet commenters keep a few severed hands lying around for this sort of occasion.
Warren Platts
Dec 26 2018 at 4:52pm
Good analysis! There are many that say that China has waged economic war against the USA through blatantly mercantilist policies and rampant IP theft that amount to multiple percentage points of US real GDP. So, lets look at the predictions:
Poverty increasing in China Shock affected regions: check
Worse health and education in China Shock affected regions: check
Positive political change to escape “sanctions”; Trump: check
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